Nokia CEO Memo on Their "Burning Platform"

[SockRolid]

Elop "gets it." But it's probably too late anyway.

He's right. Slick hardware and an integrated OS are just the beginning. Very few companies can do both at once in the mobile space. And only one, Apple, has slick hardware plus integrated OS plus massive robust ecosystem.

But just because Elop understands Nokia's problems doesn't mean he can fix them. And even if he does, it may already be too late to mount a significant challenge to Apple's massive vertical integration. It's possible that Nokia will flail away with WP7 phones for a year or two, then give up and join the ranks of the generic droid makers.

 

[Coarseman]

Actually I own Nokia Symbian Phone and I don't trade it for any iPhone, in my opinion is much better than iPhone

I still own E72 as my back-up phone and can't fault it at all.
Does everything a business model is supposed to do,has excellent battery life etc. etc.

Would I go back to Nokia (Symbian) however after having owned an iPhone?
No sir...absolutely no way...

 

[rdlink]

I don't know how long he's been CEO of Nokia, but as the CEO of the company he should have himself to blame for the company's downfall. He never had took the leadership to stir the ship in the right direction. Lesson learned for him, I guess.

Today's statement brought to you by the letter "moron."

 

[Alisstar]

He took the helm five months ago. Their previous CEO (2005-2010) is now Chairman of the board of Nokia Siemens Networks.

B

I stand corrected. Thanks!

 

[rdlink]

In reading many of the posts here I guess I was always in the minority. I never liked Nokia.

I would go into phone stores, and want something better than the "take it or leave it" features that Nokia engineers told me I needed, and the sales idiots in the stores would always try to steer me back to the Nokias, telling me that they were always superior to the other brand that was really capturing my attention for it's usability and options. On more than one occasion I was duped into believing the sales idiot actually knew what he or she was talking about, only to feel burned within two months of trying to get the phone to actually do what I wanted it to do.

Eventually, I learned that the sales idiots were just that, and never again did I buy a Nokia phone. Not saying I won't ever do it again. Let's see if they get up to speed in the smart phone market.

Meantime, many of the "benefits" being touted by Android lovers are exactly the reason I don't want an Android. The largest one being the control that the hardware manufacturer/carrier cartel exercises on the phone. Carriers have never had, and never will have my best interest at heart. They want me committed to serfdom on their network for as long as possible, and they want to force me to buy at the company store while toiling away for them.

I know that Apple haters will jump all over that last statement, saying that the "walled garden", App store restrictions, etc. is Apple's way of doing that. But the fact is that nobody has nailed the out of the box user experience like Apple did with the iPhone. And they refuse to let carriers bastardize it. Never have.

I've owned 4 different Android phones while waiting for TMO to get the iPhone. They ranged from half-baked and not ready for prime time, to already letting the carrier pervert them. When I buy an "open source" phone that won't even let me delete the cancer that is Yahoo apps off of it, the words "open source" no longer fit.

And I know the thought is "you can root it." True enough. But that's what the Android geeks (the ones who stay up until 3:00 AM every day tinkering) don't get. I can root my phone. I have rooted my phone. But I, and the vast majority of smart phone users have better things to do with our days (and nights). Heck, that's my major frustration with my iPhone now. I have to root it to get it on my carrier of choice.

The last major hurdle Apple faces for continued domination is complete carrier choice. Once they have that, the greatest majority of users have no reason to look to Android. They know this. That's why they rushed to release an iPhone to VZ as soon as their contractual obligations with ATT were over. Purely defensive move on their part. Now comes the biggest moment in the history of the iPhone. If they want to continue to dominate they will have to go on the offense, and release the following in June:

Dual-core
9600 Qualcomm chip, supporting all carriers' current 3G and LTE

The second item is even more important than the first.

 

[iPhoneCollector]

Please no windows phone 7

 

[Coarseman]

The last major hurdle Apple faces for continued domination is complete carrier choice. Once they have that, the greatest majority of users have no reason to look to Android. They know this.

We already have that in Europe and I can tell it was a GREAT relief when you finally could just go to Apple, buy the phone and then choose the carrier you prefer.
Indeed,they keep selling it through the carriers, but having the two or three major ones offering the iPhone as opposed to only one (in some cases by far not the best) is a huge step in the right direction.

