1. Getting back to profitability.
Learning. Always.
Done by: Shang
Innovation Office, Nokia Singapore
For: Board of Nokia, Stephen Elop

2. Agenda
1. Nokia “in bad shape” 5. Our Competitors
2. Why are we in such bad 6. How to reach our goals?
shape
7. Annex
3. Relook Mission and
Vision
– Mission
– Vision
– Looking Ahead
4. Mobile Trends

3. Nokia “in bad shape”
• Posted a loss of $523 million in the second
quarter
• Total shipments of mobile devices are down 20%
compared with 2010
– Smartphone sales dropped 25.8%: from more than
100 million in 2010 to 74.4 million units this year
– Feature phones sales dropped 16% to 71.8 million
units
• Overall worldwide market share down from 34%
in 2010 to 25%

4. Reported second quarter 2011 results
YoY QoQ
EUR million Q2/2011 Q2/2010 Change Q1/2011 Change
Net sales 9 275 10 003 -7% 10 399 -11%
Devices
Net sales 5 467 6 799 -20% 7 087 -23%
Smart
Devices net
sales 2 368 3 503 -32% 3 528 -33%
Mobile
Phones net
sales 2 551 3 190 -20% 3 407 -25%
Source: Nokia 2nd Quarter Interim report
http://investors.nokia.com/phoenix.zhtml?c=107224&p=irol-newsArticle&ID=1587484&highlight=

5. DigiTimes Research
S@#%!!!
Its not the market’s problem!
Among the top 10 cell phone
manufacturers, Nokia will be the
only one to experience
negative growth
Source: http://www.digitimes.com/Reports/Report.asp?datepublish=2011/09/06&seq=202&pages=PR

6. Why are we in such bad-shape?
• Logistics issues?
• Phones too over-priced?
• Unreliable phones?
• UBS Survey: People just don’t like Nokia?
– Not a cool and sleek phone to have.
= Low IMPACT on its users.
– Have we have fallen back on R&D?

7. Survey on Brand Loyalty
• “consumers…considering changing
handset…Nokia appears to have a negative
net beneficiaries (less users won than users
lost).”
• Low Retention Rates => 42%

8. Why low retention rates?
Annex
• Missed key game-breaking technological handset
trends
• Weak brand
– Poor marketing of products
– Lack of support from a major carrier
• Unusual design
– Thin phones, flip phones, touch screens
• Failed OSes -> Symbian, Meego
– Slow to get off this OS
• Insignificant Ovi app store
– 20,000 titles in comparison to Apple’s
55,000
– Poor Execution

9. Relooking at Our Mission and Vision
• Mission
Connecting People.
• Vision
To build great mobile products and to enable people,
like us, to get more out of life’s opportunities through
mobile.
• Our Plans: To regain our former position of being the
top mobile company, by growing our world-wide
market share to 40%.

10. Looking Ahead
• Our Plans: To regain our former position of
being the top mobile company, by growing our
2015 and
world-wide market share to 40%. beyond: for
Innovating
2014:
Regain our top the future
position in the mobile
market
2012 - 2013:
Regain our lost Goal - 34% 40%
market share and
start new initiatives
planned
Oct - Dec 2011:
Goal - 25% 34%
Consider why
we are failing
and how to
reinvent
ourselves

11. Mobile Phone Growth Areas
• Nascent technologies including NFC, Mobile
Payments/Wallets
– Mobile Smart Phones enables the ‘touch’ and on-the-go
in contactless and paperless billing
• LTE and WiMAX multimode phones
• Mobile 3D and AR new power technologies
• GPS capabilities, location technologies
• Mobile TV

12. Mobile Phone Growth Areas
• Market areas
– Emerging Asia
• Western China
• Rural India
• Vietnam, Cambodia and the Indo-China region
– Africa
– South American giants
• Brazil

