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February 09, 2011

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Mike Macias | The Mobile Fanatics

I don't know how you do it Tomi. This article is huge and I'll have to finish it in the morning (I'm in LA).

All I know is I thought it was fake at first but now I've heard from a few bloggers that I trust saying their sources confirmed this... in particular Mark Guim. Guess we'll find out soon!

Mark

"Just learned from a source that this is real, but it was not sent as a memo. It was a post on CEO Stephen Elop’s internal blog. I was also told “some of the info is false some true.”

http://thenokiablog.com/2011/02/08/nokia-ceo-burning-platform-memo/

Steve Litchfield

100% agree with your last few paras Tomi - I'm also unsure about Elop's nature. Saboteur, (p)Sychopath or Saviour? I guess we'll find out...

SoVatar

Very refreshing, Tomi. You clearly demonstrate why the memo is unlikely to be authentic. But most U.S. blogs take it as real, citing unnamed "trusted sources".

And I also agree, if this memo turns out to be authentic, then Nokia has a very big problem ... at the top!

Steve Barker / @NokTokDaddy

Thanks Tomi - all good points well made.

I am not suitably qualified to expand on the technicalities within the 'NokiLeaks' memo, but I have to say that I find the use of the 'Burning Platform' analogy entirely inappropriate and way too pessimistic for the CEO of a world-class company.

Would a guy of Stephen Elop's caliber really say to his troops: "look guys, we have no option here: we either jump into the icy waters and risk near-certain death or stand here and get burned alive"? I think not.

The language is not what people like this really use. The analogy is a poor one, is so bleak it'd start a chain-reaction of panic and resignations and is totally fatalist - something that is contradicted after the analogy story.

I'm with you on this one.

Jan Tervonen

Turns out the memo is not a memo. According to Helsingin Sanomat newspaper on 9 Feb 2011 it is a speech by the CEO from last Thrusday held at the Nokia headquarters to its employees, which was then published in an internal blog.

If this was a fake document I would assume it would require some action from a publicly traded company - don't you think?

Christian

To tell people the solution is to jump in ice cold water and dy is not really a strategy. I think the analysis of the memo is right, but the only solution is to do a better job. Other platforms will not help nokia, if nokia wants not end up building "just another android phone" or "just another WP7 phone". Also the WP7-platform does not scale and is not very popular.

Christian

sorry, i meant die

years behind

You are an idiot.

Nok_Int

It is genuine, I have seen the original.

Romain Criton

Hi Tomi,
I can't really tell whether this document is authentic or not. I would indeed find it very surprising if Nokia threw away their whole Qt strategy after putting so much effort into it. However, since this strategy wasn't initiated under Elop tenure, it is still possible that he decides to stop the effort before it's too late.
I agree with many of your objections but there are some points that you attempt to debunk and where I think the memo is right:
About missing big trends:
yes Nokia did miss several big trends:
First, the switch to capacitive, no-stylus-required, touchscreens. Even if they had released touchscreen phones well before the iPhone, they never really believed in this form factor and I think that's why it took them so long to release iPhone competitors. They missed the trend from a hardware standpoint, by continuing to release phones with resistive touchscreens when most other smartphones (save for the lowest end) had transitioned to capacitive touchscreen. And they missed the trend from a software standpoint by taking years to adapt their Symbian UI to "finger-based" interactions. I mean, it is only in Symbian^3 that the system was fully "finger-ready"

Second, they always favored battery life over performances, even in their high end phones, when all the competition was clearly putting the emphasis on performance at the expense of battery life. I mean look at the Nokia N8, their Symbian flasghip: it uses a 600MHz CPU when all the high end competition is already using 1GHz (and more) processors
So yes, Symbian phones have a great battery life when compared to iPhone or Android phones which barely make it through a day on a single charge. But is it what matters most to consumers when compared to shiny games and a responsive user interface ? I think that the success of iPhone and Android proves that battery life is no longer a dominant criteria in this segment (otherwise consumers would reject phones with such a poor battery life).

