Q: How Many Nokia Reorgs Does It Take to Compete With the iPhone? A: 4 and Counting

Nokia said today that it’s reorganized its devices and services units into three distinct areas: Mobile Solutions, Mobile Phones and Markets. Netbooks and high-end smartphones fall under Mobile Solutions, while feature phones are part of Mobile Phones, and Markets touch both units through sales, marketing and supply chain management.

Olli-Pekka Kallasvuo, CEO of Nokia, explains the shuffle by saying:

“In addition to extending our leadership in mobile phones, we are decisively moving to respond faster to growth opportunities we expect in smartphones and mobile computers. Nokia’s new organizational structure is designed to speed up execution and accelerate innovation, both short-term and longer-term. We believe that this will allow us to build stronger mobile solutions – a portfolio of products and integrated services that connect people and enable new ways of communicating, sharing and experiencing mobility.”

But haven’t we heard this song before?

Indeed, this reorg is the fourth since Apple effectively changed the mobile industry landscape by introducing its iPhone in June of 2007, yet Nokia still hasn’t created a compelling handset to stem the growing tide of iPhone sales in the worldwide smartphone market. Here’s a recap of the steps taken since the iPhone launch, including the launch of Nokia’s iPhone challengers:

  • June 2007 — Nokia collected its trio of units — Mobile Phones, Multimedia and Enterprise — and melded them together into a Devices group. A standalone Software and Services unit was created along with a Markets unit. The goal then, according to comments Kallasvuo made at the time, wasn’t much different than it is today:

    “The convergence of the mobile communications and internet industries is opening up new growth opportunities for us, both in the devices business as well as in consumer internet services and enterprise solutions. We believe this new organization can capitalize on these opportunities while allowing us to increase the effectiveness of our investments and the efficiency of our operations.”

    The referenced growth opportunities were indeed real, just not realized by Nokia as much as they were by Apple — and now by Google, Research In Motion and others. Nokia’s N95 was a flagship model that showed promise, but never truly competed with the iPhone.

  • August 2008 — Nokia rejiggered the Software and Services unit in order to “integrate some of our content delivery services into a single service to create a better experience for consumers and to continue increasing investments into key initiatives.” Nokia’s Ovi app store eventually became the umbrella for services such as mapping, music and data sharing, but it took until March of this year for Ovi users to experience easier browsing and searching for software. Nokia launched its first touchscreen device, the 5800 XpressMusic, but opted for a resistive touchscreen that diminished the experience and highlighted the fact that Symbian S60 isn’t optimized for touch.
  • October 2009 — After another quarter of slowing sales, declining market share and its first net loss in a decade, Nokia tapped its CFO of five years, Rick Simonson, to head up the Mobile Phones unit along with the Devices group. (Note that as part of today’s announcement, Simonson is retiring from full-time duties at the company.) Nokia described the move as a common job rotation, but coming hot on the heels of the stinging financial loss, it was hard to dismiss a feeling of reactionary near-panic. And just two months prior, there were questions of Nokia’s commitment to Symbian as the future platform for its smartphone devices — perceived uncertainty while competitors are focused and committed don’t often make for success. The company then launched the Nokia N900, which Om feels still falls short when compared to the iPhone.

Meanwhile, what has Apple done? Introduce one singular ecosystem for its handset, which has seen incremental — but effective — updates to both its both hardware and software. The mobile operating system on its iPhone has also matured and scaled into an all-day mobile slate in the iPad, which has already topped a million units sold, adding more cash to Apple’s coffers — aside from the hardware profits, the iTunes App Store annualized revenue is on pace to hit $900 million or more in 2010. From a business model perspective, the strategy Apple follows is simple: Define the right vision for the future, commit to it and march toward it, step by step, for as long as it takes to get there.

Nokia’s strategy, on the other hand, comes off as reactive, not proactive. Nokia is still the world leader when it comes to phones, yes. But the company’s recent moves in this iPhone era aren’t setting the trends — Nokia’s competitors are blazing new paths while the company is still waiting to see the results of its last reactionary move. In a situation like that, you’ll always be at least one step behind. And it isn’t helping matters that Nokia supports multiple operating systems across such as wide range of devices. Its feature phones, smartphones, Internet tablets and even netbooks run Symbian S40 and S60, Maemo, Microsoft Windows, MeeGo and in the near future, Symbian 3, which will power the new Nokia N8 (shown). Effectively integrating cloud services across one platform is a challenge — a topic ripe for discussion at our upcoming Structure conference — so perhaps the “less is more” approach might be a good one for Nokia to follow instead of various reorganizations to support a vast array of products.

Om interviewed Kallasvuo last month, and based on that conversation, I have no doubt that the Nokia CEO understands the challenges the company faces better than anyone. In fact he specifically stated that the direction for Nokia “is very clear.” My only question, then is: clear for the long-term future or simply until the next reorganization?

Related research on GigaOM Pro (sub req’d):

Mobile OSes Are No Longer Just About Mobile

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