13. Paying Attention to
Our Competitors

14. Our Competitors
• We must pay attention to what really matters =
Paying attention to what our competitors are
doing
• Apple’s innovation and sleek design with its
abundance of apps offering a lifestyle
• Google’s Android phones are also offering as
many apps as the AppStore coupled with the
freedom of Open-Source
• RIM’s Blackberry is slowly dying
• Low-end manufacturers like ZTE and HuaWei
compete on extremely low pricing

15. So what can we do to reach our goal?
1. Change of Organisational Structure
2. Low-cost SmartER-Phones
3. Changing to a better OS
– Suggestions for WP7
– Baidu’s Yi (licensed under another brand)
4. NFC Strategy
5. Future location-based developments
6. Further Development of the Meego platform
– Deep social integration

16. Change of Organisational Structure
Stephen Elop
CEO
Innovation
Office
Juha Äkräs
Henry Tirri Jerri DeVard Timo Ihamuotila Esko Aho
Human Resources
CTO CMO CFO Corp R&R
Manager
Mobile phones Sales Legal & IP
Corporate
Smart devices
Development
Location and
Markets
Commerce

17. Nokia’s Competitive Strategy
High Differentiation
Innovation
and
functionality
hTC
Low
Innovation
High Cost Low Cost
Cost Effectiveness

18. Low-Cost SmartER-Phones
• Create a blue ocean for Nokia smart phones
– Budget smart-phones
– Allows for dual-SIM functions
– Provides Near Field communication (NFC) technology to
boost functionality and convenience for its users
• This will also create demand for NFC
accessories like headsets and wireless music
speakers

19. Nokia’s WP7 Strategy Annex
• Launch of WP7
phones in 2012
• Should join forces
with Microsoft in
encouraging the
creation of more
WP7 apps
• Increase the
number of apps in
WP7 MarketPlace

20. Nokia’s partnership with BaiDu Yi
• Alternative OS if the WP7 phones do not take off
– Why not adopt Google’s Android? Purchase of
Motorola
• Newest member of mobileOS scene = Baidu's Yi
• What about Dell?
– Baidu already has licensed Yi to Dell
– but Dell is new
• Opportunity for "guan xi“ and tap
into the Chinese market
• Opportunity to move factories to
cheaper countries like China

21. Nokia’s NFC “Acceleration Strategy"
1. Releasing NFC enabled phones
– Allow mobile payment using NFC apps
2. Partnering Orange, a major carrier, and creating
its NFC eco-system
i. Aim to "seed the market" with NFC-enabled SIM
cards and devices
ii. Orange wants to move into the Asian emerging
markets and a "worldwide alliance" charged with
growing the NFC market would help them get there
iii. Orange will help solve the interface problems

22. Nokia’s NFC “Acceleration Strategy"
3. Investing in NFC or mPayment or mWallet related
mobile startups
4. Organise startup competitions and student business
plan competitions
5. Distribute NFC services to encourage adoption

23. NFC “Standard"
• Introduce NFC-ready devices (and related
technologies) using its standards
• Achieve this together with a partner mobile
carrier like Orange
• Potential for newly created NFC accessories,
working together with the new NFC smart phone,
like headsets and wireless music speakers
We want to make the ‘N’ in NFC,
stand for Nokia!

24. Future of ‘Nokia’FC
• We would move from NFC-enabled secured
SIM to secured-NFC built-into the smartER
phone
• Enabling Nokia to integrate horizontally and
not need to integrate its systems with the TTP
and the MNO
SIM Card
Trusted
Manufacturer
Service SIM Card POS Service Applicatio
&
Manager Manufacturer Provider n Owner
Card Issuer
(TTP)
MNO

25. Future location-based development
• Through Navtaq, Nokia will enable indoor
location-based tracking
– a new product called “Destination Maps”
• It is a new in-built miniaturize technology enabling
both asset and people tracking
• Aims to provide the data that would enable
guidance services inside public buildings
• Functions
– “Indoor GPS” functions
– Security functions
– Marketing & Advertisement infrastructure

