Nokia’s long road back begins with attacking established smartphone order

3 Sep 2013

Conor Pierce, Nokia's managing director for the UK, Ireland and Dubai

The year 2007 will go down in technology history as the year Apple transformed the mobile phone industry forever by bringing out the iPhone and the year the then-established order of tech giants signed their own death warrants by dismissing the iPhone.

(Note: this interview was conducted prior to this morning’s news that Nokia is to be acquired by Microsoft for €5.4bn in cash)

“It doesn’t even have buttons,” Steve Ballmer, CEO of Microsoft, had said at the time.

Future Human

Microsoft, having initially missed the seismic shifts on the technology landscape towards apps, tablets and smartphones, has had to reinvent its entire business model in recent years to be a more mobile-oriented company.

Samsung eventually overtook Nokia as the world’s No 1 mobile phone maker. Nokia had to abandon its flagship Symbian operating system (OS) and replace it with Microsoft’s Windows Phone platform.

BlackBerry has never truly recovered. A new series of devices based on its new BB10 OS failed to ignite sales. In recent weeks, the company established a special committee to look at its alternatives – a sale, a joint venture or partnership.

That sea of sameness

For Irishman Conor Pierce, who is Nokia’s managing director for the UK, Ireland and Dubai, the road back is a long one made possible by tackling what he said is a “sea of sameness”, or near-identical products from Samsung and Apple.

He said Nokia’s strategy hinges on releasing to market Windows Phone devices that are unique, that will differentiate themselves through better camera technology, and by targeting a significant gap in the enterprise space.

In recent weeks, Nokia has brought out a number of smartphones that tackle both the high-end and the lower end of the smartphone business. Some of these are the Lumia 1020, which has a 41-megapixel camera; the Nokia Lumia 925, which has six internal lenses and all-metal body; and a low-cost 4G device, the Nokia Lumia 625.

Pierce said he enjoys being in a challenged state, and the challenge Nokia faces is a big one: Google’s Android OS has 79.3pc of the global smartphone market, according to the latest figures from IDC. Apple’s iOS is in decline as the world awaits the next iPhone models (rumoured for launch on 10 September), and Microsoft’s Windows Phone OS is in No 3 position after selling 8.7m devices, thanks mainly to Nokia. BlackBerry is in fourth position, having sold just 6.8m devices in the recent quarter.

Nokia’s business overall is still struggling. Second-quarter revenues came in at €5.6bn, down 24pc on last year. The company reported that sales of its Lumia smartphones based on Microsoft’s Windows Phone 8 OS were up 32pc to 7.4m handsets sold.

After Nokia pretty much conceded defeat when Stephen Elop, its CEO, described the Symbian OS as a “burning platform” in a memo three years ago, Nokia has had to reinvent itself from the ground up.

Pierce said it’s been a great journey for Nokia. The company launched Lumia as a new brand, and in effect relaunched Nokia, he said.

“It’s been a battle, not only because we’ve been in a challenged position but because we believe competition will get more intense at the high end of the market as the market gets more saturated,” he said.

Changes at Nokia

Hence Nokia’s focus on innovation and features. “We had to change our culture and attitude and I have to say that everything is different,” Pierce said. “We’ve had to accept our position as a challenger, which is very different from our position in the past, requiring a totally different mindset that is obsessed with bringing value.”

Nokia’s focus now is on breaking the two forces in the smartphone world – Apple and Android – and breaking the boundaries of what smartphones are perceived to be.

“That will require a lot of bravery and confidence. It’s not been easy to change the minds of consumers but I’m pleased with the momentum we’ve built,” Pierce said.

In addition to pushing the boundaries on camera technology, Pierce said Nokia intends to fight back with more apps and a free music service called Nokia Music, which provides consumers with more than 22m songs for free.

He said Nokia intends to win in the apps race not by quantity – there are 165,000 apps in the Windows Phone store compared with 800,000 on Android and 900,000 on iOS – but by quality app experiences. One such example is Jobs Lens, built jointly by Nokia, Zillow, LinkedIn and Dun & Bradstreet, which uses the phone camera’s viewfinder to point out which buildings on a street have job vacancies.

Pierce also said Nokia sees a widening gap in the enterprise space or business market that’s not being adequately addressed by either Apple or Android. It is here Nokia can work closely with Microsoft and its Office 365 productivity platform.

“I think we are only at the tip of the iceberg and the appetite among businesses for reliable devices that work securely with IT infrastructures based on Windows is a huge opportunity for us,” Pierce said.

A version of this article appeared in the Sunday Times on 1 September

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years