Nokia desperate for a turnaround

Nokia desperate for a turnaround

So Stephen Elop, who left a top post at Microsoft in September to lead the turnaround effort at Nokia, knows that his priority is to steal a beat on the competition and quickly get Nokia back in the game.

Nine months into the job, after a reorganisation that will eliminate 7,000 jobs and the introduction of a new operating system from Microsoft, Elop has taken the first visible step in that direction. In Singapore on Tuesday, Nokia introduced a sleek touch-screen smartphone, the N9, with a useful innovation not found on any competing device, including the iPhone and Google’s Android phones.

“It’s optimised for one-hand use,” said Marko Ahtisaari, Nokia’s head of design, whose team devised the N9, which allows users to switch between applications with a thumb, avoiding the need to return to a main menu screen or press a button, something required on both the iPhone and Android phones.

The N9, which will sell unsubsidised for the equivalent of about $670 to $760 for 16 and 64 gigabyte models, is no panacea for Nokia, which is well behind in the fast-growing market for smartphones and was leapfrogged in revenue by Apple in the first quarter.

Late last month, Nokia issued a second-quarter profit warning and abandoned its 2011 outlook, a move that sent its stock tumbling more than 17 per cent. During a 40-minute interview, Elop said Nokia was on the cusp of a productive new phase that would re-establish the company’s credibility and increase its global smartphone share, which the market research firm Gartner put at 27.4 per cent in March, behind Android, with 36 per cent, and ahead of Apple’s 16.8 per cent.

Aesthetically, the N9 is a quantum leap for Nokia in smartphone design, incorporating a sculptured 4-inch glass screen and a polycarbonate plastic body made of solid color – cyan blue, magenta and black – so that scratches are barely visible. But beyond the features, it is the timing and strategy of its introduction that signal a deeper change at Nokia.

Bracing transition
Nokia has gone through a bracing transition since Elop arrived. The company is cutting 4,000 jobs, including 1,500 in Finland, and transferring 3,000 others to a consultant, Accenture. Investors reacted skeptically to news of the Microsoft alliance, sending Nokia’s shares down 20 per cent a day after the announcement. Then came the profit warning on May 31. Since Elop’s arrival, Nokia’s share price has fallen 40 per cent.

Elop acknowledged that the job cuts and transition to Microsoft, considered necessary to restore competitiveness, have been challenging. But he rejected criticism from some analysts who had questioned whether he could have better finessed the timing of the move to Microsoft’s software to limit any damage to Symbian.

In the midst of the battle, Elop spoke rapidly but appeared upbeat, even buoyant. He said the reason for his optimism was that the collaboration with Microsoft on smartphones was going much better than he had expected. Just before the interview, Elop said he spent two hours reviewing plans for the introduction of Nokia’s first Microsoft phones.

“This is still some number of weeks and months before that happens,” he said. Nokia might unveil one or more of the first Microsoft handsets in time for the holiday season, he added.

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