Nokia CEO Stephen Elop recalls a meetingin August 2011 inwhich the company's leadership struggled to decide on the name of its new smartphone,the first using Windows Phone software.
"We almost fellinto the trap that had often befallenNokia, which was... let them work on it a bit longerbecause we couldn't quite reach agreement," Elop said. Instead, he demanded a decision that day.
"Why wait til tomorrow or next week? We could make the decision today. And we did." Lumia was the result.
Senior Nokia employees say Elop, hired in 2010 to revive theonce-undisputed leader inmobile phones, has forced them to make faster decisions, which has sped up everything from restructuring to the development of new handsets.
There is no time to waste. Nokia's ability to compete in theglobal smartphonemarket is increasingly questioned; its market share is stands at around three percent, far behindSamsung <005930.KS> and Apple which control around 50 percent between them.
Second-quarter Lumia sales missed market estimates, and with cash reserves falling,some investors worry how much time Elop has left to validate his decision to adopt Microsoft's untested Windows Phone software. The transition to Windows, which he said would take two years, is now in its third.
Nokia has picked up the pace of product launches this year, including the July 11 unveilingof its Lumia 1020 with a 41-megapixel camera.
Elop reckoned thecompany spent 22 months on the N8, which used the now-obsolete Symbian operating system and was launched shortly after he joinedthecompany.
"A number of our Windows Phone products are on six to eightmonth delivery cycles. We are moving so much faster," he said.
Apple has been launchinga new iPhone around once a year, and analysts have said it may need to speed its cycle up to compete with thefrequency and variety of Samsung product launches. The South Korean company has close to 40 versionson themarket compared with around 20 forNokia.
Nokia's 1020 is themost advanced of its Lumia smartphones, and followed the925 and 928 launches in May. In February, it introducedthe more basic Lumia 520 and 521 models.
Also this year, it announced a 15-euro phone, its cheapest phone ever. It has also upgraded its line of feature phones with theAsha 210 and 310, as well as themore powerful 501 with built-in social media applications.
Elop said the older Nokia prioritisedquality and features but was lessdisciplinedabout the time it took to deliver.
"There was a pattern in thepast where, with Symbian and everything, lots and lots and lots and lots of things got added and it took a long time to getthe qualityup to the right level," he said.
It has cut one inthree jobs under Elop, and some employees say the leaner structure means things getdone faster.
Samuli Hanninen, who was incharge of building the imagingsoftware for Lumia 1020 and had returned from its launchevent in New York several days earlier, said he was enjoyingthe same kind of buzz he felt inhis early days at Nokia a decade ago.
"We had a culture where we never gave up, we were always working very late, you could call guys at any point of theday to say this needs to be fixed," he said. "We somehow lost it. The process became more important thanthe product and consumer."
Elop, a Canadian and former Microsoft executive, replaced OlliPekka Kallasvuo, who led thecompany from 2006 and was criticised forbeing complacent about therise of smartphones.
Elop was the first non-Finn to become CEO of the 148-year-old company, which started as a paper milland at one point made rubber boots. Many initially wondered whetherhe could fit in.
His enthusiasm quickly endeared him to staff. In person, he is quick to laugh and to offerjokes, with a down-to-earth style that has little in common with the Microsoft's Steve Ballmer or Apple's former CEO Steve Jobs.
He can also be blunt. In a now-famous 2011 email to staff, he compared Symbian to a "burning platform" that needed to be abandoned. The switch to Windows was a shock, but many said Elop won support with his frankness.
Carolina Milanesi, an analyst at Gartner who has followed theindustry for over a decade, said theswitch was the right choice and one that could only have been made by an outsider.
"You needed someone who wasn't personally invested, who could take a harsher look," shesaid. "If you'd been there, you'd obviously have been part of what theproblem was."
The problem, Elop says, was a stubbornness that came from years of being at thetop. He says he has encouraged employees to adopt a "challenger mindset".
"What I really mean is, don't be arrogant," he said. "There's a number of examples over thelast six, seven years, where Nokia heard trends but decidedto ignore those trends because it felt that it somehow knew better... And that hurtthe company badly for many years."
Alf Noto, headof Nokia's customer care division, said that approach was reflected inthe way it now deals with customers. Elop answers around 10-20 customer emails each day, he said.
Others say Nokia has also become more humble towards its partners, including carriers and retailers who sell handsets, as well as developers who create the appsfor phones.
"He took a lot of the arrogance out. For a while we were behaving like a market leader and we weren't," said Christof Hellmis, an executive at Nokia's Here navigation business.
Elop, however, has yet to prove he was right to switch to Windows, with Google's Android and Apple's iOS running around 90 percent of smartphones sold today.
He was speaking to Reuters theday before it announced it sold 7.4 million Lumia phones in thesecond quarter, a 32 percent improvement from the first quarter but fewer thanthe market's consensus forecast of 8.1 million units.
It chose not to predict future Lumia sales and some, including Pierre Ferragu at Bernstein Research, are scepticalabout Nokia's ability to compete in smartphones. Nokia shares, now around 3 euros, are a fraction of their 2000 peak of 65 euros, and its bonds have junk ratings.
Chris Weber, executive vice president in charge of global sales and marketing, said its expanded product line, as well as a joint marketing pushwith Microsoft and AT&T forthe Lumia 1020, shouldhelp boost sales ahead. Gartner's Milanesi was also optimistic.
"They're now behaving theway they should,fighting and thinkingdifferently," shesaid. "Things don't change overnight... But I think the1020 is goingto be thespark to getcustomers to pay attention to Nokia."
No comments:
Post a Comment