INSIDE MOBILE: Open Letter to Stephen Elop, Nokia's New CEO: How to Make Nokia Great Again

 
 
By J. Gerry Purdy  |  Posted 2010-09-29
 
 
 

INSIDE MOBILE: Open Letter to Stephen Elop, Nokia's New CEO: How to Make Nokia Great Again


Mr. Elop, I congratulate you on assuming leadership of one of the great mobile and wireless companies in the world. Surely, something intrigued you enough to leave the safe mother ship of Microsoft to take on the challenge to "remake" Nokia.

You certainly have a great base in which to start. You're selling over one million cell phones a day. That's still better than any other mobile handset manufacturer in the world. You've got many excellent people-some of the most professional I've met in the industry. Nokia is also one of the most recognized and respected brands in the entire world.

But all is not well with Nokia as you walk in the door.

While the volume of cell phone production is very high, it's clearly not the right mix of models, software and services. While you have been a leader in phone development for many years and were one of the first firms to develop a full-featured multimedia smartphone with the N95 in 2006, you have clearly fallen behind in the fast-growing smartphone segment-especially in the United States. Integrated, multimedia smartphones are becoming the dominate handset device type in the developed world. Nokia needs to get back to creating truly great and innovative products.

You've got not one, but two, separate device operating systems between Symbian and MeeGo (partnering with Intel). Also, unfortunately, your entire business in North America is in the toilet. It wasn't too many years ago that it seemed as if most everyone had a Nokia phone in North America. But when Motorola developed the RAZR, it displaced Nokia in the United States market. Then there was the quick migration to smartphones that resulted in Nokia becoming almost nonexistent in the lucrative North America market (which is now leading the world in cellular innovation).

Nokia Missed Critical Migrations


Nokia missed critical migrations

I can remember sitting in a Nokia analyst meeting just a few years ago. There were too many feature phones all designed for micro-markets. Plus, the Nseries models, while advanced technically, were designed to focus on specific media such as music or video. Nokia missed the critical migration from single-function devices to integrated media devices such as the Treo, BlackBerry Bold and iPhone.

Nokia's early Nseries phones were out of synch with the demand for integrated multimedia in smartphones. Nokia missed the migration to touch-screen devices. Nokia missed the industrial design revolution and, in particular, didn't understand the design difference requirements between Europe and the United States.

Major changes are needed

I'll assume that Nokia's board did an extensive search for their new CEO. It wouldn't surprise me if they had even talked to Mark Hurd (formerly of HP and now with Oracle). I'll accept that they believe you have the right skills to lead Nokia going forward.

There's no way around the basic fact that you'll have to make a number of major changes. You can't keep designing products the way you have in the past. You can't keep doing operating system software the way you have in the past. You can't ignore major changes in the way in which people use their phones (highly-integrated multimedia and almost all oriented toward touch-screens).

You have to rebuild from the ground up. You have to re-create a culture around Nokia being "cool" again. You can't simply declare it. Rather, you have to actually do it.

Seven Recommendations for Nokia


Seven recommendations for Nokia

Let me offer a number of recommendations. These are offered at "no charge." I'm happy to consult with you and your team to pursue any of these further as a consultant.

1. Industrial design: I commend the company for realizing that it needed to put a product creation center in San Diego, but the products that have come out of that center (for example, the E71) still have had basic Nokia industrial design elements: user interface, trade dress, square-shaped keys, and overall "foreign" look and feel. I recommend you have a "bake-off" with the top United States industrial design firms, and then test their proposed designs with users to find a path for future designs that relate well to customers.

2. Handsets: You know how to manufacture handsets, but Nokia fell out of grace in not building handsets that were relevant to the current customer. You need to look carefully at what HTC is doing (for example, EVO) as well as Apple (iPhone). Then, use the new industrial design firm to develop a basic, low-end product (10-key pad) and a higher-end (smartphone) product. You don't need 20 different handset designs. Don't worry: with software you can provide differentiation for these basic handset designs to a variety of separate geographies and markets.

3. Operating systems: The operating environment may present a bigger challenge to you than hardware. I recommend that you take Symbian and focus it on low-end products (Series 40/60 class) but redesigned. Then, for the high-end smartphone, I recommend you do something really innovative: make them adaptable to multiple operating platforms. There are a number of ways to do this, but using a special Subscriber Identity Module (SIM) card might be one way to approach it. Then, if the customer wants Android, you give them Android. If they want Phone 7, you give them Phone 7. If they want Palm WebOS, then you give that to them. If they want MeeGo, you give them that.

