Nokia seeks to regain edge as Android grows

By Diana ben-Aaron
(c) 2010 Bloomberg News
Tuesday, September 21, 2010; 4:17 AM

Sept. 21 (Bloomberg) -- Nokia Oyj Chief Technology Officer Rich Green says he wants his team to be in "dirty jerseys" as the Finnish company seeks to regain the edge in smartphones from Apple Inc. and Google Inc.

"They should be in the game, playing, and not on the sidelines with a clean jersey telling people what to do," Green said in an interview.

The former Sun Microsystems Inc. executive, who was named to the position four months ago, is charged with making choices that get products to market faster and attract third-party application writers. Apple's iPhones and devices based on Google's Android have eroded Nokia's dominance as they rolled out regular upgrades and built large apps portfolios.

Green is among the top executives Nokia Chief Executive Officer Stephen Elop, who takes the helm today, will lean on to revive the fortunes of the world's biggest maker of mobile phones as analysts predict Android-based devices will overtake the Finnish company in smartphones. Green, like the new CEO, will have to find the right pace to roll out features to lure developers and win back users.

Green wants to "futureproof" the software interfaces programmers use "so that when developers make an investment in writing applications on our platform they know they'll be long lived." Nokia wants "to radically grow our developer community and the contents of our apps store," he said.

Nokia shares slid as much as 2.5 percent in Helsinki today on reports it is delaying shipment of the N8, its latest smartphone. Nokia denied there were any delays.

Concern over its shrinking market share and margins has pulled shares down more than 26 percent in the past 12 months, making Nokia the worst-performer on the Euro Stoxx 50 index.

Nokia's research and development budget of 5.9 billion euros ($7.7 billion), including 3 billion euros for devices and services, is the largest in the industry. The company spent almost six times as much as Apple on R&D last year. Although it employed more than 17,000 R&D workers in devices and services, Nokia still isn't leading the charge in smartphone innovation.

"Why can you not see that they have the biggest R&D budget when you get their products?" said Bengt Nordstroem, the CEO of Stockholm-based consulting company Northstream AB. "Something's not working when the people who have the biggest budget and the most resources cannot translate that strength into something that means something to customers."

Nokia's R&D efforts are symptomatic of the broader structural challenges that lie ahead for Green and Elop, both newcomers to the Espoo, Finland-based company. It may be among operations that risk being shrunk as competition intensifies.

"If financial pressures on the company increase, Nokia may be obliged to review its software R&D strategy, perhaps partnering, outsourcing or even selling off selected elements," said Gavin Byrne, an analyst with researcher Informa Telecoms & Media in London.

Nokia may need to continue the effort announced last year to cut the smartphone product lines and platforms so that apps can run on the largest number of models with the least rework.

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