I guess that is what freedom is all about,no?

 

[0815]

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.

admitting that there is a problem is the first step to improve. There is hope for Nokia. I love my iPhone, but competition is needed to push for more innovations.

 

[Risco]

I know a lot about Nokia and how they rule the dumb phone market and are very strong in communications software and other areas. However their new CEO sees the growth future in the phone business as residing in the "smart phone" area where Nokia is very weak.

Furthermore, with all their R & D money, they haven't got anything really going on other then building hardware and writing more software. The CEO rightly understands that isn't enough...a smart phone will require a whole ecosystem to be effective in the market. Nokia has nothing of that sort...zero...zilch...nada.

Now one doesn't conjure up an ecosystem...it takes time to root and develop and success means always tweaking and adjusting to (or creating) trends. Obviously, that's not Nokia's strength or they wouldn't currently be the king of the bottom feeders in the phone market.

There is no way to rush an ecosystem into being. It takes time to grow it. It's like that old problem the Russian government had for years: If a a hundred farmers can grow a thousand tons of wheat, then putting 400 farmers on the job ought to get it done in four months. That's now how it works.

You talk about how it may take 3 years for Nokia to get its act together and start kicking arse. No way will the market stand still for an arse kicking. When they get ready to kick, they will be kicking an old target. The best example is Microsoft. They are now putting on the market their phone... it gives Apple's iPhone serious competition...IF Apple hadn't gone on and improved their hardware and software to be much more desirable to the enterprise market, and improved their ecosystem to tightly capture the personal home user.

The CEO of Nokia recognizes that the phone market is changing very rapidly. He recognizes that they don't have 3 years to catch up. (Hence the "burning platform" analogy). He also recognizes that there are no really attractive quick solutions.

I agree with most of what you have said. However Apple have not really improved their software much, it has a few more bells and whistles and runs faster but it is still essentially the same OS from 2007 in terms of functionality.

As to my 3 years comment, you only need to look to Apple and the return of Steve Jobs. He managed to turn the fortunes of the company in the first 3 years. What he did was to reduce the R+D to only the essential stuff. This cut their expenditure massively and helped them refocus. His biggest realisation was that looks sell and simplicity does as well.

I believe the new CEO will do all of the above. Nokia also need to get in to the high street. They sell so many models of phones they would have no problem dedicating a shop to it. This would help customer relations and improve brand image. One thing they really need to get right is make the phones pretty! I had Nokia's for years and not a single one in terms of form factor made me go wow. With the iPhone the very first time I tried it I was sold, this is what Nokia needs. Their hardware has never really been an issue ( except the N97, terrible phone which I owned and sold ). When you go in a shop and look at mobiles ( apart from the iPhone ) what is the first thing you see? Of course it is the form of the phone, this gets you interested, then you try the OS. Basically I am saying if you don't have a good looking phone, then the OS ( or ecosystem for that matter ) is irrelevant.

 

[andiwm2003]

was he CEO already in 2007? If yes I wonder why he still is CEO. I hope they come up with a good strategy, join WebOS or Android and build a good ecosystem. Competition is good for us.

 

[ChrisTX]

Certainly not defunct.

Palm is now a big well funded division at HP, still shipping smartphones on multiple carriers, and about to announce a some new products and strategy at a big press conference tomorrow.

If anything, this division of HP is in a better position to compete with Apple than is either Nokia or Google. HP is vertically integrated, with their hardware design, massive manufacturing capability, broad distribution channels, enterprise services, and their own captive and shipping 3rd generation mobile OS more advanced than Symbian and more polished than Android in some areas. Even a (re)growing developer community.

Nokia may be underestimating a 3rd front against them in their battle for smartphone mindshare.

Way to be optimistic, but you're crazy if you think HP / Palm has a chance at overthrowing Apple. No developer support makes WebOS a bust.

 

[the vj]

Not a good CEO

I liked the letter but he IS the CEO, he is the one who should be driving the company (I think), but in the letter he seems to asking his employees for ideas.

