Nokia Strategic Views


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Nokia Strategic Views

  1. 1. Getting back to profitability. Learning. Always. Done by: Shang Innovation Office, Nokia Singapore For: Board of Nokia, Stephen Elop
  2. 2. Agenda1. Nokia “in bad shape” 5. Our Competitors2. Why are we in such bad 6. How to reach our goals? shape 7. Annex3. Relook Mission and Vision – Mission – Vision – Looking Ahead4. Mobile Trends
  3. 3. Nokia “in bad shape”• Posted a loss of $523 million in the second quarter• Total shipments of mobile devices are down 20% compared with 2010 – Smartphone sales dropped 25.8%: from more than 100 million in 2010 to 74.4 million units this year – Feature phones sales dropped 16% to 71.8 million units• Overall worldwide market share down from 34% in 2010 to 25%
  4. 4. Reported second quarter 2011 results YoY QoQEUR million Q2/2011 Q2/2010 Change Q1/2011 ChangeNet sales 9 275 10 003 -7% 10 399 -11%DevicesNet sales 5 467 6 799 -20% 7 087 -23%SmartDevices netsales 2 368 3 503 -32% 3 528 -33% MobilePhones netsales 2 551 3 190 -20% 3 407 -25% Source: Nokia 2nd Quarter Interim report
  5. 5. DigiTimes Research S@#%!!! Its not the market’s problem! Among the top 10 cell phone manufacturers, Nokia will be the only one to experience negative growthSource:
  6. 6. Why are we in such bad-shape?• Logistics issues?• Phones too over-priced?• Unreliable phones?• UBS Survey: People just don’t like Nokia? – Not a cool and sleek phone to have. = Low IMPACT on its users. – Have we have fallen back on R&D?
  7. 7. Survey on Brand Loyalty• “consumers…considering changing handset…Nokia appears to have a negative net beneficiaries (less users won than users lost).”• Low Retention Rates => 42%
  8. 8. Why low retention rates? Annex• Missed key game-breaking technological handset trends• Weak brand – Poor marketing of products – Lack of support from a major carrier• Unusual design – Thin phones, flip phones, touch screens• Failed OSes -> Symbian, Meego – Slow to get off this OS• Insignificant Ovi app store – 20,000 titles in comparison to Apple’s 55,000 – Poor Execution
  9. 9. Relooking at Our Mission and Vision• Mission Connecting People.• Vision To build great mobile products and to enable people, like us, to get more out of life’s opportunities through mobile.• Our Plans: To regain our former position of being the top mobile company, by growing our world-wide market share to 40%.
  10. 10. Looking Ahead• Our Plans: To regain our former position of being the top mobile company, by growing our 2015 and world-wide market share to 40%. beyond: for Innovating 2014: Regain our top the future position in the mobile market 2012 - 2013: Regain our lost Goal - 34% 40% market share and start new initiatives planned Oct - Dec 2011: Goal - 25% 34% Consider why we are failing and how to reinvent ourselves
  11. 11. Mobile Phone Growth Areas• Nascent technologies including NFC, Mobile Payments/Wallets – Mobile Smart Phones enables the ‘touch’ and on-the-go in contactless and paperless billing• LTE and WiMAX multimode phones• Mobile 3D and AR new power technologies• GPS capabilities, location technologies• Mobile TV
  12. 12. Mobile Phone Growth Areas• Market areas – Emerging Asia • Western China • Rural India • Vietnam, Cambodia and the Indo-China region – Africa – South American giants • Brazil
  13. 13. Paying Attention to Our Competitors
  14. 14. Our Competitors• We must pay attention to what really matters = Paying attention to what our competitors are doing• Apple’s innovation and sleek design with its abundance of apps offering a lifestyle• Google’s Android phones are also offering as many apps as the AppStore coupled with the freedom of Open-Source• RIM’s Blackberry is slowly dying• Low-end manufacturers like ZTE and HuaWei compete on extremely low pricing
  15. 15. So what can we do to reach our goal?1. Change of Organisational Structure2. Low-cost SmartER-Phones3. Changing to a better OS – Suggestions for WP7 – Baidu’s Yi (licensed under another brand)4. NFC Strategy5. Future location-based developments6. Further Development of the Meego platform – Deep social integration
  16. 16. Change of Organisational Structure Stephen Elop CEO Innovation Office Juha Äkräs Henry Tirri Jerri DeVard Timo Ihamuotila Esko Aho Human Resources CTO CMO CFO Corp R&R Manager Mobile phones Sales Legal & IP Corporate Smart devices Development Location and Markets Commerce
  17. 17. Nokia’s Competitive Strategy High DifferentiationInnovation andfunctionality hTC LowInnovation High Cost Low Cost Cost Effectiveness
  18. 18. Low-Cost SmartER-Phones• Create a blue ocean for Nokia smart phones – Budget smart-phones – Allows for dual-SIM functions – Provides Near Field communication (NFC) technology to boost functionality and convenience for its users• This will also create demand for NFC accessories like headsets and wireless music speakers
  19. 19. Nokia’s WP7 Strategy Annex• Launch of WP7 phones in 2012• Should join forces with Microsoft in encouraging the creation of more WP7 apps• Increase the number of apps in WP7 MarketPlace
  20. 20. Nokia’s partnership with BaiDu Yi• Alternative OS if the WP7 phones do not take off – Why not adopt Google’s Android? Purchase of Motorola• Newest member of mobileOS scene = Baidus Yi• What about Dell? – Baidu already has licensed Yi to Dell – but Dell is new• Opportunity for "guan xi“ and tap into the Chinese market• Opportunity to move factories to cheaper countries like China
  21. 21. Nokia’s NFC “Acceleration Strategy"1. Releasing NFC enabled phones – Allow mobile payment using NFC apps2. Partnering Orange, a major carrier, and creating its NFC eco-system i. Aim to "seed the market" with NFC-enabled SIM cards and devices ii. Orange wants to move into the Asian emerging markets and a "worldwide alliance" charged with growing the NFC market would help them get there iii. Orange will help solve the interface problems
  22. 22. Nokia’s NFC “Acceleration Strategy"3. Investing in NFC or mPayment or mWallet related mobile startups4. Organise startup competitions and student business plan competitions5. Distribute NFC services to encourage adoption
  23. 23. NFC “Standard"• Introduce NFC-ready devices (and related technologies) using its standards• Achieve this together with a partner mobile carrier like Orange• Potential for newly created NFC accessories, working together with the new NFC smart phone, like headsets and wireless music speakers We want to make the ‘N’ in NFC, stand for Nokia!
