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Nokia software choice in focus as Elop takes stage
February 8, 2011 / 1:46 PM / 7 years ago

Nokia software choice in focus as Elop takes stage

HELSINKI (Reuters) - Expectations are high when Nokia’s new Chief Executive Stephen Elop takes stage on Friday at an investor event in London.

<p>A man talks on his mobile phone as he walks past an advertisment for the new Nokia N8 on Oxford Street in London, September 30, 2010. EUTERS/Luke MacGregor</p>

The world’s biggest cellphone maker warned on January 27 of a grim start to 2011, but its shares quickly recovered steep losses after Elop flagged possible change of software strategy.

The stock is up 17 percent from the lows of January 27.

Nokia has rapidly lost share in the higher-margin smartphone market to new entrants like Apple, and it lost No. 1 spot on the market to Google’s Android last quarter, just two years after Google entered the market.

Its answer to the new high-end competition, MeeGo platform, is yet unproven, and its workhorse Symbian software -- used across its smartphones -- has lost attraction among developers.

“Any change from current strategy would be positive for the share price ... Investors think Nokia should at least try out another platform. Nokia stock would rise 30 percent,” said Canaccord analyst Michael Walkley.

After limiting its financial forecasts on January 27 to just first quarter, Elop is also set to unveil longer-term forecasts on Friday.

On average analysts expect phone business to bottom out in January-March, with underlying operating profit margin starting to improve already in the April-June quarter.

However, if Elop will revamp company’s software strategy, investors likely have to wait until 2012 for first results as rolling out new models takes several quarters.

Elop could unveil on Friday also a major management shakeup, laying off half of the executive board -- including long-time Finnish leaders Kai Oistamo, Niklas Savander and Tero Ojanpera -- a German magazine report said.

ANDROID, WINDOWS OR MEEGO?

After Elop flashed the possibility of a change in smartphone software many market followers expect Nokia to adopt either Google’s hugely popular Android software or go for Microsoft’s Windows Phone 7.

However, the focus will likely stay on its MeeGo software -- the result of a merger of Nokia’s Linux Maemo software platform with Intel’s Moblin -- something which could disappoint the market.

“Nokia CEO has now raised expectations for a dramatic change in software strategy - markets may not be satisfied with a compromise solution,” said analyst Tero Kuittinen from MKM Partners. “When the seventh veil drops, the audience wants to see a lot more than a flash of thigh.”

Nokia’s problem so far -- mobile software developers are not very keen to work on its software platforms.

Developers remain fixated on Apple and on Google’s Android as the prime targets of their toil, with also Microsoft and Research In Motion making gaining popularity, a survey of more than 2,2000 developers showed last month.

Nokia’s MeeGo offering attracts 6 percent of developers.

“I am seeing far more appetite for Android, I see increasing interest in Blackberry, I see very little people looking at developing for Nokia,” said Carl Uminski, chief operating officer at Somo Ltd, mobile advertising agency.

The solution to change it could be tapping into wide base of Microsoft developers, creating the third ecosystem in addition to Apple and Google, said Canaccord’s Walkley.

However, others were more cautious on the likelihood.

“If Nokia and Microsoft come together it could have an air of desperation about it -- it’s like two middle-aged people left in the nightclub after all the cool kids have left for the after-parties in Cupertino and Mountain View,” said Ben Wood, head of research at British consultancy CCS Insight.

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