Nokia CEO Memo on Their "Burning Platform"

[MacRumors]

Engadget publishes a memo written by Nokia CEO Stephen Elop and posted to the company's employees about the fragile state of their business. The memo is surprisingly candid about the challenges Nokia faces with increased competition from the Apple iPhone and Google's Android. He compares Nokia's current situation to a man standing on a burning platform where the only choice is to shift from expected behavior and "jump".

Of the iPhone's entry into the market, he wrote:

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.

Elop acknowledges that even though the original iPhone launched in 2007, Nokia does not yet have a product that is close to that experience. While they have been working to innovate, they fell behind and missed big trends.

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.

Nokia plans on launching a new strategy on February 11th. Many are speculating that they may join an existing platform such as Windows 7 rather than continuing on their own.

The whole memo is a very interesting read on the disruptive nature of the iPhone on one of the major mobile phone manufacturers.

Article Link: Nokia CEO Memo on Their "Burning Platform"

 

[thejadedmonkey]

This would be huge if Nokia was the primer OEM partner for WP7, and it would certainly boost MS and Nokia shares, which seems to be the motive for everyone anymore.

Honestly, is there even a downside?

 

[orfeas0]

HMmm i'm smelling an n-gage 2 on the air!

 

[motulist]

The more competition there is, the better it is for us consumers. I hope Nokia sticks around.

 

[R2D2 xx]

Yeah, I hope Nokia sticks around. It's nice to see him being so honest with his employees. You don't see that much these days.

 

[ten-oak-druid]

Nokia should train their employees for others careers as they get ready to close up shop. They owe it to them to write some good recommendations and get them ready to move on.

 

[ThunderSkunk]

Huh! A CEO who actually speaks honestly and does more than just BS through a PR filter. Neat!

 

[macduke]

I just read the whole letter on Engadget, and I must say, I'm impressed with this guy. I hope that Nokia can make a comeback. Competition is always good.

 

[balamw]

Not bad for 5 months on the job. Of course as a former Microsoftie, the WP7 path seems obvious.

B

 

[notabadname]

And that really is where Apple shines, building an ecosystem around their products. They learned brilliantly from the iPod and iTunes, and subsequently applied that lesson to both the iPhone and iPad. One of my favorite things about all three of those products is the interchangeability of the music, movies, apps and podcasts through a single interface. And, most importantly, it keeps me loyal- why would I ever by a Droid when I have hundreds of Apps waiting to make any new iOS device as familiar and equipped as one I have had for years. The upgrade path/built-in-loyalty is tough to beat.

 

[MattInOz]

They should team with RIM.

 

[landscapeman]

Windows would be a total mistake. Android would be a better choice.

 

[Mr. Gates]

It's about time!

WP7 Needs a little Validation right now anyhow.

All of you Hardcore Apple Fans must realize that the success of WP7 is Good for IOS......Right?

 

[tpm1999]

Nokia has always been a strange. In the US they would waffle between having multitudes of good phones on a carrier and then simply disappear from that carrier. Nokia innovated a lot of standard features that we see today, but that doesn't mean they get a free pass.

Their arrogant ways and refusal to change has led them to the brink of destruction. They are the European GM and I dont see them coming out of this anytime soon.

 

[SidewaysTakumi]

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Im glad he's honest but I am hoping they can find a new path. I want more competition.

 

[Doctor Q]

On a similar topic, it's worth reading BlackBerry or Bust: Does RIM Have a Second Act?, a recent article in TIME Magazine on RIM's challenges in the tablet market. Apple is pushing everyone, everyone is pushing back, and we consumers ultimately win.

 

[notabadname]

What Apple learned in it's battle with the Windows based PC is that getting people invested in your software ecosystem keeps people from wanting to switch. A reason many people are reluctant to switch from a PC to a Mac is because all their software won't work. Now people are getting equally vested in all the Apps and stuff that make an iPad, iPhone or Touch hard to give up for a alternative. They can't take their "stuff" to a different platform, and it can be worth a lot of money.

 

[calev]

I dont see why they don't just run android. Its open source. I hate my nokia e71x. I only got it because my iphone broke. Nokia's os is crap. Its hard to do anything and stuff is always getting pushed on accident. They should just suck it up, take smaller bonuses and hire good programmers. If all your programmers come from third world countries your programs will reflect it. Sorry but my grandma can code better software on a punch card.

 

[ad2435]

i've had a few nokias over 6+ years.

not a big fan of symbian software though.

they will never never be #1 again.

i wonder if they will be in business in 5 years.

 

[darbus69]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

if I was nokia I would prefer iOS to WP7...just a strange thought.

 

[celo48]

Nokia was my ONLY choice until I bought an iPhone. I don't think any phone manufacturer could make me switch from iPhone.

 

[jaw04005]

I actually like Windows Phone 7 (just like I like the UI of Media Center, Zune and XBOX). However, I don't think it's the answer for Motorola.

For one thing, it's a new platform and therefore lacking a multitude of basic features. Even Windows fanboy Paul Thurrott has been complaining about the lack of updates lately.

Nokia should just do what all the other phone manufacturers are doing --- adopt Android and get on an aggressive hardware upgrade cycle (where there's basically a new Android handset every 3-4 months on a different carrier).

Maybe they can be the first to bring Android down to the "dumb/feature phone" mass market.

 

[SandynJosh]

This would be huge if Nokia was the primer OEM partner for WP7, and it would certainly boost MS and Nokia shares, which seems to be the motive for everyone anymore.

Honestly, is there even a downside?

The downside is the slope both are on is carrying them into the mouth of the volcano. I guess it's more comfortable to hold hands as they feed the fire god...even if one of the hands is rather sweaty and profusing confidence that Windows Vista on a hand-held phone will save their backsides somehow.

I do have to say that the head of Nokia has summed it up correctly... it's the whole damn ecosystem that is making the iPhone so dang powerful, and neither Nokia or Microsoft have got one, or even a good plan to build one.

 

[E.Lizardo]

I actually like Windows Phone 7 (just like I like the UI of Media Center, Zune and XBOX). However, I don't think it's the answer for Motorola.

For one thing, it's a new platform and therefore lacking a multitude of basic features. Even Windows fanboy Paul Thurrott has been complaining about the lack of updates lately.

Motorola should just do what all the other phone manufacturers are doing --- adopt Android and get on an aggressive hardware upgrade cycle (where there's basically a new Android handset every 3-4 months on a different carrier).

Maybe they can be the first to bring Android down to the "dumb/feature phone" mass market.

??Why are you talking about Motorola????????

 

[Nicksd84]

Very candid and well written. I was a big nokia user prior to the iPhone. Tough to see me going back at the moment, but I'll wait and see what they offer.