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Nokia's new Chief Executive Stephen Elop (left) and Nokia's Chairman of the Board Jorma Ollila attend a news conference in Espoo in this September 10, 2010 file photo. (LEHTIKUVA/REUTERS)
Nokia's new Chief Executive Stephen Elop (left) and Nokia's Chairman of the Board Jorma Ollila attend a news conference in Espoo in this September 10, 2010 file photo. (LEHTIKUVA/REUTERS)

Special Report

Welcome to Nokia, Mr. Elop Add to ...

The company many see as among the most innovative in the world is a strange mix of intensity and laid-back cool. Its products are revolutionary and have transformed an entire industry, says the author of a definitive history of the firm. The mobile phones it makes, says one executive, are a perfect fusion of form and function, both "beautiful and practical."

Apple, right? Actually, it's Nokia - or at least Nokia at the turn of the century, when the Finnish firm had just become the biggest mobile phone company in the world with a market value of $250-billion (U.S.) and visions of the cellphone as a fashion accessory, a substitute for cash, even as a handheld computer.

We know what happened next. Within years, Fortune magazine was asking: "Has Nokia Lost It?"; today, North American rivals such as Apple and Research in Motion have stolen the lead in high-end smart phones while Asian competitors are loosening Nokia's grip on the mass market. Investors who have checked Nokia's stock price recently - using an iPhone or a BlackBerry, probably - may know the stock has fallen back to 1998 prices, putting the company's value at about 15 per cent of its peak. The cool factor? Gone.

Granted, Nokia is still easily the biggest cellphone maker in the world, with incredible market share in fast-growing markets such as India. But as its margins shrink and its Symbian operating system loses ground to upstarts like Google's Android, the company risks losing even that title.

Which is why, on Sept. 10, Nokia announced that it was replacing its CEO and had dialled up what it hopes will be some Silicon Valley mojo.

Enter a Canadian who headed Microsoft's business division. Stephen Elop, the first non-Finn to head Nokia in its 145-year history, begins this week, just in time for the autumn equinox that heralds the long, dark Finnish winter. His appointment is part of a wholesale regime change: Chairman Jorma Ollila, the architect of Nokia's cellphone success, and smart phones chief Anssi Vanjoki have said they will follow CEO Olli-Pekka Kallasvuo out of the door.

Nokia is on a path often trodden in the unforgiving world of consumer electronics, an industry which is built, after all, on obsolescence. In the beginning comes a great product slightly ahead of its time, and a charismatic leader. As things mature, imperceptibly at first, habits harden, bureaucracy grows. Once more nimble rivals seize the initiative, the buzz - and fast-money investors - vanish.

Philips, which convinced the world it needed electric razors and invented the home video cassette recorder, has now largely given up competing in consumer electronics and is concentrating on health care equipment and lighting instead. Sony, while still a force in everything from televisions to Walkman music players, has seen better days and is cutting 10 per cent of its global manufacturing capacity.

Most famously there's Apple itself, which after early success with personal computers went through a decline in the late 1980s and early 90s that threatened to sink the company. But following the triumphant return of Steve Jobs in 1996, the firm came back with a vengeance. Even though it was at one stage forced to accept a $150-million investment from then arch-rival Microsoft, it went on to achieve phenomenal success with products like the iPod and iPhone.

Like Apple, Nokia is determined to transform itself. In 2007 it set out to add software and web services to its existing offerings. So far, the results have been mixed. The arrival of Mr. Elop is partly an admission of that, as well as being an attempt to boost the vision of a new, software-focused Nokia.

"What they really need is a software guru," says Tim Bajarin, president of Creative Strategies, a California-based analyst firm, who has been following Apple for 30 years. "This has been a huge hole in Nokia's strategy. They knew that building the software ecosystem around Nokia hardware held the key to their future."


On the morning of his first appearance as Nokia's CEO-designate two weeks ago, Mr. Elop didn't give the impression of being a magic man. Dressed soberly in a neat suit and tie, he blended in with the Finnish executives surrounding him. Compare that with his predecessor Mr. Kallasvuo, who gave the keynote speech at this year's International Consumer Electronics Show in Las Vegas wearing a black T-shirt and jacket as if channelling Apple's Steve Jobs.

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  • Nokia Corp
  • Apple Inc
  • Updated July 21 4:00 PM EDT. Delayed by at least 15 minutes.

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