Can Stephen Elop realise Telstra’s global ambitions?
- 16 May, 2016 08:22
Stephen Elop - Group executive of technology, innovation, and strategy, Telstra
Somewhere amidst the hustle and bustle of daily channel chatter in Australia, Telstra’s appointment of Stephen Elop has slipped under the radar.
Once touted as the next CEO of Microsoft, two months on from his appointment in the newly created role as Telstra’s group executive of technology, innovation and strategy, one overriding question remains; Why?
Cited as an “unusual choice” by the Sydney Morning Herald, the “serial tech exec” - as labelled by Fortune - joins Telstra with a mixed reputation and history, dividing opinion on both sides of the Pacific.
For the man once described as the “worst CEO in the world” - as reminded by the SMH - is tasked with repositioning the Australian telco as a “world class technology” company.
“It’s likely Stephen’s role will focus on global opportunities, especially as it seems he is not relocating instead choosing to split his time between USA and Australia,” Tech Research Asia executive consultant and industry analyst, Mark Iles, told ARN.
“Ultimately with the right acquisitions any product or service Telstra can launch should be global ready, however, with infrastructure predominantly based in Australia it’s hard to see a growth strategy for areas like Cloud where Telstra is heavily invested locally with infrastructure and in other markets these solutions are already well established.”
For Iles, when speaking to ARN, Elop’s experience in the broader technology landscape, coupled with his connections in the important US markets, will prove “extremely valuable” to Telstra’s ambitious pursuit of global growth.
“Telstra is ambitious in its plans to expand outside of Australia, which is by global terms, a small market with only 23 million people,” he explained.
“As nbn continues to rollout this will put more pressure on fixed line revenues and Telstra needs to look to other markets either geographic, as evidenced by their recent expansions into Asia, and into higher level products and services like their investment in High Definition Video services and eHealth.”
As reported by ARN, Telstra CEO Andy Penn said the creation of the new technology, innovation and strategy portfolio reflects the company’s “ambitious new direction”, with sights firmly set on markets outside of Australia.
“Stephen’s role could help them become a player in the US if they can make the right moves into growth technology and services areas as they look to move “up the stack” and embrace over-the-top plays, especially in markets like the US where they have no infrastructure,” Iles added.
“The US is a huge market though with a number of significant competitors that are much bigger than Telstra like Verizon, AT&T, T-Mobile and Sprint.
“It will be a challenge to bring a proposition to market ahead of the competition. It’s possible of course that Telstra could look for a big acquisition in the US and this wouldn’t be surprising given Stephen’s background in large acquisitions.”
In the interim, Penn said Elop will “immediately add major firepower to the team”, drawing on his “extensive technology experience” and “innate sense of customer expectations”.
But despite global executive stints at Microsoft, Nokia, Juniper Networks and Adobe, does the Elop of 2016 carry the same industry weight as before?
“This a good opportunity for Stephen to show his leadership in the mobile industry and redeem himself from the stigma of being the chief executive who sold out Nokia,” Telsyte senior analyst, Rodney Gedda, added.
As the man responsible for Nokia’s failed Lumia devices venture at Microsoft, Elop’s departure from Redmond remains a clear indicator that in the eyes of CEO Satya Nadella, his Windows Phone performance and strategy wasn’t working.
But despite a sketchy legacy, with the local and global market undecided on the appointment, Iles was quick to assert that Elop’s appointment undoubtedly represents a “definite coup” for Telstra, regardless of its unusual nature and surprise.
“Telstra has focused heavily on building depth in their executive ranks and the addition of the former Nokia chief executive adds to this,” he said. “Though some might question his track record with his last two assignments as Nokia chief executive and executive vice president of Microsoft’s Devices group, viewed as less than positive by most industry watchers.”
Going forward, Gartner research vice president, Neil Osmond, said Telstra plans to carry out its new strategic vision by taking a co-creation approach to innovation with partners.
“Telstra may be looking to leverage Elop’s experience in software and equipment providers renowned for technology innovation such as Adobe, Microsoft and Nokia,” he observed.
“His extensive executive contacts in the industry will also further progress their goals.”
Osmond added that as the industry moves towards ‘softwarisation’ of network technologies and products, there will be strong demand for new skills and operating models.
“Given Telstra have assigned him responsible for technology, innovation and strategy, they clearly see Elop as equipped with the necessary expertise and experience in the software industry to accelerate its plans,” he added.
According to Osmond, a number industry analysts still remain “surprised” by the appointment, because in the global scheme of things, Telstra is a “relatively small company compared to the industry giants that he previously had executive leadership roles in.”
“Given Telstra is also a telco rather than a vendor or service provider, the move is also a directional shift for him,” he added.