Elop brings his knack for software to Nokia

Helsinki: Stephen Elop, Nokia Oyj's new chief executive officer, brings a history of iconoclastic decisions that may benefit the Finnish mobile-phone maker as it competes with nimbler Silicon Valley rivals.

As CEO of Macromedia Inc, Elop focused on Flash internet software at the expense of bigger product lines and orchestrated the company's $3.4 billion (Dh12.4 billion) sale to Adobe Systems Inc in 2005. At Microsoft Corp, he revamped Office and helped boost the business-software division's sales 15 per cent last quarter.

Nokia is counting on Elop's software expertise and willingness to shake up businesses as it tries to revive its fortunes in the mobile-phone market.

While Nokia remains the biggest handset maker, Apple Inc and Google Inc are using their operating systems and applications to set the industry's agenda and build loyalty with consumers and carriers. Elop's experience may help Nokia take more chances with software and give its phones the same kind of must-have features.

Background

"He's got a software background, which is becoming more critical in the smartphone space," said Mark McKechnie, an analyst at Gleacher and Co in San Francisco. "They've found someone with a pretty deep technical background."

The Canadian-born Elop, the first non-Finn to run the company, will need to challenge a slower-moving, consensus-driven culture at Nokia.

Though the company supplies more than a third of the world's mobile handsets, current CEO Olli-Pekka Kallasvuo has been forced to cut prices to defend its falling market share against Apple.

That's hurt Nokia's bottom line and stock price. The shares have fallen more than 60 per cent since Apple's June 2007 introduction of the iPhone.

"The clear challenges Nokia faces are well understood," Elop, 46, said at a press conference in Nokia's hometown of Espoo, a suburb of Helsinki. He will take over for Kallasvuo, a 30-year Nokia veteran, on September 21. "My role is to surface those, to make sure we're dealing with them efficiently — that we're making crisp decisions and moving the organisation forward aggressively."

The company has been bound to the Symbian mobile-phone software at a time when developers are rallying around Apple's iOS and Google's Android operating system. That's hampered Nokia's sales, especially in North America, and held it back from the burgeoning economy for smartphone apps. Nokia also has a more complex product line marked by varying technical configurations, slowing down the design process.

"Nokia is missing out on billions of dollars in revenues in the US because of their under performance," said Neil Mawston, an analyst at Strategy Analytics, a technology consulting firm.

At Microsoft, where Elop served as president of the business software division, he pushed the company to cooperate more with competitors. He showed up for one of his job interviews with an iPhone and a BlackBerry clipped to his belt, in addition to a Windows Mobile device. He also pushed to ensure Microsoft's web software worked well on Mozilla Corp's Firefox and Apple's Safari rival browsers.

Ward off threats

Office 2010, which arrived in June, includes free, web-based versions of Word, Excel and other applications. While the move risked hurting one of Microsoft's biggest and most reliable sources of revenue, Elop wanted to ward off emerging threats from Google's online software and other rivals. The software also includes the ability to connect to Facebook pages.

Elop's division posted sales of $5.25 billion last quarter, topping the $5.05 billion estimate of Brent Thill, an analyst at UBS AG in San Francisco. Revenue rose from $4.57 billion a year earlier.

On the downside, Elop doesn't have relationships with mobile carriers, said Sanjiv Wadhwani, an analyst at Stifel Nicolaus and Co in San Francisco. Nokia will need their support to win over more US customers.

"Elop lacks any visible ties to the operators that control the distribution network in the US," Wadhwani said in a research note yesterday.

At Nokia, Elop will keep working with Microsoft. The companies have agreed to put a mobile version of Office on Nokia phones, and the devices can access Microsoft's Exchange email.

"There may be opportunities in the future to do more work together," Elop said.