Nokia Takes a Measured Approach to Being Bold

One of the big stories to come out of Nokia’s Capital Markets Day was the revelation that it plans to cut its smartphone portfolio in half (see CCS Hotline about the event here). It set me thinking, “Is this a bold move?”

It’s quite easy to argue that it probably is. Why? Because it risks opening big holes in Nokia’s smartphone portfolio at a time when there will be an avalanche of competitors who could fill the gaps (particularly with Android phones).

Yet Nokia has to do something, because I don’t believe its current model is working. Having so many devices has produced mediocrity in many areas: software, hardware (which has historically been a major strength for Nokia) and, most recently, the way it’s delivered services on top of that hardware and software. It’ll be hoping that fewer products equals better products.

Alternatively, you could say that Nokia is merely responding — and perhaps a little late — to the fact that one competitor (Apple) has grabbed a disproportional slice of the smartphone market with essentially one product and that another (RIM) is doing rather well with a pretty limited set of devices.

But is Nokia a company that takes bold moves? And if so, what examples have there been in the past?

The boldest move in Nokia’s history is probably its decision to get into the services business. It has bet billions of dollars on this one, most notably the $8.1 billion purchase of Navteq. When Nokia announced Ovi, I stated it was the “biggest roll of the dice” the company had made since abandoning tyres and TVs for phones, and I stand by this view.

Another bold step that comes to mind is buying Symbian. The problem, however, is that it’s too early to know whether either of these moves will pay off.

However, looking at the bigger picture, I actually think Nokia is a relatively conservative company that has made a series of well-structured and highly accurate long-term bets and succeeded. Its success is partly due to “sisu”, a particularly Finnish trait of inner strength and determination. This characteristic is why I tell Nokia’s rivals that you underestimate the Finns at your peril. Just ask the Russian army!

One major thing struck me while listening to the string of speeches from Nokia’s leadership team at the Capital Market Day event. They all committed to a set of bold and measureable promises, such as fixing Symbian and Ovi, slowing down margin erosion, and manufacturing and distributing phones even more efficiently. These were so explicit that failure is not an option.

That’s certainly a bold move, and if the executive team doesn’t deliver, the speakers for next year’s event could look very different.