Illusions of Grandeur...

Interesting week for Nokia and Nokia-Siemens, resulting in not-insignificant jumps in share price for the mother company.

But why?

Two major developments: Nokia-Siemens announced its intent to buy out Motorola's non-iDEN based infrastructure business and, reportedly, a search is underway for a new CEO that could, some say, result in Olli-Pekka Kallasvuo's ouster as early as next month.

Hey, these are both big deals, but, well, they're questionably meaningful in any real commercial sense and the share-price jump is almost certainly a short-term phenomenon unless a "really big deal" (e.g. a complete and utter strategy overhaul) happens, and soon...

Considering the Nokia-Siemens acquisition of the Motorola infrastructure assets, what does this really mean? Yes, on the upside, investing over $1.2 billion could be considered a good move, given that Nokia-Siemens reported a 7% annual revenue decline in Q1 2010 while the Motorola division posted a decent $112 million operating profit, a figure which Nokia-Siemens could arguably grow should it succeed in digesting the Motorola assets and rationalizing and/or eliminating redundant spending and R&D, etc. And yes, the acquisition might boost Nokia-Siemens opportunities in its weakest market – North America – if it succeeds in leveraging the long-term and healthy relationships Motorola enjoys with Verizon, AT&T and Sprint. But, let's recall that both Nokia-Siemens and Motorola were essentially shut out of recent Verizon and AT&T 4G/LTE infrastructure projects (which were awarded to the unofficial infrastructure vender duopoly of Ericsson and Alcatel-Lucent) - so it's unclear what this perhaps "too little, too late" acquisition might mean in the cases of those major operators, at least in the short- to medium-term (unless Ericsson and/or Alcatel-Lucent majorly screw up in terms of their contracted deliverables, which has happened before...).

We should also recall that Motorola's strong presence in the U.S. market is a legacy one. A not-insignificant percentage of Motorola's past infrastructure revenues and related profits were the result of selling 3G equipment based on CDMA2000 to Verizon, Sprint, and others. Given that CDMA2000 is itself a legacy standard, having been trumped by LTE, where (again) Motorola's infrastructure business has failed to break through in the U.S. (not unlike Nokia-Siemens), it's unclear where the real value is to Nokia-Siemens, excepting perhaps a breakthrough opportunity in WiMAX with Sprint/Clearwire.

I'd have argued (indeed, I have argued for a year-and-a-half now, in this blog and elsewhere), that Nokia would have done better to invest that rather remarkable chunk of change in a wholesale conversion to Android-enabled devices, derailing Motorola's terminals division, rocking RIM's nebulous recovery and standing up to HTC which in less than two years has seized significant market share and, remarkably, achieved almost household brand status.

Which leads me to that second big development: The swirling rumors over the last 24 hours or so about a purported Nokia search to find a replacement for Olli-Pekka as CEO.

Not too long ago, I posted a "don't blame Olli-Pekka for the mess in the U.S." rant (see May 2, 2010 post). My thoughts have not changed. However, when a company is consistently challenged to deliver, year after year, regardless of where the fault ultimately lies, the buck's gotta stop somewhere, and, mixing metaphors, it appears this chicken's come home to roost. Assuming that the rumors are true, including the imminent timing of the change, I think the big question should not be "who will it be?," but, rather, "what will he/she do differently?" Some important strategic decisions begging resolution:

- Whither Symbian?
- Why not Android? It's late, perhaps critically so, but it's not too late...
- If Android, MeeGo as well? Why?
- What about an unholy alliance with equally-struggling Microsoft (see June 23, 2010 post)?
- Whither Ovi? It's not on a par with the Apple and Google solutions. White label for operators? Go unholy and relaunch (see bullet immediately above)?
- What about the all-important U.S. market? Overhaul a management team that has failed to deliver for almost four years? Outsource all product to exacting operator spec (beat LG and Samsung at their own game)?
- What about morale - employee and investor? Recovery will not come overnight.
- How about an iconic product? Not some N8-like thing, but something truly iconic, like the 6160 married to AT&T's one-rate plan back at the turn of the Millenium when Nokia commanded near 40% share in the U.S. alone?

Not easy challenges, not easy decisions. But the world has moved on as Nokia has serially re-org'ed for the last three-four years. It is indeed a time for wholesale and brave renewal. I wish the greatest luck to Nokia and whomever emerges as its leader - it's gonna be one hell of a bumpy ride.

Later...