Nokia’s earnings report for the December quarter contained more bad news — profits down 21% from last year, market share down to 31% from 35% last year — but new CEO Stephen Elop says the company is finally taking serious action.
Speaking to investors on the earnings call (here’s the Webcast) Elop said the company is going to announce a major smartphone strategy shift in a conference for investors on Feb. 11.
Most surprisingly, Elop hinted that the shift may involve Nokia embracing with another major phone platform. Here’s the money quote:
“Nokia must compete on an ecosystem-to-ecosystem basis. In addition to great devices, we must build, catalyze, and/or join a competitive ecosystem.”
Elop joined Nokia from Microsoft last summer, and rumours have emerged that the company is considering a partnership with Microsoft’s Windows Phone 7 platform.
But a shift to Android might be more likely.
Here’s why: during the call, Elop emphasised several times that Nokia must maintain competitive differentiation — in other words, it must be able to customise its platform so that Nokia phones still offer something unique. Microsoft is very strict about what partners can do with Windows Phone 7 — it dictates everything from the required hardware to the layout of the buttons. In contrast, Android has almost no limits in how it can be used, although companies must do certain things to get the “Powered by Google” certification.
Other hints in Elop’s remarks:
- His definition of a winning ecosystem is one with a “coherent aggregation of search, advertising, e-commerce, social networking, location based services, entertainment, and unified communications” — the first two points are Google’s greatest strengths
- The strategy shift will be be “elegant in its simplicity” — a major revamp of Symbian or replacement of Symbian with MeeGo doesn’t really fit that characteristic
- Nokia needs an “attitudinal shift” and “must compete as a challenger” in the smartphone market.
Elop also said that Nokia views the market for mid-to-high end smartphones differently from the market for feature phones, and may use different platform approaches for each. In other words, Nokia might stick with Symbian for feature phones and in regions where it’s successful, while embracing another platform for high-end smartphones in North America, where Nokia is weakest.
It’s certainly possible that Nokia will extract some concessions from Microsoft to let it customise Windows Phone 7 in new ways, or that the big strategy shift will in fact be more of the same — Symbian, but better. But Elop was brought in to shake things up, and embracing the fastest-growing smartphone platform in the world would certainly be a big change.
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