Every summer for the last four years while Apple Inc shipped a new iPhone, Nokia Oyj managers vacationed at their lake cottages in Finland.
“In mid-July, Nokia House is a ghost town,” said Adam Greenfield, managing director of Urbanscale, a design consulting firm in New York, who worked for Nokia from 2008 to 2010. “If you need a decision and the key person’s at the summer cottage? Forget it. You’ll resolve that issue in September. It’s something that hampers their agility.”
Speeding up Nokia’s product development is at the top of Chief Executive Stephen Elop’s agenda as he tries to meld the Finnish company’s handsets with Microsoft Corp. software to narrow the widening gap to Apple and Google Inc. Nokia has delayed most of its top-end smartphones in the last two years, resulting in sliding profit and market-share losses. Its shares have dropped 25 per cent since the Microsoft deal was announced. Elop, a former Microsoft executive brought in as CEO in September to turn the company around, is relinquishing Nokia’s homegrown platforms Symbian and MeeGo for Microsoft’s Windows Phone 7. Nokia may provide a peek at its first Windows phone this year, though it’s promising volume shipments only in 2012.
“It’s risky even to wait that long,” said Rob Sanfilippo, a consultant with Kirkland, Washington-based consulting firm Directions on Microsoft. “It would be great if they had them out by the middle of the year, June or summer, even if it’s one device to show that there’s real progress happening quickly.”
Elop needs to narrow Nokia’s productivity gap to boost margins. Apple squeezes three times more revenue per employee than Nokia, while Taiwan’s HTC Corp. gets twice as much, Bloomberg data show. Microsoft’s revenue per employee is 1.5 times Nokia’s.
Both Nokia and Microsoft need the collaboration to work. Nokia’s smartphone market share has tumbled to 30.8 per cent from 50.8 per cent when Apple started shipping the iPhone in June 2007. Redmond, Washington-based Microsoft, with about 3.4 per cent of the smartphone market, is piggybacking the world’s largest mobile-phone maker to dent the emerging dominance of Apple’s iOS and Google’s Android software.
An early test for the partnership will come as Nokia folds its services into Microsoft’s world: Office, Exchange corporate e-mail, Xbox games, Zune music products and Bing search.