Tuesday, February 22, 2011

Analysts on Nokia-Microsoft Strategy

Background: Nokia Industry Analyst Relations met with 150+ industry analysts at Mobile World Congress (Barcelona) and Nokia Strategy and Financial briefing (London).
Here is a summary of analysts’ first feedback on the new Nokia strategy and recommendations to Nokia:
Overall:
Move to Windows Phone bold and necessary move – and analysts overwhelmingly agree that it was the best option available

‘Nokia had to do something – it was going backwards in relation to the rest of the market and needed to make some tough decisions.’
‘Symbian couldn't possibly be successful, and MeeGo was taking far, far too long to bring to market’.
‘Without such a radical but decisive change in direction Nokia would have died a slow and painful death over the next 5 years.’
Most analysts think that Microsoft is the bigger winner
‘Huge win for Microsoft. WP had a slow start with none of the vendors giving it priority. So from Microsoft's perspective this is fantastic.’
‘It seems lopsided in Microsoft’s favor. The challenge will be to gain some balance’.
although there are also opposite views
‘Perhaps more strategically vital to Nokia than to Microsoft’.
Success or failure depends on how two different corporate cultures are able to work together
‘You made the leap, but that just buys you a few seconds. Now you have to decide what happens when you hit the water.’
‘Partnerships like this usually fail to accomplish anything. This one, however, has much better than usual odds because both companies desperately need this to work.’
Execution on a licensed model is key
‘What exactly is going to be different this time and why should we believe that you can execute this time around as you haven’t been able to do it in years?’
And now it’s critical to get a ‘WOW’ WP device out as fast as possible.
‘The very first phone is critical. A great WP device would build confidence both externally and internally.’
‘It must be dazzling, a clearly competitive experience to iPhone and Galaxy (best of Android), and preferably with some unique LBS features.’
‘A beautiful flagship smartphone in the US during Q4 2011 will put Nokia right back in the game. But a dud design for the very first model will heap huge pressure on Nokia.’
In Mobile Phones you must maintain leadership in emerging markets against Chinese challengers, preferably through services - so that customers can be migrated to smartphones as incomes rise and prices fall.
‘Also, for emerging markets it is important to explain how the new strategy will positively impact their countries.’
Future Disruption perceived to be the weakest pillar of the strategy.
‘It was not well articulated, and relegating MeeGo to this category makes it seem even less "mission critical". It feels like it got thrown in so that you could point to a forward looking strategy while trying to right the ship.’
Concerns
Differentiation from other Windows Phone manufacturers
Analysts eager to hear how Nokia plans to differentiate.
Developer alienation
Nokia risks alienating application developers who had been working on Symbian and MeeGo
‘Developers view themselves as ‘outlaws’ and Microsoft is the ultimate establishment. You are at great risk of losing a significant part of your FN developer base. The natural tendency will be to move to Apple and Android rather than shift to Silverlight.’
For existing Symbian developers, you have to urgently communicate that Symbian and Qt are not dead!’
‘You also risk alienating the application developers who had been working on apps for Symbian. You have to convince all those developers to stay put and it may not work.’
‘Developers have already stopped working w/ Symbian.’
Transition period related challenges
Challenges with retention of current consumer base
‘Hundreds of millions of Symbian users feel left alone and will look elsewhere when looking for replacement.’
‘If Nokia cannot introduce a range of nice Symbian products by 2011 end to compete with iPhone and Android, you risk losing these customers. This is the second attack to the Symbian user base, after the first wave of high-end users defaulted to iPhone.’
Symbian will be increasingly hard to sell to operators.
‘You will see a lot of bargaining. Symbian likely to be positioned as talk & text devices w/o data plan, and no impact on ARPU. Therefore you will be penalized on price.’
Employee buy-in will be crucial
‘This will be a significant emotional journey to all your troops’.
‘ If senior management is committed and the employees are not, then there is greater risk of failure. It is crucial to get the whole company onboard ASAP.’