Is Nokia (NYSE: NOK) president and chief executive Stephen Elop on the hot seat? Unhappy investors want to see better results and are making a case that Elop’s leadership isn’t delivering the goods for the storied Finnish mobile device maker, according to a published report.
Nokia skeptics squawked about the company’s flagging performance about this time last year, too. Let see if anything’s changed…
Investors at Nokia’s annual general meeting in Helsinki on Tuesday complained about Elop’s controversial call two years ago to abandon the company’s Symbian operating platform and switch to Microsoft’s (NASDAQ: MSFT) Windows Phone. At the time, though the move raised eyebrows owing to Elop’s tenure as head of Microsoft’s Business Division, he vowed Nokia—and investors—would see positive benefits in two years.
Ok, time’s up.
"You're a nice guy ... and the leadership team is doing its best, but clearly, it's not enough," said Hannu Virtanen, a Nokia shareholder, to Elop, as quoted in the report. "Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road."
In Elop’s defense, Nokia’s Q1 2013 results show improvement. The company moved 5.6 million Lumia smartphones, up 27 percent from the prior quarter and 180 percent year-over-year, with two-thirds of the units sold running Windows Phone. In the 15 months since it began shipping Windows Phone-based Lumia smartphones, Nokia has sold nearly 20 million units. The one blip in its quarterly performance is in North America, where sales dipped by 33 percent.
A further sales spark could come from a rumored Lumia 928 for carrier Verizon (NYSE: VZ), running a Windows Phone 8 update, said to be in the final round of testing.
Simply put, Nokia’s disgruntled investors, used to being at or near the top of the mobile device market, aren’t pleased the Finnish icon lags so far behind leaders Apple (NASDAQ: AAPL) and Samsung. Some also believe that while Elop has given Windows Phone a sufficient chance, it hasn’t worked to plan, and perhaps Nokia should either move to, or add, Android-based phones to its lineup.
Elop reportedly remains committed to Windows Phone. "We make adjustments as we go,” he said. “But it's very clear to us that in today's war of ecosystems, we've made a very clear decision to focus on Windows Phone with our Lumia product line. And it is with that that we will compete with competitors like Samsung and Android."
A nagging question about Elop’s fork-the-road choice of Windows Phone is whether Nokia can compete at the high end of the smartphone market with those two behemoths. By one researcher’s figuring, Windows Phone is making some progress in the U.S. to ebb the commanding lead of iOS and Android-based devices but not necessarily at the high-end of the spectrum. Researcher Kantar Worldpanel ComTech, which tracks global consumer behavior in a variety of fields, estimates Windows Phone-based smartphones make up some 5.6 percent of all smartphone sales worldwide in Q1 2013, up from 3.7 percent at the same time last year.
That’s something but it’s not within shouting distance of iOS or Android. Of note, Kantar said that Nokia’s smartphone share grew to 4 percent in Q1, up from 1 percent a year ago. Nice progress, but, as Nokia’s investors have voiced, not all that great.
In fact, a better play for Nokia might be at the low end of the market, specifically at buyers upgrading from a feature phone to a smartphone.
“Windows strength appears to be the ability to attract first time smartphone buyers, upgrading from a feature phone,” said Mary-Ann Parlato, a Kantar analyst. “Of those who changed their phone over the last year to a Windows smartphone, 52 percent had previously owned a feature phone,” she said.
“Comparatively, the majority of iOS and Android new customers were repeat smartphone buyers, with 55 percent of new iOS customers, and 51 percent of new Android customers coming from another smartphone,” said Parlato. “While the differences between these figures are small, with over half of the US market still owning a feature phone, it’s likely that many will upgrade over the coming year, which will ultimately contribute to more growth for the Windows brand.”
Nokia take note, the data is there for a market switch, not necessarily an OS switch, but a change in market target may be in order.