26. Further Development of the MeeGo
platform
• Develop the MeeGo platform further
– Deep social integration
– Following the foot-steps of Apple’s iOS
• Social messengers (enabling groups)
– Similar to Blackberry’s BBM and iOS’s iMessenger
– Deep integration of What’s App
• Allow more personalisation of content from mobile browsers
and native app content
– Creating shared cookies function
• Social gaming within the phone
– Widgets
– Alerts

27. Thank you for listening ☺

28. Annex

29. DigiTimes Research Annex
Source: http://www.digitimes.com/Reports/Report.asp?datepublish=2011/09/06&seq=202&pages=PR

30. DigiTimes Research
S@#%!!!
Its not the market’s problem!
Among the top 10 cell phone
manufacturers, Nokia will be the
only one to experience
negative growth
Source: http://www.digitimes.com/Reports/Report.asp?datepublish=2011/09/06&seq=202&pages=PR

31. Nokia getting whacked in “home
country” India
• India although an important country to Nokia
is losing its market base steadily.

32. Why are we in such bad-shape?
Annex
• Logistics issues?
No, we get our phones to places on-time and we never
had that problem before even during the period when
there was greater demand for our phones.
• Phones too over-priced?
No, we have been adopting the pricing scheme making us
the lost leader so our phones are not over-priced.
• Unreliable phones?
No, users do not have a lot of trouble with our phones.
• UBS Survey: People just don’t like Nokia?
– Not a cool and sleek phone to have = Low IMPACT

33. IDC's Mobile Phone Technology and
Trends Annex
IDC's Mobile Phone Technology and Trends service provides a
comprehensive, global analysis of the key technologies and market
trends relating to both consumer and enterprise mobile devices.
Markets and Subjects Analyzed
• Smartphones and feature phones
• Wireless access standards
• Evolution of wireless technology trends
• Mobile device operating systems and browsers
• User interface technologies, including touchscreen
• Multimedia and input methodologies
• LTE and WiMAX multimode phones
• Nascent technologies and services, including NFC, mobile
payments, 3D, and AR new power technologies
• Emerging markets and entry-level smartphones
• GPS capabilities, location technologies, and presence
• Platform creation
• Mobile TV
Source: http://www.idc.com/getdoc.jsp?containerId=IDC_P1600

34. IDC's Mobile Phone Technology and
Trends Annex
Source: http://www.idc.com/getdoc.jsp?containerId=IDC_P1600

35. Change of Organisational Structure
Annex
• bureaucratic organisation flat structure
A recent finding stated that
“… (the) number of positions reporting directly to the
CEO has gone up significantly over time while the
number of levels between the division heads and the
CEO has decreased.”
The advantage is as GE CEO Jeffrey Immelt-“faster
decision making and execution”
A great believer of these benefits Apple’s late-CEO
Steve Jobs
• Innovation department reporting directly to the
CEO

36. Flattening the Firm Annex
Source: THE FLATTENING FIRM by Raghuram G. Rajan

37. Flattening the Firm Annex
• Using a detailed database of managerial job descriptions, reporting
relationships, and compensation structures in over 300 large U.S. firms
• Find that firm hierarchies are becoming flatter
• The number of positions reporting directly to the CEO has gone up
significantly over time while the number of levels between the division
heads and the CEO has decreased.
• On the one hand, the CEO is getting directly connected deeper down in
the organization, a form of centralization. Increasing span of control
suggests he is more directly involved in decision-making across a greater
number of organizational units
• On the other hand, decision-making authority and incentives are also
being pushed further down, a form of decentralization and empowerment
• Decisions need to be taken more quickly to take advantage of fleeting
opportunities in the marketplace
• Faster decision making and execution as it takes time for each managerial
layer to give approval to a decision
• final decisions are delegated further down a hierarchy with attendant loss
of top management control
Source: THE FLATTENING FIRM by Raghuram G. Rajan

38. Porter’s Theory on Competitive
Advantage

39. NFC Eco-system Annex

40. 2 Ways to Achieve NFC Annex
1.
2.