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Nokia no longer on ‘burning platform’
Nokia no longer on ‘burning platform’

Nokia no longer on ‘burning platform’


Business Day - Feb 13th 2012, 08:25

Nokia no longer resembles a man standing on the edge of a burning oil platform with the sea as his only option for survival, according to CEO Stephen Elop. 

Mr Elop said in Sandton on Friday that more than a year after writing the now famous "burning platform" memo, the Finnish cellphone company was facing a new era of growth. This was despite persistent investor concern about its future and ability to compete, particularly with giant Apple, in the smartphone sector.

At one stage, analysts said Nokia would be an ideal takeover target for companies such as Microsoft, with whom it now has a strategic partnership. Analysts have not ruled out Microsoft making a bid for the company.

But Mr Elop said Nokia’s future was secure even though tough decisions had to be taken and implemented to refocus the business, slash costs and increase its competitiveness.

"That (burning platform state) was the position more than one year ago and a lot has changed since then," Mr Elop said during the second leg of his first African tour as head of Nokia. He flew to SA after visiting the company’s research and development unit for India, the Middle East and Africa, which is based in Kenya.

Technology analyst Arthur Goldstuck agreed yesterday that Nokia’s future was brighter than it had been a year ago. "The previous leadership of Nokia was so focused on their massive global market share, and so strong at the bottom of the pyramid, that they didn’t see it crumbling from the top," he said.

Mr Elop, a former senior executive at Microsoft, is the first non-Finn to head Nokia after taking over from Olli-Pekka Kallasvuo in September 2010.

Soon after taking over, Mr Elop wrote the memo in which he outlined the opportunities the company had missed and the challenges it was facing from nimbler competitors. He said the memo, which he never thought would attract such global interest, was meant to share his honest view of where the company was.

"I sat down to write the memo as a call for action and, a year later, everyone in the company says Nokia is changing," he said.

He said his optimism about Nokia’s future was based on a new strategy he unveiled in February last year, which has since been followed by a raft of initiatives that included staff cuts.

Nokia had also shifted its smartphone operating system from Symbian to rival Microsoft’s Windows Phone 7, a decision that stunned technology analysts given the rivalry between the two.

Nokia also released two new versions of its Symbian operating system, the Meego-based N9 and five dual SIM feature phones, and had since sold more than a million units of its relaunched flagship phone, the Lumia 800.

The company said last week that it would cut 4000 jobs at plants in Finland, Hungary and Mexico and shift smartphone manufacturing to Asia. The cuts bring the number of job losses since Mr Elop took over to more than 30000. He declined to say whether there would be further job cuts, saying Nokia would continue to monitor and respond to changing conditions.

However, he said he would not lose sleep over the pace of growth of rivals, including Samsung, which said in November that it had shipped 10-million units of its Galaxy S2s smartphone since its launch seven months earlier.

Mr Elop said Nokia would increase its investment in SA and Africa this year to grow market share in both the entry-level and smartphone segments.  

Read more about: growth | mobile phones | electronics | nokia

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