Nokia prepares for major shake-up

News agencies report that Nokia is considering ditching development of its high-end operating system, MeeGo, as well as a headquarters change to Silicon Valley.

Nokia's CEO Stephen Elop is reportedly preparing for a major shake-up at the company as he searches for a way to save the once mighty cell phone brand.

Nokia CEO Stephen Elop Nokia

Elop is expected to unveil a new strategy for turning around the company at its investors' conference in London on Friday. Nokia has been slipping in terms of market share the last several quarters as it faces stiff competition at the high end of the market from Apple's iPhone as well as phones running Google's Android platform. And at the low end, the company is also facing competition from Chinese manufacturers.

News outlets are already reporting bits and pieces of the new strategy supposedly leaked from insiders. Reuters said Wednesday that unnamed sources at the company confirmed that Nokia has halted development of its new high-end mobile operating system, Meego. And The Register in the U.K. said in its story that "well-placed sources" inside of Nokia told it that Nokia is considering moving its headquarters from Espoo, Finland, to Silicon Valley.

And Nokia this week may announce that it is adopting an operating system from one of its rivals, either Microsoft's Windows Phone 7 or Google's Android, according to The Wall Street Journal. The Journal said today that Nokia is in talks with Microsoft about making use of Windows Phone 7, along with its own Symbian software. Before joining Nokia last fall, Elop was a top executive at Microsoft.

Nokia representatives declined to comment.

Elop, who hinted at sweeping new changes during the company's most recent earnings call with investors, wrote a scathing internal memo that was leaked to The Wall Street Journal and Engadget this week.

In that memo, he said the company has lost its competitive edge to competitors Apple and Google. Apple's iPhone has dominated the smartphone market for the past couple of years, and Google's Android operating system has quickly picked up momentum as Nokia's traditional handset competitors adopt the free, open-source platform.

In the memo, he noted that the company's own two operating systems-- Symbian and Meego--may not be enough to combat rivals. The traditional Symbian OS is unwieldy, and the Meego effort, announced almost a year ago for high-end devices , is woefully late.

"We thought MeeGo would be a platform for winning high-end smartphones," he said in the memo. "However, at this rate, by the end of 2011, we might have only one MeeGo product in the market."

The company has already started to cancel product launches in the U.S. Last month is was reported that the company canceled the upcoming U.S. release of a new smartphone, the X7 , which was supposed to be exclusive to AT&T. The company also supposedly canceled the launch of another device on T-Mobile USA's network.

As for possible plans to virtually relocate the company's headquarters? It's not entirely unlikely. The board of directors made a bold move in putting Elop in charge. He is the first non-Finnish CEO in the company's 150-year history.

Nokia moved into its current headquarters in Espoo in the 1980s, The Register said. If the company moved headquarters to the U.S., it likely wouldn't affect the company's main development facility in Finland.

Other executives have also taken bold moves to change the company throughout its history. The Register noted that the late CEO Kari Kairamo ushered Nokia into the high-tech age with numerous acquisitions in the 1980s. And Jorma Olilla shed many of the company's legacy industrial businesses. Later, he ditched Nokia's consumer electronics and computing products.

While Nokia's presence in the U.S. today is minimal, the company did have a major facility in Irving, Texas, for several years. In an effort to regain market share in the U.S., the company opened a new office in Sunnyvale, Calif., in December, which could serve as the new headquarters.

CNET will be following new developments in Nokia's changing strategy. We'll have the news from the investor conference in London on Friday morning, as well as news about the company from Mobile World Congress in Barcelona, Spain, next week. So stay tuned.

Update 9:52 a.m. PT: Added information about Nokia potentially adopting Windows Phone 7 or Android.

 

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