Nokia's Transformation Journey

I am attending Nokia World in London. For those of you not familiar with this event, that’s usually the conference where Nokia shares its vision and strategy, announces new products and services, and demonstrates its latest innovation. This is also an interesting opportunity to hear thought leaders share their vision of the mobile industry (this year, Sir Tim Berners-Lee). See the agenda here.

The 2010 edition is already unique in Nokia’s history due to the recent appointment of Stephen Elop as the new CEO and yesterday’s resignation of Anssi Vanjoki, currently EVP of Nokia's Mobile Solutions unit. Needless to say there is lots of speculation about Nokia’s future. Let me wrap up some thoughts:

  • It’s precisely all about organizational and cultural issues. No one should be surprised to see other departures as well as the arrival of new executives close to the newly appointed CEO. Nokia’s real challenge is to make sure these changes are implemented quickly enough -- without totally disrupting existing processes -- to keep pace with innovation. The simple fact that Nokia appointed a non-Finnish CEO, coming from the US and from Microsoft and the software industry, is another acknowledgment that Silicon Valley has become the new mobile innovation hub. Nokia’s cultural heritage is precisely to constantly reinvent itself. Tectonic shifts are shaking up the traditional mobile ecosystem, and Nokia needs to be much more agile to compete with the likes of Google and Apple.
  • Nokia’s long-term strategic goal is to become the leader of the mobile solutions space. It views itself as a challenger now. It is true that it needed to catch up with the competition in the high-end smartphone segment where software plays a key role. I think the new flagship device (N8, available later in September at €370 before taxes and subsidies) is doing a great job with a revamped user-interface experience. My “Ovi maps” experience was quite compelling and seamless. It is a great device but not necessarily one that will set the bar for a long time in a highly competitive landscape. The challenge here is really to master product life-cycle management, to integrate early in the process the services that consumers are likely to use in two years’ time. Out of the range of devices announced today (N8, C6, C7, and E7), the focus is on Symbian^3 (Nokia plans to ship 50 million of these devices but did not share a time frame for this forecast). “Symbian is back” as Jo Harlow, SVP Nokia, summarized it. While addressing the mass market today with Symbian 3 and later with Symbian 4, the key issue will be Nokia’s ability to lead the pack again with differentiated MeeGo devices moving forward.
  • The challenge is still to offer a fully integrated OVI brand experience. Because of poor execution in 2009, the industry consensus — particularly in the US, where Nokia has a small footprint — was that Nokia was not in a position to catch up with the Apple App Store or Android Market. Reports of the Ovi Store’s death are greatly exaggerated: Nokia simply cannot afford to fail. On the contrary, it is now catching up, particularly in emerging countries, where Nokia clearly differentiates thanks to its unique local presence and relationships with operators (mobile billing is currently supported in 27 countries). On the contrary, Nokia made the bold claim that Ovi will be the leading store by 2013. It is currently reaching 2M downloads a day (versus 1.7M back in May 2010) and has 135 million active users worldwide. While this number looks impressive, bear in mind that a user is considered active on a 6-month period and that this figure includes multiple Ovi experiences, including the 14M Ovi mail users. That being said, the rhythm of growth is interesting, with 200,000 sign-ups to Ovi per day. It took a couple of years to move Nokia services under the Ovi umbrella. The new challenge is now to make sure that the Ovi experience is seamless enough to nurture the overall Nokia brand. The key attributes of the Ovi (by Nokia) brand experience will depend on how tightly and seamlessly Nokia interconnects devices and services.