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Nokia reportedly looking for a new CEO

by Scott Bicheno on 20 July 2010, 10:03

Tags: Nokia (NYSE:NOK)

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Something has to change

It's bizarre to think of the world's biggest mobile phone company as being in crisis, but as the true smartphone era develops, and Nokia looks like being left behind, that's precisely how it's starting to look.

A recent report in the WSJ claims the Finnish handset-maker has quietly commenced the search for a new CEO, citing the good-old ‘people familiar with the matter'.

The current CEO - Olli-Pekka Kallasvuo - has been in place since 2006. In the intervening four years, Apple has completely transformed the smartphone market with the iPhone and Google's Android has become the OS of choice for most other smartphone OEMs.

At the same time, RIM has massively increased the appeal of its BlackBerry phones to consumers and the Koreans - Samsung and LG - have been eating away at Nokia's feature-phone market share. Add to that the renewed impetus behind webOS with the HP acquisition of Palm, and Microsoft's surely last throw of the mobile dice with Windows Phone 7, and Nokia's competitive environment has never been so brutal.

For all the efforts made to re-invigorate Symbian - Nokia's low-end smartphone OS - by making it fully open, developer and end-user enthusiasm for it remains low. Meanwhile MeeGo - Nokia's mobile device OS collaboration with Intel - is still in its infancy and certainly has yet to produce a competitive handset.

How much of this is Kallasvuo's fault is debatable. Nokia would have had to put the strategic pieces in place before he was appointed if it was really taking the mobile device market seriously, not four years later. But then again, Kallasvuo cold have changed the course at any time since then.

Nokia's share price has almost halved in the last three months since it issued a profit warning and announced its corporate restructure. Shareholders will be looking for more to be done and replacing the CEO is the obvious option for the board. Nokia's shares were up over three percent in pre-market trading on the NYSE since the WSJ story broke.

 

HEXUS Forums :: 5 Comments

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Posted by usxhe190 - Tue 20 Jul 2010 10:50
They should. They are like the powerhouse of mobile phones and they keep stuffing up with their smartphone offerings.

The fact that HTC can get so much market share shows they have lost direction.
Posted by chrestomanci - Tue 20 Jul 2010 14:08
The thing is, Olli-Pekka Kallasvuo is an accountant, as such he has been very good at cutting waste and inefficiency, but rather bad at the necessary blue sky thinking to drive the business forward.

In the past 3 years or so, Nokia has saved an enormous amount of money, both by reforming internal practices to cut waste, and by closing some smaller Nokia sites and making thousands of redundancies. The cost cutting was so effective that the company actually made a profit in 2009 Q4.

On the other hand, Nokia's efforts to develop new and exciting stuff that will excite end users has faltered. The Ovi store was buggy and unreliable when it first launched, and still does not work very well or have many worthwhile apps on it. (If you discount ringtones & wallpapers). The core Series 60 operating system looks the same as it did 5 years ago, when the competition is full of eye candy. Maemo/Meego/<insert the latest name here> is promising, but should be driven forward to all mid to high end phones, rather than a few experimental and expensive models.

About the only area where Nokia is doing well is at the low end. Series 40 is reliable, but unexciting so works well on cheap phones, and Nokia has a very efficient supply chain that enables it to sell millions of bargain basement phones a week to the developing world, and still make a slender profit. The problem with the low end is that it is a race to the bottom, and as those markets mature, they will want to upgrade, and Nokia won't be able to compete with the likes of HTC and Samsung, who can produce basic touch screen smart-phones, that are better and cheaper than Nokia.

The bottom line, is that Nokia never really understood the threat from the iPhone and Android, and has managed to continue so-far on momentum and cost cutting. I don't think that will be sustainable over the next few years, and I think Nokia and it's employees (many of whom are still my friends) will have a very tough time.

NB: I was a Nokia employee, but I quit in April.
Posted by usxhe190 - Tue 20 Jul 2010 17:59
Yea, I agree and that's because Nokia is a more of a communications company than a computer electronics company in the sense that Nokia knows how to make reliable communications. I.e. you won't get stupid designs like Apple from Nokia (Nokia was the FIRST to come up with internal antennas).

But the problem - Apple, an bloody amateur, came along and changed the landscape. They told people that phones are not just for calling but for more important things.

In fact, phones now are like mini computers and that's where Nokia stuff up. Nokia doesn't know how to make that. They still think phones the old school way and that's why they are so crap at the smartphone market but still good in normal phone market. They still keep making good reliable phones but that's not the future.

I mean the fastest growing smartphone companies (HTC, Apple, Android) are like little kids compared to Nokia.

Hope Nokia can break into the smartphone market. You can see I quite like Nokia :D
Posted by Brewster0101 - Wed 21 Jul 2010 07:31
Nokia makes the hardware but can't keep up with the software.

Nokia + Android would make a great handset.

Lets see a new N900 released with Android, or a new N97
Posted by chrestomanci - Wed 21 Jul 2010 10:08
Brewster0101
Nokia + Android would make a great handset.

Lets see a new N900 released with Android, or a new N97
It has already been done:

http://www.engadget.com/2010/01/23/android-dual-boot-could-make-nokia-n900-jack-of-two-trades/
http://www.engadget.com/2010/06/27/hacked-n900-blazes-through-froyo/

Needless to say these are not officially supported releases, but as a proof of concept, it shows that the hardware could support Android if Nokia wanted it to.

Brewster0101
Nokia makes the hardware but can't keep up with the software.

Agreed. The problem with Nokia software development, is that it is done by a huge and many layered bureaucracy, which is dominated by deadlines rather than quality. Everyone has a deadline to meet and if the code is not ready they will fudge it somehow and deliver incomplete or buggy code to the next step in the chain, rather than miss their deadline.

There are dozens of development groups spread around the world each of which develop different components (such as the browser) and releasing new versions every week or so, Each feed into integration groups which pull together sets of components, which in turn are fed into the core platform groups (one each for S60, S40 etc), who also release every week or so with major “stable” releases twice a year. Remember that all the code they receive was developed to tough deadlines, so the quality won't be great in a lot of areas.

Phone development programs, each take branches from these stable releases and start customising them for the product they are working on. They end up doing a lot of bug fixing that should have been done at the component development level, many of these fixes don't make it back to the component teams or the core platform for various political reasons. Worse a lot of bugs never get fixed, especially minor ones which can be swept under the carpet indefinitely. Remember the deadline over quality culture exists in product development teams as well, so it is better to get a phone out of the door on time with only “minor” bugs, than to delay and get it right.

Brewster0101
Nokia + Android would make a great handset.
While that could be done, I don't think it is the solution. If Nokia sold Android phones, then they would be just like all the other Android partners who are subservient to the mighty google. Also they would not be able to compete on features, only on price. Finally Android is a fairly ugly hack that is deliberately incompatible with mainstream Linux and Java in order to force users to use Google services and the Android marketplace.

Instead, I think Nokia should produce a runtime layer that allows future Meego phones to run Android applications in a separate sandbox. That would solve the App store problem and allow Noka to sell future smart-phones “With access to 100,000 apps” while at the same time retaining independence.

I don't actually think an Android runtime layer would be that hard. Android is already open source, and Google already offer an Android emulator as part of their SDK. If you remove the parts related to debugging Android applications, then you would be left with a runtime system that would allow you to run Android on any linux computer, including a Meego phone.