Mobile
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5/6/2010
05:20 PM
Eric Ogren
Eric Ogren
Commentary
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Nokia Decides Not To Fire Its CEO

Even though Nokia is still far and away the world's number one provider of mobile phones, investors have not been happy with the company's performance. Specifically, there is disappointment that Nokia has yet to field a worthy iPhone competitor. Talk of a leadership change was mounting. Whatever Nokia's CEO said to investors today, it was enough for him to keep his job.

Even though Nokia is still far and away the world's number one provider of mobile phones, investors have not been happy with the company's performance. Specifically, there is disappointment that Nokia has yet to field a worthy iPhone competitor. Talk of a leadership change was mounting. Whatever Nokia's CEO said to investors today, it was enough for him to keep his job.Olli-Pekka Kallasvuo has been with Nokia for more than 30 years. He took over the CEO position in 2006. Apple announced the iPhone in early 2007. Nokia has since lost its status as the main innovator in the mobile space, and shows no signs of recovering it any time soon.

Nokia's market share in the North American market has tanked to well below 10%. Even though the company has released waves of new devices, none of them has been able to convince American buyers to bite. Part of the problem is Nokia's aging S60 operating system. It was innovative when first brought to the market, but iPhone, Android, and BlackBerry have trounced it in the U.S.

"The recession coincided with our transformation, as well as changes in our device portfolio," said Kallasvuo. "With all these factors together, it resulted in a decrease in operating profit and earnings per share, compared with 2008. Despite the challenging conditions, Nokia continued to maintain strict controls on costs and has maintained a solid financial position."

Nokia is moving forward with a new operating system -- called Symbian^3 -- but it won't be available until the third quarter of this year. Apple will surely have a new iPhone available before then. First impressions of Symbian^3 have not been favorable, though Nokia contends that what bloggers have been able to get their hands on is a non-final version. "We are working hard to reclaim leadership in high-end smartphones and mobile computers." he said. "It is critical that we improve the customer experience with the usability of both our devices and our services."

Nokia has instead invested billions of dollars in software and services. Nokia's R&D expenditure was six times that of Apple's in 2009. That budget amounts to some $7.7 billion (14% of revenue), compared with Apple's $1.3 billion R&D budget (3% of sales).

"Our approach has been to concentrate on fewer, competitive products that bring the features of Symbian-based smartphones to more and more people around the world. And we are well on our way to doing that."

Whispers have mounted suggesting that Nokia's investors were unhappy enough in the lack of results from all this R&D to make a change in leadership.

Kallasvuo -- or OPK as he is referred to internally -- faced down those investors today, and was able convince them that the company is moving in a positive direction. He cited a number of factors in Nokia's favor. Perhaps the most impressive is that its Ovi Store has grown to 1.7 million downloads per day. It launch about a year ago. Also, more than 10 million customers have downloaded its free mapping and navigation software, which was first made available in January. Nokia's Ovi Mail has also done well to sign up users, with more than 8 million doing so in the past few months.

"By combining services with devices, Nokia is in a stronger position to grow and create more value for our shareholders," Kallasvuo said. "We still have plenty of work to do, but we have built a solid foundation. We believe in our strategy."

[Via Nokia]

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