It was over a year ago that Nokia and Microsoft announced their partnership to make Windows Phone the primary operating system for Nokia’s smartphones. But the real test in the consumer market starts now, the first full year of Nokia selling its new handsets, with a portfolio of four models shipping in a range of markets, including China.
Stephen Elop, the CEO of Nokia, is all too aware of the challenge ahead. Although his company is still the world’s biggest handset maker, its leadership is now much more narrow, at 23 percent, according to Gartner. And its fightback strategy on Windows Phone is effectively starting from scratch: Windows Phone accounted for only 1.9 percent of smartphones sold in Q4 2011, a decline on the 3.4 percent it took in the same quarter in 2010.
We got a chance to sit down with Elop earlier today, in a meeting room at the top of Nokia’s ginormous MWC stand, to talk about some of the challenges and opportunities the company is facing up ahead, and how its news this week will play into that:
On innovation and whether Nokia is moving fast enough to change its ways and adapt to a new world dominated in mindshare and market share by Android and iOS. “We have absolutely changed the clock speed of Nokia,” Elop insisted, citing the Lumia 800 and 710 introduced in October, and the 900 and 610 that have come out since. “The pace we’re accomplishing this, including the next builds of the WP software, will continue at an accelerating pace.”
He says it’s a two-way street: with the lower-priced Lumia, the 610, and its aim for the Chinese market, actually helping influence how Microsoft was developing the OS. “That’s a good example of that collaboration working.”
On that 41 megapixel camera, and why it is that Nokia put it into a Symbian device rather than its line of Windows Phones. Elop says it’s because Nokia wanted to introduce the product as soon as possible; then work out the engineering to get it on to a Windows device.
“This is the type of innovation that Nokia has traditionally been known for,” he said. “It was more important to bring that to the market, and to see what works and what needs to be improved.” He says that the technology will make it into its Windows devices, too: “This will live on in the future,” he said. Unlike Symbian, he might have added.
On tablets. Recall that yesterday Nokia introduced, Reader, which will be its first foray into e-reading and possibly one of the surest signs yet of what it needs to get in order before it really launches a tablet. Today he would not be drawn out on whether Nokia will be making one and when. The software from Microsoft is getting more uniform across screens: “That is something really interesting to us.”
The future of Symbian. So many rumors that Nokia is pulling out of Symbian altogether, and that what they’ve announced there this week (the 808 Pureview, with the 41 megapixel lens), could be their last. No answer to that, but Elop is also aware of alienating those who have remained loyal to that platform. Indeed that is a tricky line to play because those are his first natural customers for the new devices.
What’s next in line for innovation, after the camera? Location-based services, he says, citing the rise in citizen journalism, and people walking around and photographing and documenting events, as a mark of that. “I think you will see more innovation around that activity. A big part of our strategy going forward will be location-based services.”
That makes sense, given how many assets Nokia already has in this area: Nokia Maps, Nokia Drive and Transport among them. What’s interesting is that Nokia is keen to spread as much of that to other OEMs building on Windows Phone as for itself — which of course can help the services gain better critical mass.
Going cheaper and smarter. Elop says that the 610, the least expensive yet of Nokia’s Lumias, at $250, is probably just the first step before we see devices that are priced even lower. He calls this model the “realistic first step.” He notes that the more expensive 710 is being offered for $50 on contract in the U.S. With this phone priced substantially lower, that could imply free Lumias.
On Motorola and Google. He’s in the dark on what happens next. “They now have in their hands a hardware platform.” It’s a mark, he says, of how “the Android ecosystem has shifted quite a bit over the last year… It’s a hard one to predict.”
He notes that he doesn’t see the Google/Motorola deal impacting Nokia. “Whatever goes on there will be activity in Android. But just think if we made a decision to go Android instead of Windows Phone, how would we feel right now?”
On following an Apple (few) versus Samsung (many) model for handsets. “If you think of Nokia a few years ago where there was a large number of devices, we will be a lot more pared down going into the future. It’s not a single device strategy but there will be a paring down.”
On competition from other Windows Phone makers. He welcomes the likes of ZTE, HTC, Samsung and others making devices on the same platform as Nokia’s because “The principal competition is Android, and then Apple.” He notes that “a factor of the perceived success of Windows Phone” will be whether those many handset makers develop and sell those devices:
“When it comes to competing because there are too many Windows Phones? That would be a nice problem to have.”
The “phablet” mid-size devices like the Galaxy Note from Samsung, that straddle the break between tablets and smartphones. “Tablets are an opportunity, and smartphones up to a certain size are an opportunity,” he says. “We are looking closely [at the mid-size tablet market] and looking to see whether it will catch on.” He says he likes the form factor of the Lumia 800 the most because he can reach across the whole screen with his thumb. “But different things for different people in different markets.”
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