Five Things Nokia's New CEO Needs To Do

Nokia CEO Stephen Elop

Olli-Pekka Kallasvuo has run Nokia since 2006. One of his main charges to was to reinvigorate Nokia's presence in the U.S. Instead, Nokia's value has plummeted by half -- to $37 billion -- and its mindshare in the U.S. is at its lowest point in years. What happened?

Kallasvuo, known affectionately as OPK, was never a product guy. Under his direction, Nokia has yet to see a major hit smartphone. One could argue that the N95, which hit the market in April 2007, was a hit, but that phone was mostly developed under OPK's predecessor. Since OPK has taken over, Nokia has produced a string of decent Symbian S60 smartphones that absolutely no one is excited about.

The 2007 introduction of Apple's iPhone and the 2008 introduction of Google's Android platform -- both of which feature touch-based user interfaces -- have created a seismic shift in the smartphone market and drastically altered what consumers want from their devices. Nokia attempted to respond, and fielded such half-baked efforts at the XpressMusic 5800, N97, and N97 Mini. The latter two were so bug-ridden as to be unusable and were monumental flops. So what has OPK been up to?

Reforging the software and services businesses have been Kallasvuo's main achievements at Nokia -- though that's not saying much. The company has reorganized its internal structure at least three times under OPK's leadership, shuffling management, divisions, and focus of the separate business units each time. It has also shifted operating system strategies from Symbian to Maemo to MeeGo, creating a rift with developers who want one solid platform to target.

The end result is a huge organization -- Finnland's largest employer -- that is sadly adrift and without either a paddle or a compass to help it regain its bearing. So what can Elop do to turn things around for Nokia in the U.S.? Plenty.

First, Nokia needs to pick a single smartphone platform and move forward with it -- quickly. Nokia invested billions in Symbian, open-sourced it, redesigned it, and has spent countless man-hours trying to put it on the same playing field with the iPhone and Android. Despite its efforts, the look and feel of Symbian^3, the company's latest variant of Symbian, feels as old and outdated as the OS did several years ago.

Nokia has also been toying with Linux forever. Its platform of choice was Maemo, which was used in its Internet tablet devices. Earlier this year, Nokia and Intel decided to join their mobile Linux platforms together and formed MeeGo. MeeGo was initially announced as a mobile computing platform, but not necessarily for smartphones. Later, Nokia and Intel said that a smartphone-specific version of MeeGo would be distributed.

Whether it is Symbian or MeeGo, Nokia needs to choose one and focus all efforts on making it as solid as possible. You don't see Apple, Google, RIM, Microsoft or any other smartphone maker actively developing two separate smartphone platforms. Each focuses on one. Nokia needs to choose one and make it easy to develop for, make it easy for end users to navigate, and for the love of god give it a modern user interface that offers the best of today's capacitive touch screens.

Second, Nokia has whip up a hit smartphone. The N8 is currently on deck to be Nokia's next potential hit. It runs Symbian^3 (groan) and goes on sale in late September in several markets around the world. Nokia has also made mention of a touch-based phone called the E7 that might debut during Nokia World on September 14. Sadly, Nokia has a long history of over-promising and under-delivering with its smartphones, which are often announced six to nine months ahead of their release in the market.

Rather than develop a half dozen smartphones to compete, Nokia needs to take a cue from Apple and focus all its efforts on perfecting one super phone. Once it has a solid hit under its belt, it will be in a better position to move forward with more designs.

Third, Nokia needs to clean up the mess that is its software and services business. Aside from Nokia fanatics, no one in the U.S. has heard of or understands what Nokia's Ovi brand is. Everyone knows what the iPhone App Store and Android Market are. Nokia needs to come up with a much more visible and friendly way for consumers to reach applications, content and services. The Ovi Store -- Nokia's own application storefront -- is a horror to use. Despite a recent redesign, it needs to be cleaned up and streamlined.

Fourth, Nokia needs to find a way to convince users to invest in Nokia as their platform in the same way that users invest in Android or the iPhone. Android and iPhone users are buying into an ecosystem when they purchase their smartphone, and right now Google and Apple have solid ecosystems in place that make sense for consumers. Nokia doesn't.

Fifth, Nokia needs to foster better relationships with U.S. carriers. For years, Nokia has been resistant to giving U.S. wireless network operators control over device design and features. This strategy has gotten Nokia nowhere. Rather than choose to offer Nokia's best devices, carriers have been offering the company's lowest margin, entry-level phones instead. Apple may have had the gumption to put its foot down when dealing with AT&T, but Nokia is not in the same position. It needs to listen to the U.S. carriers, do what they want, and make devices that the U.S. carriers are willing to sell. If Nokia can't or won't do that, it will never succeed in the U.S.