Nokia CEO Stephen Elop

Nokia this morning announced a major shakeup, acknowledging that “competitive industry dynamics” in the smartphone market are hurting its business more than previously expected.

The company scaled back its financial forecasts, announced the departure of three top executives, and said it plans to reduce its workforce by up to 10,000 people, or 8 percent, by the end of 2013.

Nokia is Microsoft’s key partner in the Redmond company’s Windows Phone turnaround effort. Their partnership faces steep competition from the likes of Apple’s iPhone and Android phones.

As part of the news today, Nokia signaled plans to press ahead with its Windows Phone strategy, and announced a deal to buy smartphone imaging assets from Scalado, a Swedish company.

“We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia,” said Stephen Elop, Nokia president and CEO, in the news release announcing the changes. “We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”

Elop was president of Microsoft’s Business Division before taking the top job at Nokia in 2010.

Departing the company are Jerri DeVard, chief marketing officer; Mary McDowell, executive vice president of Mobile Phones; and Niklas Savander, executive vice president of Markets. Nokia announced a series of new executive promotions to effectively fill those roles.

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  • guest

    Like MS, Nokia has been doing some of the right things lately. But not enough of them and none fast enough. You can’t win against Apple, Google, or Samsung with average or worse execution.

  • Nick White

    It’s getting difficult to remember that these guys were top dog along with RIM only a couple of years ago.

    • Dave

      Is that true for smartphones? They were the early leaders in smartphones but that is 8-10 years ago. They steadily fell off and focused on being number 1 in volume with dumbphones, particularly by selling in emerging markets. Now they want back into the smartphone business and it has changed. Too bad for both Nokia and Microsoft.

      • Nick White

        My comment only applied to the broader cell phone market. You’re right – their sales for the last decade have always been comprised primarily of feature phones, so the writing has been on the wall for awhile.

    • guest

      Old dogs that can’t learn new tricks die. MS is well down that path too.

  • Christopher Budd

    I can’t remember which analyst it was that said this (if you know please chime in) but the comment that the “burning platform” at Nokia was caused by Elop setting fire to the platform (Symbian/Meego) is starting to look credible to me. Basically, that by publicly disowning those platforms that were their primary income source, they killed their cashflow before the replacement (Windows Phone) was up and running.

    It’s starting to look like that’s an accurate take. They’re running out of money faster than their new Windows Phone platform is taking off.

    I’ve got a bad feeling about this.

    • Guest

      In a way, burning Symbian and Meego was the right thing for Nokia. By jettisoning these obsolete and unnecessary platforms, Nokia could jettison staff who are similarly obsolete to cut costs. As we can see, that’s definitely happening.

      The upshot will be a leaner, cleaner, more agile Nokia that is able to meet the challenges of the 2010s.

      • Christopher Budd

        I think the argument is that burning those platforms so drastically cut their income prospects such that WP became make or break.

        If they had kept those platforms and milked the income from those it may have given them more time before running out of cash.

        • guest

          Your argument assumes consumers were unaware of Nokia’s problems and would have continued buying into either dead-ended OS platform from a struggling manufacturer. That’s false in my view. If Nokia wanted a chance of being relevant in the future they needed to act boldly, pick one arrow to put their remaining wood behind, and move forward. They did. Whether it works out or not is TBD. But trying to hedge that was a guaranteed failure. Anyway, on the money side MS will not let Nokia fail for lack of funds. It’s a concern for analysts and the stock price short term. But it’s not really a business concern as long as MS is still desperate to get back into mobile and has no other horse to ride.

  • Kevin Foreman

    Congrats to Nokia for taking drastic action. That’s leadership. You have to trim a tree for it to grow.

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