Last but not least, Nokia missed the "always connected" trend. I mean, the iPhone was the 1st smartphone to be designed as an always connected device. It handled the cellular/Wi-Fi switch automatically and seamlessly. In the meantime, Symbian (and many others, not only Symbian) phones required the user to create several connection profiles and switch between them, prompting the user for confirmation every time an application needed to connect to the internet. This made sense when mobile data was billed per the KB or MB, but it no longer made sense in post iPhone era.
Yet, it is only in Symbian^3 that Nokia made the connectivity really seamless and transparent for the user

As a corollary, yes Nokia was and is still years behind regarding those "big trends".
Look at how long it took them to acknowledge those trends and implement them into their product:
Their first truly modern smartphone (i.e. capacitive touchscreen, finger-based UI), the N8, was released more than 3 years after the iPhone !

Anyway, we'll find out in a couple of days. Can't wait !

ryzvonusef

Hi Tomi,

Here[1] is the closest I can get to an "official" Nokia response on this:
(translated from Spanish)

"We do not comment on our internal communications, memos or documents, or their legitimacy (or lack thereof). For clarity on the current view of our CEO of Nokia, we suggest reviewing the transcript of our call about fourth-quarter results: http://seekingalpha.com/article/249092-nokia-ceo-discusses-q4-2010 -results-earnings-call-transcript"

The link in the quote leads to a transcript of Elop's speech at the Q4 report presentation.

Take of it as you will.

[1]: http://translate.google.com/translate?hl=en&sl=auto&tl=en&u=http%3A%2F%2Fwww.matuk.com%2F2011%2F02%2F08%2Fnokia-nos-responde%2F

Alex Kerr

Perhaps Elop is actually in the end how Microsoft get to win at mobile. A trojan horse that gets MS to the top, either by chance (likely) or design, steering and absorbing Nokia from the inside out. Most MS key big breaks have come by chance. Oh well, at least it means Microsoft get to make more billions in mobile, thus increasing Bill Gates' share options and helping the world's needy. We have to look at the bigger picture ;-)

Going to Win Pho 7 or Android makes no sense whatsoever on any level. They are both a considerable downgrade in technology and ecosystem.

What Nokia actually need to do is finish and accelerate the process they've started very well - making Symbian more competitive and getting MeeGo out. That has far more sanity than throwing the baby out with the bathwater.

If Nokia go WP7, then Android has won the game in smartphones. Which actually means, ironically, that Java has won the game in mobile, because you'll have J2ME on most phones and Android Java on smartphones. And this gives the popular LWUIT library that spans J2ME and Android and Blackberry a HUGE chance at being the primary future development environment/library for the world's phone developers. You heard it here first :)

Tom

Curious why you confuse % of smartphone market by total handset number with % of smartphone market by total smartphone profit?

Finally the CEO understands the situation Nokia is in, and you're deriding him? The figures don't have to be pixel perfect - he's nailed the major trends - that Nokia's low profit margin low cost handsets are facing threats, that Nokia's high profit smartphone that are actually on sale, right now is constrained by an inferior UI. MeeGo later maybe - but right now, and until MeeGo is actually released and debugged... then what?
By the time MeeGo gets to v1.1 on the market, iOS 5.1 will likely be out, with Gingerbread across the Android devices, potentially with 2.4 possibly out too.

Is Nokia's profit per handset going up or down or stable?
Is Nokia's profit per smartphone going up or down?
Is Nokia selling smartphones well in comparison to competitors in US, Europe?
Is Nokia's UI and OS competitive currently, and will be in next year (extrapolating what Android & iOS will bring on dual core ARM CPUs with better GPUs)

Andre

if this memo or blog post is real i gotta SELL NOK1V
I like your Analisis Tomi!

don_afrim

Tomi, you know why it's real? Because Nokia went out and hired a friggin American exec with no background in the phone business. He prolly still uses a RAZR!!! He has no clue about the world, prolly never even seen the world and totally detached from reality. This guy is going to jump ship on MeeGo because that's what his buddies are telling him to do from back home.

gap

Nokia will add Win7 phones to their lineup. It's a win/win for both companies. Nokia gets a share of the U.S. marketplace. Microsoft get a larger distribution of Win7 phone. It would be stupid for them "not" to partner up.

