Nokia rings in the changes as it appoints new CEO

Ex-Microsoft exec Stephen Elop is the knight in shining armour charged with slaying the iPhone...

by Emma Haslett
Last Updated: 25 Mar 2011
It seems Nokia is finally gearing itself up to enter the battle of the smartphones in earnest, after it revealed plans to replace beleagured CEO Olli-Pekka Kallasuvo with Microsoft exec Stephen Elop. It’s a critical time for the company, which has been heavily admonished by shareholders for failing to come up with a viable  competitor to the iPhone after Nokia saw a dramatic drop in market capitalisation.  But is it already too late?
 
Nokia’s latest smartphone, the N8, is due to launch at Nokia World in London next week – so the timing of Elop’s entrance is fairly decisive. And you can see why the company is feeling the pressure: since the launch of the iPhone in 2007, Nokia’s share price has lost two-thirds of its value, wiping €60bn (£76bn) off the company’s market capitalisation. Ouch. And it has struggled to compete in other markets, too – Nokia’s Ovi app store, for example, still has a fraction of the number of downloads of Apple’s app store, despite numerous attempts to encourage developers to get involved.
 
But at least it appears Nokia has taken heed of warnings by Gartner analysts, who said that it needed to find a ‘European Steve Jobs’ with ‘the experience to run a company the size of Nokia, the charisma to pacify investors, the knowledge to recognise bad products and strategies, and the courage to kill them’. (And, they might add, a willingness to be based in Helsinki, a city clothed in darkness for great swathes of the year.) Elop, who has been the president of Microsoft’s business division for the past two years, can tick a few of those boxes – but whether he can come up with something to vanquish the iPhone not to mention contenders from HEC, Blackberry  and Samsung is another question. Even the FT has described Nokia’s management culture as "bureaucratic and lumbering."
 
While it’s still the largest manufacturer of mobile handsets in the world, Nokia has been struggling for years with the smartphone, which competitors with better knowledge of gadgets like Apple and Google seemed to grasp almost instantly. There is a risk that, by the time Nokia has managed to create its holy grail of smartphones, the world will already have moved on. The mania surrounding the iPad gives an indication that that’s happening already. And it’s not like Elop’s previous company, Microsoft, is exactly the market leader when it comes to smartphones…
 
Apart from crushing Apple, another pressing concern for Elop will undoubtedly be Nokia’s acquisitions strategy, which is in the process of building up a deeply embarrassing reputation. Its latest tale of woe is travel social network Dopplr, the Finnish-founded site which was once the darling of the UK startup scene, but has seen its star plummet since its $20m (£12.9m) acquisition a year ago, with unique user numbers falling by 10,000 since September 2009. One source ‘close to Dopplr’ pretty much captured popular opinion around Nokia acquisitions when he told The Guardian: ‘Nokia – where good ideas go to die’. Hmm.

Still, spare a thought for Kallasuvo, who has been virtually cast out by Nokia after 30 years' loyal service. Although we're sure his €4.6m payoff, as well as the value of 100,000 Nokia shares (their value may have dropped, but it hasn't dropped that much) will serve to console him...

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