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Digital River - Talk to the Experts

Nokia's New CEO May Whip Up Savvier Smartphone Strategy

By Erika Morphy E-Commerce Times ECT News Network
Sep 10, 2010 1:06 PM PT

Nokia has announced that President and CEO Olli-Pekka Kallasvuo will leave his position on September 20, handing the keys to Microsoft executive Stephen Elop.

Nokia's New CEO May Whip Up Savvier Smartphone Strategy

Kallasvuo's departure is likely due to Nokia's failure to crack the smartphone market -- the U.S. market in particular -- under his guidance. That goal appears to be the main mission for the new CEO.

Microsoft doesn't seem particularly aggrieved by the move, even though the two companies could become competitors in the smartphone space: CEO Steve Ballmer wished Elop well in a statement.

Microsoft did not respond to the E-Commerce Times' request for comment by press time.

Turning the Ship Around

Elop's move to Nokia has the potential to shake up the industry -- but it will be a long slog to correct the missteps the company has made.

"Nokia has been trying to crack the smartphone market for years, but it has approached it in a very stubborn and high-handed manner," Allen Nogee, principal analyst at In-Stat, told the E-Commerce Times. "I think Nokia has gotten to the point where it is so frustrated with its lack of progress, they finally got rid of their CEO."

The company never embraced the different drivers in the U.S. and Asian smartphone markets, he noted. It has not forged any long-term partnerships with major U.S. carriers. The end result has been devices that are not well marketed to smartphone buyers.

For instance, next week at Nokia World, the firm will unveil the N8, the latest Symbian smartphone, priced at US$549.

Turning to Microsoft

If Nokia's goal is to penetrate the U.S. smartphone market, it might have picked an executive from a company that has actually penetrated that market, suggested Nogee.

"Microsoft represents a North American point of view that Nokia needs, but let's face it, its success in the smartphone market has not been anything to brag about," he remarked.

Another challenge facing Nokia, said Nogee, is one that even an executive with Apple or Android experience ultimately might not be able to address: Nokia's image as a feature phone staple.

"Nokia has a huge market in the low-end part of the market, which in some ways could present a negative image among people who want state-of-the-art smartphones," Nogee pointed out.

On the Plus Side

Still, there is much to like about Elop's appointment, according to Azita Arvani of the Arvani Group.

Nokia is basically admitting that it needs a big change in its software platform strategy, she told the E-Commerce Times. "Nokia's Symbian platform was not keeping up with the Apple's iOS or Google's Android -- and, going forward, Symbian's strategy was not promising."

Then there is the MeeGo platform, in joint development with Intel.

"It was difficult to envision how these two platforms were going to lead Nokia into a leadership position in the modern smartphone arena," said Arvani," but Elop has a lot of experience in the software arena that Nokia is hoping can help with straightening its software strategy."

The fact that he is North American is also important, she noted. "The U.S. is the new hotbed of mobile and wireless innovations, especially in the smartphone arena. In the past, Europe may have had a lead over the U.S. But in the last few years, in the post iPhone era, where mobile and Internet have converged much more rapidly, it would be best to have a U.S. executive -- and even though Elop is born in Canada, he is considered a U.S. executive -- leading the company."

There are risks with this appointment, though. Elop has has moved around to different companies every couple of years and does not have recent mobile telecom connections, Arvani pointed out. "So, it would be interesting to watch how he balances short-term results versus long-term goals for Nokia."

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