Mobile Applications


4. Mobile applications: I commend Nokia for creating a comprehensive, online services portal called Ovi that provides a number of service offerings, including contact management, the Ovi Store, Ovi Mail, Calendar and other services. Nokia needs to better organize the applications by category and then promote the more popular ones. I recommend that Nokia bring together a lot of the support you already have for developers (that assists them in creating applications for Nokia smartphones) and make it easy to adapt them to the different operating environments. You could become a leader in providing resources and support tools to enable developers to create a core application and then easily migrate it to other operating system platforms.

5. Media services: It's important that Nokia invest in more media services. While Nokia has significant online media resources, you'll need to build an integrated, rich media service offering like iTunes-with access to media libraries from the major media companies (Disney, Sony, EMI, etc.) that provides easy access to music, TV shows and other entertainment. Consider a partnership with Rhapsody.

6. Analyst relations: You already have a great analyst relations team-one of the best in the industry. My peers love to dialog with Nokia. I think the frustration has been that, in the past, the primary purpose of meeting with the analysts was to give them information rather than to listen to what they might say-and then actually do something based on the feedback. Other vendors with good analyst relations spend a lot of time listening to recommendations and provide feedback on what they did with what was recommended. I personally never felt that, with Nokia, my opinions were ever requested and the things I did recommend were ever taken to heart. Nokia needs to keep tabs on analyst recommendations and what was done to either implement them or not (and why). I'm available to help whenever the process is changed.

Move Nokias Corporate Headquarters


7. Move Nokia's corporate headquarters: I recommend you seriously consider moving Nokia from Finland to the United States. You might want to expand your Mountain View office to focus on software, retain the product creation center in San Diego, and put the worldwide headquarters in Atlanta (great weather, great housing and great culture that's already pro-wireless with AT&T Mobility). You need to adopt more of a United States-centric culture. Europe originally was the center of wireless advances, but now the United States is the leader. Besides, you can get to just about anywhere in the world on a nonstop flight on Delta out of Atlanta.

You're going to get all sorts of advice from lots of people, including me. You'll need to pick your future strategy and then get all of the great Nokia resources-people, money, supply chain, manufacturing partners (such as FoxConn)-to all move in the same direction rather quickly. It's a tough job, but if you are successful, it's clearly possible for you to return Nokia to greatness.

I'm looking forward to meeting you in the not too distant future. Your tag line of "Connecting People" is still appropriate. You simply need to go about living out that objective in a different manner than you have in the past. I wish you success on behalf of the 3.5 billion people who currently have a mobile phone.

And I wish you good luck in your new job or, as they say in Finland, Onnea Matkaan!

J. Gerry Purdy, Ph.D. is Principal Analyst of Mobile & Wireless at MobileTrax LLC. As a nationally recognized industry authority, Dr. Purdy focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North America. Dr. Purdy is an "edge of network" analyst looking at devices, applications and services, as well as wireless connectivity to those devices. Dr. Purdy provides critical insights regarding mobile and wireless devices, wireless data communications and connection to the infrastructure that powers the data in the wireless handheld. He is author of the column Inside Mobile & Wireless that provides industry insights and is read by over 100,000 people a month.

Dr. Purdy continues to be affiliated with the venture capital industry as well. He currently is Managing Director at Yosemite Ventures. And he spent five years as a Venture Advisor for Diamondhead Ventures in Menlo Park where he identified, attracted and recommended investments in emerging companies in mobile and wireless. He has had a prior affiliation with East Peak Advisors and, subsequently, following their acquisition, with FBR Capital Markets. For more than 16 years, Dr. Purdy has been consulting, speaking, researching, networking, writing and developing state-of-the-art concepts that challenge people's mind-sets, as well as developing new ways of thinking and forecasting in the mobile computing and wireless data arenas. Often quoted, Dr. Purdy's ideas and opinions are followed closely by thought leaders in the mobile and wireless industry. He is author of three books as well.

Dr. Purdy currently is a member of the Program Advisory Board of the Consumer Electronics Association (CEA) which produces CES, one of the largest trade shows in the world. He is a frequent moderator at CTIA conferences and GSM Mobile World Congress. He also is a member of the Board of the Atlanta Wireless Technology Forum. Dr. Purdy has a B.S. degree in Engineering Physics from University of Tennessee, a M.S. degree in Computer Science from UCLA, and a Ph.D. in Computer Science and Exercise Physiology from Stanford University. He can be reached at gerry.purdy@mobiletrax.com. 

Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column. If that situation happens, then I'll disclose it at that time.

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