  24. 24. Future of ‘Nokia’FC • We would move from NFC-enabled secured SIM to secured-NFC built-into the smartER phone • Enabling Nokia to integrate horizontally and not need to integrate its systems with the TTP and the MNO SIM Card TrustedManufacturer Service SIM Card POS Service Applicatio & Manager Manufacturer Provider n Owner Card Issuer (TTP) MNO
  25. 25. Future location-based development• Through Navtaq, Nokia will enable indoor location-based tracking – a new product called “Destination Maps”• It is a new in-built miniaturize technology enabling both asset and people tracking• Aims to provide the data that would enable guidance services inside public buildings• Functions – “Indoor GPS” functions – Security functions – Marketing & Advertisement infrastructure
  26. 26. Further Development of the MeeGo platform• Develop the MeeGo platform further – Deep social integration – Following the foot-steps of Apple’s iOS• Social messengers (enabling groups) – Similar to Blackberry’s BBM and iOS’s iMessenger – Deep integration of What’s App• Allow more personalisation of content from mobile browsers and native app content – Creating shared cookies function• Social gaming within the phone – Widgets – Alerts
  27. 27. Thank you for listening ☺
  28. 28. Annex
  29. 29. DigiTimes Research AnnexSource:
  30. 30. DigiTimes Research S@#%!!! Its not the market’s problem! Among the top 10 cell phone manufacturers, Nokia will be the only one to experience negative growthSource:
  31. 31. Nokia getting whacked in “home country” India• India although an important country to Nokia is losing its market base steadily.
  32. 32. Why are we in such bad-shape? Annex• Logistics issues?No, we get our phones to places on-time and we neverhad that problem before even during the period whenthere was greater demand for our phones.• Phones too over-priced?No, we have been adopting the pricing scheme making usthe lost leader so our phones are not over-priced.• Unreliable phones?No, users do not have a lot of trouble with our phones.• UBS Survey: People just don’t like Nokia? – Not a cool and sleek phone to have = Low IMPACT
  33. 33. IDCs Mobile Phone Technology and Trends AnnexIDCs Mobile Phone Technology and Trends service provides acomprehensive, global analysis of the key technologies and markettrends relating to both consumer and enterprise mobile devices.Markets and Subjects Analyzed• Smartphones and feature phones• Wireless access standards• Evolution of wireless technology trends• Mobile device operating systems and browsers• User interface technologies, including touchscreen• Multimedia and input methodologies• LTE and WiMAX multimode phones• Nascent technologies and services, including NFC, mobile payments, 3D, and AR new power technologies• Emerging markets and entry-level smartphones• GPS capabilities, location technologies, and presence• Platform creation• Mobile TVSource:
  34. 34. IDCs Mobile Phone Technology and Trends AnnexSource:
  35. 35. Change of Organisational Structure Annex• bureaucratic organisation flat structure A recent finding stated that “… (the) number of positions reporting directly to the CEO has gone up significantly over time while the number of levels between the division heads and the CEO has decreased.” The advantage is as GE CEO Jeffrey Immelt-“faster decision making and execution” A great believer of these benefits Apple’s late-CEO Steve Jobs• Innovation department reporting directly to the CEO
  36. 36. Flattening the Firm AnnexSource: THE FLATTENING FIRM by Raghuram G. Rajan
  37. 37. Flattening the Firm Annex• Using a detailed database of managerial job descriptions, reporting relationships, and compensation structures in over 300 large U.S. firms• Find that firm hierarchies are becoming flatter• The number of positions reporting directly to the CEO has gone up significantly over time while the number of levels between the division heads and the CEO has decreased.• On the one hand, the CEO is getting directly connected deeper down in the organization, a form of centralization. Increasing span of control suggests he is more directly involved in decision-making across a greater number of organizational units• On the other hand, decision-making authority and incentives are also being pushed further down, a form of decentralization and empowerment• Decisions need to be taken more quickly to take advantage of fleeting opportunities in the marketplace• Faster decision making and execution as it takes time for each managerial layer to give approval to a decision• final decisions are delegated further down a hierarchy with attendant loss of top management control Source: THE FLATTENING FIRM by Raghuram G. Rajan
  38. 38. Porter’s Theory on Competitive Advantage
  39. 39. NFC Eco-system Annex
  40. 40. 2 Ways to Achieve NFC Annex 1. 2.