Nokia is desperately trying to reestablish itself as a major contender in the mobile phone space, but it’s no easy task going up against the likes of Apple and Samsung. There’s also a lot riding for company CEO Stephen Elop, who could find himself looking for a new job if the Lumia 920 fails to excite customers the way he envisioned.
Elop has bet the farm and possibly his job on Microsoft’s Windows Phone platform. So far, that strategy hasn’t really paid off, but if Windows Phone 8 turns out to be a success, Nokia’s fortunes could turn around in a heartbeat. The problem with that scenario is that the Lumia 920 announcement didn’t exactly create a feverish buzz the way Elop hoped it would.
Analysts believe the Lumia 920 is a make-or-break product for Elop. When Elop took control of Nokia in late 2010, he put into motion a plan that included dropping Symbian and focusing on a partnership with Microsoft. At the time, he touted a two-year transition period, and the end of that period is quickly approaching.
Despite of all changes, Nokia still cannot turn itself around: sales of Symbian-based smartphones are slowing down, shipments of Windows Phone-powered devices continue to be low when compared to Apple iPhone or Samsung Galaxy S III flagship models. The company continues to make losses as its relationships with its partners among carriers and retailers are getting worse.
It has been nearly exactly two years since Nokia hired Stephen Elop to regain the dropping smartphone market of the world’s largest maker of mobile phones. Since then, Nokia has lost position of the world’s largest maker of smartphones, ceased to be the globe’s biggest supplier of mobile phones, fired tens of thousands of its employees, closed down manufacturing facilities around the world, ceased development of its own operating systems, sold-off its luxury phone division called Vertu and restructured the company’s management for a couple of times.
“Elop has not been able to attract customers and that is what counts. You can say that he has not had enough time, but he has been there for two years. Time is up,” said Magnus Rehle, senior partner in Greenwich Consulting, in an conversations with Reuters news-agency.
In case Nokia fails to make Windows Phone 8-based Lumia handsets popular within a couple of quarters, to avoid fatal consequences, it should focus on rolling out smartphones running on Google’s Android software for millions of consumers in emerging markets who often still prefer Nokia’s brand, Mr. Rehle advised. At the same time, focusing on Android would mark defeat of Mr. Elop’s Microsoft-centric strategy, which would naturally call for the CEO to resign.
“He is totally a Microsoft guy, so it is natural that he would have to step down then,” said Mr. Juha Varis, who holds Nokia shares as part of the Danske Invest Finnish equity fund.
Judging by the success Microsoft had so far with its Windows Phone 7, it is highly unlikely that Mr. Elop could turn the tide with its Lumia 920. The world market share for all smartphone producers who implemented Microsoft’s Windows Phone 7 (Nokia, Huawei, HTC, LG, Samsung, Dell) never exceeded 3,5%. Because Windows Phone 8 looks almost identical to its predecessor, chances are, its world market share will remain unchanged, thus bounding the new Nokia Lumia 920 to be a big failure right from the start.
Since Nokia’s own OS, Symbian has been put under the rug, there will be only one option left for Nokia, to finally join the Android club which owns a vast 68% of the world market share.
To be fair, Elop inherited a company that was already in trouble.
“He has been making some brave decisions and courage is something this company has lacked for a long time before Elop jointed,” Nordea analyst Sami Sarkamies told Reuters. “His starting point was really weak and it’s hard to say someone else would have done a better job.”
That’s true, but at the same time, it was Elop who gambled on Microsoft’s mobile platform. Win or lose, that strategy falls on him.
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