Nokia’s Stephen Elop Responds to Those Who Oppose His Big Windows Phone Deal
Stephen Elop knows there are plenty of investors and employees who are none too happy with his plan to phase out its homegrown Symbian operating system in favor of an approach that focuses on phones that are built on top of Microsoft’s software.
Financial markets have sent Nokia shares lower, workers have been up in arms and earlier on Tuesday a group of young Nokia investors posted an open letter on the Web calling for the Nokia chief executive to rethink his plans and instead opt for a “Plan B” that would have Nokia maintain ownership of the software layer of its phones.
But Elop said he is not surprised there has been some negative reaction. Elop noted that he has had months to weigh all the options and grow comfortable with the Windows Phone-led strategy, while others are still digesting it.
“There is both an intellectual journey and an emotional journey through which we all need to go,” Elop told Mobilized during a chat on the sidelines of the Mobile World Congress event in Barcelona. “I’ve had four and a half months to go through the journey.”
As for workers walking off the job last Friday, Elop also seemed to take that in stride. “To the extent that workers need time to go through that emotional journey, that’s something I completely understand.”
While Elop said the main reason he went with Windows Phone was the opportunity for sustainable differentiation, he noted that the billions of dollars from Microsoft doesn’t hurt.
Elop said that the value of the deal reflects not just the standard business terms, but also the fact that Nokia was a “swing vote” in the mobile market and could have gone to Google and Android.
“That, by itself, has substantial value,” Elop said. “In addition to revenue streams one would normally calculate into a deal, there is a clear recognition of a special value that we are providing for which we are receiving compensation–value, money, however you want to describe it–measured in the ‘B’s not ‘M’s.”
The revenue, which was euphemistically referred to during last week’s investor event as “marketing support” will show up over the life of the deal, Elop said, and allow the company to invest more or flow through to its bottom line.
“To be clear it’s not about the money,” Elop said. “If we can be no different than anybody else, then at end of the day margins erode.”
Elop also noted that Nokia is committing fully to Windows Phone, where as Microsoft’s other partners are largely doing products for Google’s operating system as well.
“Some of the other OEMs do their best work for Android right now,” he said.
Although Nokia hasn’t committed to releasing a Windows Phone this year, Smart Devices head Jo Harlow said onstage at Nokia’s press conference that she is feeling the heat to do so.
Elop clarified where that heat was coming from. “From me,” he said. “From me.”
Update: Asked for comment on the Plan B letter, Nokia offered a brief statement.
“We are aware of the letter being posted, but have not been directly contacted,” the company said. “Nokia’s new strategy has full approval of the Board of Directors and the Nokia Leadership Team, and our focus now is on the execution of this new strategy.”