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Nokia's Executive Departure Caravan Starts -- and It's Long Overdue

Over the weekend, hidebound Nokia (NOK) dumped its CEO, reassigning the 30-year company veteran to other duties, and hired Stephen Elop, former head of business software products for Microsoft (MSFT). Yesterday, Anssi Vanjoki, head of mobile solutions for Nokia, resigned with six months notice. The 19-year company veteran had only been in the position for four months since a prior company reorganization. And Nokia chairman Jorma Ollila will also step down -- though in 2010.

It's a big shake-up, especially as Nokia starts its annual product conference. Forget Ollila for a moment, as a two year stretch in this industry is like a decade in most. However, Vanjoki is a more interesting case. He was an important factor in the company's success in the late 90s and early 2000s. Speculation has it that he was miffed at being passed over for the CEO spot. But is it also a big loss? No, it's actually an opportunity. Nokia has lagged all its major competitors in smartphone innovation, getting badly whipped in key markets as a result. Given how in the grips of long-term management the company and its culture are, it will take a good number of other significant changes if Nokia is to pull out of its nosedive.

An IDC analysis of Nokia sales trends in key markets is grim.

The company has flatlined in the US. In just over three years, market share has tanked by more than 20 points in western Europe, which should be Nokia's stronghold. Share in Asia is on a steady decline. Of course, new entries -- the Apple (AAPL) iPhone and many Google (GOOG) Android handsets -- can take big chunks of a growing market. However, look at those numbers again. We're not talking about smartphones, but overall market share. Consumers worldwide are defecting on a massive basis from Nokia to embrace its competitors. Given the customer satisfaction rates for iPhone and Android of 89 percent and 71 percent respectively, Nokia will likely get back few of the customers it lost.

Here's why Vanjoki's departure ultimately isn't a blow. One big problem at Nokia has been its insistence that it create its operating systems, hardware, and service, no matter what the sales results were. Vanjoki was one of the main people on the N-series and the MeeGo operating system. Yes, the N-series was popular, and MeeGo, a merging of operating systems from Nokia and Intel (INTC), is supposed to be the forward-going platform for the company's high-end smartphones. What, are consumers going to suddenly slap themselves on the head and say, "What was I thinking, considering an iPhone or Android?" Not likely.

That's because the same culture that got Nokia into this jam is still entrenched. Things need to turn upside down far more. Vanjoki probably left of his own accord, as three days would be unreasonably quick for Elop to clean house. However, clean he must if the company is to have a chance, and two year gaps for long-entrenched powers-that-be is simply too much of a delay. A big turnover in management is often a bad sign for a company. In Nokia's case, the opposite may be true.


Image: user zatrokz, site standard license.