As Nokia’s CEO Stephen Elop has his memo leaked that speaks of Nokia standing on a ‘burning platform’, everyone is speculating on what this will mean for Nokia.
None more so than our own forum, which has been following the plight of Nokia, Symbian and MeeGo for some time.
Finishing his memo with: “Why did we fall behind when the world around us evolved? This is what I have been trying to understand” highlights the fact that finding a solution isn’t going to be as simple as opting to ditch MeeGo (although there are rumours circulating that this is exactly what is going to happen), moving Nokia’s offices away from Finland, firing all of the management or cosying up with Microsoft or Google.
It requires fundamental changes on how Nokia operates and keeps ahead of the competition from now on. After all, Nokia had a huge head start over the competition when it launched its first Symbian smartphone over ten years ago. Nokia even launched its first tablet in 2006, which had the potential to be as big as the iPad.
With its expertise in the world of imaging and multimedia (albeit with strong competition from Sony Ericsson), Nokia should have been able to keep ahead of the competition with relative ease. We all remember iconic handsets from Nokia over the years, but if you ask most people now what their last favourite Nokia was, we bet it would be the N95 (or perhaps the N95 8GB). What has there been since then, besides the N8 that everyone would love to buy, if it had been running Android instead of Symbian^3.
And while we don’t think Stephen will have time to read this or listen to the views of a bunch of ‘crazy forum geeks’, our forum has a number of informed opinions from people who are involved with Nokia in some way (and not simply people who own a Nokia phone). Many of them, including myself, have become disillusioned and want to see things change.
Stephen Elop has a large mountain to climb, but he does have many good employees working beneath him who are probably just as keen for change as everyone else.
It was September 2009 when Nokia first owned up to having had a bad year, and promised things would change. Much the same was said in 2010. Let’s hope 2011 is the year when things really do change.
And, for now, here are some of the comments from our forum:
Nokia needs a firm kick up the arse and a clearing of the dead wood, hopefully this is the intent of the memo.
Much of Maemo/MeeGo development and management moved to San Francisco last year, so an increased focus on the San Francisco campus would make sense as it’s where it’s high-margin platform will be coming from.
MeeGo are still busily planning their future roadmap and discussing announcements they will be making at WMC, so it doesn’t sound like it’s about to be killed off – if it is, it’s going to come as a surprise to them.
There is also Alien Dalvik that is built on Qt, written by former Nokia and Trolltech (Qt) employees, and due to be presented at WMC which as I predicted would give Nokia access to the Android eco-system without committing fully to Android.
Abig part of Nokia’s problem is that the operators are/were their customers, not the end user, whereas with Apple the end user has always been their customer and the operators now bend over backwards to sell their product (not criticising Apple here, fair play to them). To a lesser degree this is also true with Android.
Nokia need to stop pandering to the operators and give the customers what they want.
Shock: Nokia forgot what it was like to have competition from around 2004 onwards, especially on software side, there were many issues but for me the main issues were, firmware was released that had major bugs in the initial (or even 2 or 3 after it) releases! This is almost unforgivable for me, did they not have a QA team? most people could find bugs within 2 or 3 days, that was just not something that Nokia itself would have let happen in the days of the 2110 or the 8110!
McPhee!: I look forward to seeing what Nokia announce. I can see WP7 potentially being a second platform. It works out of the box with minimal effort from the hardware manufacturer, Microsoft are handling everything from support to marketing. As such it’s the perfect short-term stop-gap for Nokia. They can churn out WP7 handsets and Symbian handsets while building on Symbian/Meego. When they’ve got a strong enough platform of their own they can look at dropping WP7. I also think Microsoft would give them quite favourable terms, both because of Elop’s connections and because Nokia producing handsets for WP7 would be an unbelievable coup for the platform.
mcgrad: The Osborne Effect has a hold on Nokia like no other phone manufacturer. Can Nokia announce a phone, and release it to market without it being plagued with delays?
Jimbo: MeeGo is already being promoted here on TV in Finland, even without a product. It’s unlikely that it will be dropped IMO.
The comments about moving into WP7 in select markets seem pretty solid IMO. It would give Nokia some short-term breathing space while they sort out their OS and ecosystem strategy for 2012/13, without losing one of their key USPs – decent hardware (if anything, they can strengthen this USP in this area) – and (re)building their profile at the same time.
It’s easy to imagine a product like the E7 running WP7 doing well in the market.
You can join in the discussion or simply follow it as it continues ahead of Stephen’s speech on Friday February 11th – when we might actually get a definitive answer to what is going to happen.
The leaked memo was published earlier today and makes it quite clear that the new boss isn’t pulling his punches.
There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.
As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.
He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.
We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.
Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.
I have learned that we are standing on a burning platform.
And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.
For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.
In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.
And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under ¬100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.
Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.
While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.
The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.
We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.
At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.
At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.
And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.
The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.
This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.
On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.
Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.
How did we get to this point? Why did we fall behind when the world around us evolved?
This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.
Nokia, our platform is burning.
We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.
The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.
We don’t know for sure what will happen, but we do know something has to happen.