HELSINKI - Every summer for the past four years while Apple shipped a new iPhone, Nokia managers vacationed at their lake cottages in Finland.
“In mid-July, Nokia House is a ghost town,” said Adam Greenfield, managing director of Urbanscale, a mobile-phone design consulting firm in New York, who worked for Nokia from 2008 to 2010. “If you need a decision and the key person’s at the summer cottage? Forget it. You’ll resolve that issue in September. It’s something that hampers their agility.”
Speeding up Nokia’s product development is at the top of Chief Executive Stephen Elop’s agenda as he tries to meld the Finnish company’s handsets with Microsoft software to narrow the widening gap to Apple and Google. Nokia has delayed most of its top-end smartphones in the past two years, resulting in sliding profit and market-share losses. Its shares have dropped 28 percent since the Microsoft deal was announced.
Elop, a former Microsoft executive brought in as CEO in September to turn the company around, is relinquishing Nokia’s homegrown platforms Symbian and MeeGo for Microsoft’s Windows Phone 7. Nokia may provide a peek at its first Windows phone this year, though it’s promising volume shipments only in 2012.
“It’s risky even to wait that long,” said Rob Sanfilippo, a consultant with Kirkland-based consulting firm Directions on Microsoft. “It would be great if they had them out by the middle of the year, June or summer, even if it’s one device to show that there’s real progress happening quickly.”
Elop needs to narrow Nokia’s productivity gap to boost margins. Apple squeezes three times more revenue per employee than Nokia, while Taiwan’s HTC Corp. gets twice as much, Bloomberg data show. Microsoft’s revenue per employee is 1.5 times Nokia’s.
An early test for the partnership will come as Nokia folds its services into Microsoft’s world: Office, Exchange corporate email, Xbox games, Zune music products and Bing search.
Nokia has delayed almost every top-end smartphone based on its own platforms since the N97 was shipped on time with buggy software in June 2009.
In past years, Nokia probably spent between 18 months and two years developing hardware products, said Horace Dediu, the managing director of Helsinki-based Asymco, an independent research firm.
Elop, 47, said at a media summit in Abu Dhabi this month that speed and accountability are “by far the No. 1 issue” employees talk to him about. Nokia is changing on those fronts, he said.
“We’re moving at a speed that is unparalleled for our company and I would argue is on par with anyone else in the industry,” Elop said.
The Microsoft accord is forcing a new mindset on Nokia. Symbian, unlike Microsoft software, is “open source.” So is MeeGo, which Nokia has developed with Intel. Windows Phone 7, like Apple’s systems, is closed.
“The Finnish engineers I know are religiously committed to open source, and I could hardly think of a more implacable opponent to that philosophy than Redmond,” said Urbanscale’s Greenfield.