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Nokia's 'Burning Platform' Memo

9:50 AM -- Talk about having a low-self-esteem day. Nokia Corp. (NYSE: NOK) employees worldwide received an internal memo from their CEO, Stephen Elop, on Wednesday with a brutal, yet honest, assessment of the company he has inherited. In short, "We are standing on a burning platform," he said.

If you haven’t read it already, the full text of the memo is on The Wall Street Journal or here on Engadget, which first reported on the leaked memo.

We know things are bad for Nokia right now, but Elop's memo spells out just how bad. He is frank about how Nokia is being squeezed at the high end of devices by Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG)'s Android as well as at the low end by Chinese manufacturers. (See Top 5 Candidates for Nokia's Exec Shakeup, Nokia's History of Change, OS Watch: Will Nokia Embrace WP7?, Nokia's Flagship E7 Delayed in the UK? and Android Dethrones Symbian Globally.)

Here's a sample of what's in the memo: "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."

Elop doesn't give away what new strategy he will announce on Friday, Feb. 11, at the Investor Day in London. But the changes have to be big.

— Michelle Donegan, European Editor, Light Reading Mobile

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krishanguru143 12/5/2012 | 5:13:22 PM
re: Nokia's 'Burning Platform' Memo

"Elop's memo was great, but investors have been saying that about Nokia for years. I don't know that Elop can prevail over that kind of institutional arrogance."


 


Why not? He has already replaced people.  So if anyone still has any arrogance left, they would be next on the chopping block.  A shake-up invigorates change and the ones that want things to stay the same don't last very long.  Elop won't accept status quo; it is either change or be replaced.


 


What does Android buy them?  Absolutely nothing.  Nokia had something to compete with Android and the iPhoney; it was once called S90.  Nokia just really never did anything with it but put it on a tablet and eventually a phone called the N900.  If Nokia would have worked with S90 far earlier and kept it on smartphones, things would have been far different today.  Nokia made a lot of mistakes, but they are getting back on track.  Back to Android.  How will they not get hammered in the margin even if they did adopt Android?  You have to make your Android phone different from the others and you have several low market manufacturers in it.  Nokia is trying to get to a common API so that apps can run on Symbian or MeeGo.  Android can't even have common apps across their various releases let alone two different underlying OS's.  WP7 is a disaster waiting to happen and Nokia doesn't need that headache.  They also don't have to worry about WebOS as HP is sure to bungle that up as they did WM phones as you have pointed out already.

DCITDave 12/5/2012 | 5:13:22 PM
re: Nokia's 'Burning Platform' Memo

Random thoughts...


Elop's memo was great, but investors have been saying that about Nokia for years. I don't know that Elop can prevail over that kind of institutional arrogance.


Microsoft should be sending a memo like this on a weekly basis.


Nokia's high-end smartphones are confounding. Features and apps often are hidden behind layers of menus and bad design. LOTS of functionality. No logical way to find it.


The HP Glisten running Windows Mobile 6.5 takes the cake as the worst smartphone I've ever picked up. So at least Nokia doesn't have as big a hole to dig out of as HP.


If Nokia throws in its lot with Android, what will come of all the calories it burned to get ovi up and going? With Android marketplace, ovi doesn't have a reason to exist, does it?

krishanguru143 12/5/2012 | 5:13:21 PM
re: Nokia's 'Burning Platform' Memo



Statistics mean absolutely nothing.  Scenario, I sold one widget, the following year I sold two.  I saw a 100% increase in sales.  When you start off with 0, you can see large increases but they are not sustainable.  How many long-term users does Apple really have?  You currently have quite a few users that buy the new model every year.  If you looked at total active users, Symbian is still well on top.




DCITDave 12/5/2012 | 5:13:21 PM
re: Nokia's 'Burning Platform' Memo

Replacing enough people to change a culture is so much harder than it sounds. Believe me, I work with journalists, some of the most set-in-their-ways people in all the world. People who've been doing one job one way for a dozen years always think they know better.


Elop will not win just by replacing folks. He has to find the hidden talent already in the company and figure out how to get those people on his side. Not saying it's impossible, but it's a HUGE challenge.


I mention Android only because Elop brought it up (indirectly). He said Nokia either has to join or create an ecosystem. I seriously doubt their ability to create an ecosystem and I don't see a suitable one that they can join.