In a corporation that is a really bad idea because you are making employees compete between themselves and we know corporate america, "if you try to look better than me you are doomed".

I hope Nokia can make it but remember this, once Steve Jobs is gone, Apple will fall into the same problem in no time, because there will not be leadership.

 

[mabaker]

I don’t think Nokia needs the mess that Android is. The superior built quality of Nokia handsets would be complemented by the sleekness of WP7. I am no fan of M$ and certainly not of Google’s bs policies but Nokia and their highly customized WP7 experience could be the way to go.

 

[Tunster]

Nokia never got or understood the smartphone market. Having been dominating in simple mobile phones that just did phone and text, teenagers and avid mobile users don't want that any more. As much as they drove the market and innovated it for so long, the big jumps were never made quick or efficient enough. It was like they got so blurred with other innovations at the time and have tried to react to it (rather than be proactive).

I can't say all of Nokia's smartphones are bad, but they're responsiveness is slow and menus are too complicated (having been adopted from previous systems). My mums 5800 has been sent back twice and various others I know have dumped their E-Series phones for Blackberrys or iPhones.

I don't see why Nokia need another OS in the long term. WP7 or Android would suffice with their hardware experience to create much more stylish phones than HTC (who target geeks and business people a-like). In that time (maybe over 18 - 24 months), they should create a new OS from the bottom up. I can't see how developers who ace at the simple mobile market can't make a transition. Nokia I always thought was about being robust (only have to look at the design and software of the 33xx series at the beginning of this century).

Ultimately, they need to dwindle their support for Symbian phones and look ahead. Otherwise, they'll become a scaled-down company as Google/RIM/Apple take the lead in the phone market. Nokia have the reputation, but have not delivered the correct phones people want. Can't see why Nokia can't learn from Apple's experience and go one better.

The scary thing is that Nokia had such a huge chunk of the market one time not long ago.

 

[mytdave]

their future

Let's hope they're smart enough to avoid WinPhone7. Their issues don't have anything to do with their core OS, they just failed to see the competitive threat of the iPhone, mocking it along with everybody else instead of working on a decent smartphone of their own with touch-UI.

The guy is spot-on about ecosystems.

 

[Popeye206]

Nokia is in a bad position. This is also what I hear from their CEO... they lost the lead and the market changed under their feet. Balmer probably says similar things at MS.

If they go with Google, I'm not so sure that would be smart. Too much of the "me too" factor going on there and then they just become another Android phone. With WM7 at least they would be more unique, but it's a big gamble on a phone OS that's not getting very good adoption. Each choice has it's own risk.

Too bad they don't seem to feel they can reinvent their own OS. Seems as though they can't seem to see outside of their own box.

 

[MacAodh]

I have beside me on the desk a Nokia n8, probably one of the best (if not the best) phones out there with regard to hardware. The camera is better then top notch, the hdmi out port and the ability to attach usb keys is fantastic. The software on it however is shameful and the continued promise of updates just makes it worse.

This month were meant to be getting updates for most (if not all) of the major problems i have with this phone but I don't believe we'll get them as the last update, which was meant to come before christmas, is only just being rolled out now.

I don't know what the answer is for Nokia, I'd like them to make a real stab at symbian^3 but it's not as if they haven't been doing that for the last three years, what's there to say they won't screw it up for the next three too. All I can say though is that if its an option of switching to another maker or switching to wp7 it's bye bye Nokia from me...

 

[jamiemcd]

I've liked Elop from his work with getting Macromedia and Adobe paired together. After that he went to Microsoft, so it is likely he will get Nokia and Microsoft paired up with an announcement right around Valentines.

Anyway, we know Nokia will live long and prosper because young Jim Kirk was using one -- oh wait, that was the alternate timeline Jim Kirk.

 

[ericinboston]

I love my iPhone 3GS...and will buy a 5 when it comes out.

However, the iPhone is really not a phone...it's more of a portable/mini-tablet computer with phone abilities. Seriously. 99% of the usage time of my iPhone (and I bet a very high percentage of other people) is non-phone usage...texting, email, web surfing, apps, and music. I have the 400 minute plan and am lucky to hit 300 mins a month (partly because of nights/weekends and mobile-to-mobile where mins do not count).

