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Year: 2009

Steve Number Two and the World of Microsoft

The fact that Nokia was considering changing its CEO had been known for a long time, with Nokia publicly admitting at the end of 2009 that it was considering a change at the top. It didn’t matter that journalists still couldn’t spell the name of the current CEO, Olli-Pekka Kallasvuo, even after all these years (let alone conjugate it in Czech). Instead, there was hope that a global leader would bring global ideas, that someone with charisma would get involved, someone with whom the cold and rather conservative Kallasvuo could not compete. And that he would kick the company forward. Along with the fact that his name would determine the direction of Nokia for years to come.

And so, when Nokia announced in May 2010 that Canadian Stephen Elop would become its new CEO, the first wave of panic ensued. Not because he is Canadian or another Steve (after Jobs and Ballmer), but because Elop was Microsoft’s former chief operating officer. If until then it was unclear where Nokia was headed, from that point on, few doubted that it was running toward Microsoft, even though management loudly denied it and Elop himself emphasized that all aspects needed to be considered. Nokia’s shares, which had been stagnant at the beginning of 2010, plummeted in May.

What Elop and his team discovered was revealed to the world at a conference held on February 11, 2011, and it stunned everyone except the most die-hard pessimists. Nokia will use Microsoft’s Windows Phone 7 operating system for its future smartphones, which Microsoft has not yet made a big splash with and has performed worse than its previous versions. In return, Nokia will receive billions of dollars (i.e., its half-year profit) and the opportunity to continue participating in the development of Windows Phone 7 and have it “significantly customized” for its phones—it is not customized for other manufacturers, which is also contributing to the “rush” to sign the license agreement. Symbian is left with the role of cheap smartphones and a quick retirement. Elop’s statement at the conference sounded very harsh and uncompromising, so much so that Nokia’s PR department later had to put out the fire and promote the vision of a gradual replacement of the operating system.

And what else was strange about the announcement? Elop said that Nokia would not have its first WP7 smartphones available until the end of 2011, meaning it would not be supplying them immediately. In short, it has nothing available right now. Just a statement. What will the phone giant be producing for almost a year? Symbian phones, of course, according to the company.

Not only Nokia fans were left sitting on their backsides, but also developers, traders, and the stock market. Shares are falling at the fastest rate in history and are now definitely sliding below the $10 mark. This announcement is generally understood as the death of the Symbian and MeeGo operating systems, although various Nokia managers are trying to downplay this interpretation, and Nokia itself claims that it will support Symbian for another five years, until 2016.

In such a situation, it is hardly surprising that sales of Nokia smartphones are declining. For the first time in history, sales are not growing, and the record of 28.3 million units from the last quarter of 2010 remains unbroken, even though the smartphone market is otherwise growing at a quarterly rate of approximately 6%. In the first quarter of 2011, Nokia sold “only” 24.2 million smartphones, which is still enough to defend its leading position.

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