JCMont

Wow. Excellent article Tomi.

I am convinced that the "memo" was indeed written by a fake CEO Elop, a US based analyst.

E.Casais

Tomi, your reaction mixes a refusal to acknowledge some realities and some sharp insights and questions about what is going at Nokia.

1. Nokia is indeed several years behind the competition. Not because of hardware, innovation or even the operating system, but indeed because of the ecosystem. Thus:
a) It had tablets long before the iPad or Android tablets, but completely missed developing the ecosystem that matters: e-books.
b) It had NFC long before iPhone or Android, but was unable to develop an ecosystem for mobile-based payments with whatever partners were necessary.
c) It had launched into mobile games with NGage, but after a first, disastrous miss, its
efforts in this domain petered out; no game ecosystem for Nokia devices.
d) It had a solid, widespread smartphone OS long before Android or iOS, but built the
ecosystem of application developers around OVI at a snail's pace.

And so on, and so forth. And by the way: do not talk about a Maemo ecosystem -- there is none, as there are no products on the market with Maemo at this point in time.

2. The leaked memo sounds genuine -- the kind of rubbish from a CEO who wants to talk "tough" to the troops. Do not underestimate the lack of interest that Mr. Elop has for Nokia, its culture, its products and its future: since 2005, Nokia is its _fifth_ job.

Contrarily to Steve Jobs, Bill Gates, or Larry Page, he is no entrepreneur, so very obviously, he will play by the management book (chapter "window dressing"). That means:
a) Discontinuing large areas of R&D (I guess Meamo and tablets are on the chopping block, as well as some branches of Symbian).
b) Quickly launching models based on WP7 or Android (to "catalyze or join a successful ecosystem").
c) Selling parts of the company (manufacturing plants, smaller divisions).
d) Severing the last links with Nokia-Siemens (to "focus on the core terminal business").
e) Firing lots of employees.
And in two years (max three), after a short-term profitability surge, he will tout his performance in revamping Nokia's fortunes, and then quickly decamp to his next position
in another corporation, leaving behind an eviscerated company.

We shall know more on Friday.

 Tomi T Ahonen

Oh my gosh! 22 comments already? Wow, cool, thanks guys.

First, obviously, while you guys left these comments, I ended up authoring the blog I hoped I need not have to write, to explain once and for all, why Nokia's Symbian and MeeGo strategy is the best.. for Nokia. And any shift away from it now in 2011, would be corporate suicide. Its up on the blog, please read it too.

Now, on replies, I'll answer each of you individually as we do on this blog for every comment left. So please do keep the comments coming.

Tomi Ahonen :-)

Nemus

So much leaks from Nokia these days, so much exposure in the media (especially in hostile US based tech blogs) and i think that we might witnessing carefully orchestrated campaign aimed towards American investors. Simply Elop is saying: yes i did take a deep look into market, considered alternatives, found our weaknesses, but at the end of a day only way forward for us (Nokia) is to keep current strategy alive and improve execution.

ht

very good analyse!!!

it may or may not be true. for sure nokia executed their strategy very badly and slowly.

however, now, that it finally could happen (qt with qml almost ready, symbian^3 fairly usable, meego coming this years, ovi store improving) to jump and leave symbian/meego/qt for other platform with no experiences (android or wp7) and no control of the future.
that solution would be very bad!

(otoh, i could understand if they would add some platform for USA to build brand awareness, gain some marketshare and stop US analyst ignorance).

Steve

"I ended up authoring the blog I hoped I need not have to write"

You didn't need to write it - you could have confirmed it was genuine in ten minutes.

Maybe your contacts at Nokia aren't so hot, Tomi?

keizka

Steve, oh you are so clever.

You claim it is genuine. Who are you to claim so? Working at Nokia, I presume? Then, a novel idea: Prove it.

Arun

Tomi:

Its been vetted by even WSJ.
Its over here: http://blogs.wsj.com/tech-europe/2011/02/09/full-text-nokia-ceo-stephen-elops-burning-platform-memo/

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