The game changing is that Apple has built an awesome mini-tablet that has a phone on it....not a phone with other bells and whistles.

Telephones are a commodity and have been for decades...phones are phones...you press a few numbers and you talk. That's it. Some more advanced features that you use occassionally are Redial and 3-way calling. Everything else (texting, 3G surfing, voicemail) are not phone capabilities but extra features of the phone network/system.

The problem now is that how many tablet-based user experiences can really be designed before Patent wars start? You've got Apple who was first to the game. Android came in 2nd. Anyone that comes in now will have to have very different look/feel OR they will have to pay patent royalties.

Tough luck for Nokia and others...they are years too late unless they want to pay royalties.

However, I still think there is a solid market for non-smartphones...simple phones with texting and that's it....but unfortunately that market is a commodity and phones can be bought for $0 to $25 in that market...not much room at all for profit.

 

[Frobozz]

Surprisingly Candid

That is one of the most honest and accurate summaries I have ever hear a CEO state. Usually, they are captain of the cheerleading team. Meaning that they dodge questions of weakness, parrot talking points, and generally promote the idea that their product or service is second to none-- all while sitting next to an elephant. So it sort of gives me hope that Nokia could reinvent it's self with a good CEO at the helm. But there will also have to be a shift in how they approach ecosystem design. Right now, they clearly don't "get" that.

I suppose acknowledging the problems and actually solving them are two different issues-- but his final analysis is correct. They can't just keep doing what they are doing, or they will be out of business or barely surviving as a husk of their former self. They need to choose quickly and hope that choice is the right one.

My worry is that they will simply jump on the Android bandwagon. While Android is interesting, it's not a very good platform for consumers yet. Although, with time, it could be. Perhaps Nokia's play would be to standardize the ecosystem problems that plague Android? Perhaps Nokia could be the one well-implemented Android installation? We shall see. I, for one, think it's their only viable alternative if they plan to compete head to head with Apple. One thing is certain-- their future ain't Symbian.

The other play they might have, is designing an operating system-- maybe using a super simple version of Symbian-- for a low end smartphone in emerging markets. That is an area Apple and Google aren't penetrating. It's actually a place Nokia already has a fair amount of strength. Can they, essentially, replace the cheap "dumb-phone" with task-oriented features in those markets? It's certainly a volume game, but it's one that is noble.

 

[Frobozz]

The game changing is that Apple has built an awesome mini-tablet that has a phone on it....not a phone with other bells and whistles.

Couldn't agree more. I barely use the "phone" on my iPhone. I use apps, listen to music, and email / text. Those are all things that suck on a Nokia phone right now.

 

[Mister Snitch]

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.

Yes, give the guy credit for all-around honesty. Brutal frankness, in fact. We've certainly heard from enough CEOs with nothing going for them but hot air.

And he's taking action. Whether or not it's the right action, I couldn't say. But it is radical and determined.

 

[Centient]

I had the 5800 and it was a huge POS. Unrefined, cheap, and just not a good experience. Though it was a super MP3 player. You could tell it was a product built on the scramble.

It definitely sounds like he's prepping the staff for big changes. Rumors of Nokia outsourcing their OS have been around for a while now, and I think this just about confirms it.

 

[louis Fashion]

Exactly

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

Well said motulist. The more competition the better. I also hope for the best with Nokia.

 

[ehoui]

I liked the letter but he IS the CEO, he is the one who should be driving the company (I think), but in the letter he seems to asking his employees for ideas.

Yeah, the last thing you want to do is solicit ideas from employees...

In a corporation that is a really bad idea because you are making employees compete between themselves and we know corporate america, "if you try to look better than me you are doomed".

I truly feel sorry for you.

I hope Nokia can make it but remember this, once Steve Jobs is gone, Apple will fall into the same problem in no time, because there will not be leadership.

There are many many many companies without Steve Jobs that aren't failing. So having Steve Jobs is not necessarily a hard requirement. But fine, Apple may not be as innovative (or perhaps too innovative) once he leaves. I'll wait to know who his replacement is before I sell my stock.