What should they do next?


 

DCITDave 12/5/2012 | 5:13:21 PM
re: Nokia's 'Burning Platform' Memo

Looking at the five-year charts for Apple, RIMM and Nokia...


Apple is up nearly 400%


RIMM is up nearly 190%


Nokia's down about 37%


Five years may be going back too far, but it's still a pretty staggering gap.

krishanguru143 12/5/2012 | 5:13:20 PM
re: Nokia's 'Burning Platform' Memo



Management is usually the issue, not the employees.  Employees might want to do something but management stops them.  Comparing engineers to journalists is just plain wrong; their mindsets are not even close.  Nokia is a company that innovated; Apple is not.  Look at the original Communicators; when the first iPhoney was released, it couldn’t even compete with it.  Look at the E90, it was released around the same time but it had GPS, video calls, 3G, FM radio, stereo BT, etc.  Apple couldn’t even manage MMS which was part of the GSM spec from 1999!!!!!!  It was introduced with I believe EDGE.  The iPhoney supported Edge, so clearly Apple read the spec but failed to implement MMS.  Nokia had a 3G phone in 2005 and it did video calls, it took Apple how long to introduce their closed model?  Everything Apple does is to get their followers to buy the new model with some improvements the following year.  Look at the antennae issue.  Apple was so proud of their “innovative” design that no one else did.  The fact is, others did try it and it never left the lab as there were issues with it.  Apple was more concerned with keeping it all a secret so they had to cover the phone up so people wouldn’t see it.  That cover kept the issue from being noticed.  It wasn’t noticed in the lab as they would have an internal tower to work with and thus close to the phone.  Their own arrogance caused their issue.  Back to the issue at hand.  Let the engineers innovate and remove the stumbling blocks that management has created.  Replacing key people does force change downward.  The people that are not replaced take a new look at their job and how they can do it better.  Sure morale could drop, but in the trenches it was probably already low from oppression.

 

As for an ecosystem.  How is HP going to handle their ecosystem?  How is Microsoft as well?  Nokia can do it; they just need to quit trying to include the kitchen sink.  So they don’t need to join an ecosystem as app stores were around long before Apple “invented” it, it just that they were open and platform independent!  You don’t think MeeGo won’t help given that the apps can be used on Symbian as well?  It gives manufacturers two options; Android and MeeGo.  You don’t see RIM licensing their OS just like Apple doesn’t either.  So that leaves other manufacturers with two options to use.  You have Intel backing MeeGo as well as Moblin was their addition to it.  So why does Nokia need to create an ecosystem when various partners will help?  Give the consumer choices, you just don’t need one closed model like Apple has chosen.  Apple will start losing market share as they want a piece of every sale of every app even inside the app.  How about the credit card apps for businesses, they won’t be using the iPhoney anymore as I can guarantee you, that 30% will be the deal killer.  So that forces Apple to change the rules once again, how is that good for an ecosystem when the rules constantly change?




DCITDave 12/5/2012 | 5:13:20 PM
re: Nokia's 'Burning Platform' Memo

If Symbian is doing so well, why are we bothering to discuss what needs to change at Nokia?


And, yes, statistics mean nothing. Except that Nokia's market share, profits, mindshare, ecosystem, viability and market cap keep shrinking. Other than that, nothing at all.

[email protected] 12/5/2012 | 5:13:20 PM
re: Nokia's 'Burning Platform' Memo

According to Engaget, the first paragraph of Elop's memo begins:


"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."


My underlinings. I hope that the new captain has a decent map.

DCITDave 12/5/2012 | 5:13:20 PM
re: Nokia's 'Burning Platform' Memo

Wrong, yes. But very funny. Wish I could share the emails I got after that post. :)


re: "Comparing engineers to journalists is just plain wrong; their mindsets are not even close." 

DCITDave 12/5/2012 | 5:13:19 PM
re: Nokia's 'Burning Platform' Memo

re: "Why does Nokia need to offer music?" 


Consumers want to buy device-compatible digital entertainment with simple, straightfoward billing: http://music.ovi.com/global/en/pc/storeselector


It's not a bad idea at all.


re: "How will Andorid help Nokia?"


Marketing. The Nokia brand can only be helped by an association with Android, which is seen as new, innovative and interesting. Like Moto, Android phones can be just one of many options in their arsenal.


 


 


 

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