- A Badly Needed Shakeup May Be in Short Order
Nokia CEO Stephen Elop has compared his company’s current situation to being on a "burning platform" in the North Sea, leaving shareholders to wonder if Elop will fiddle while Nokia burns.
Nokia is faced with a series of very important changes that it must act quickly upon to avoid perishing in Elop’s flames. The internal note, verified by us at The Online Reporter, Engadget, IDG News and others, pulls no punches when it comes to the state of Nokia.
Elop wrote in his letter: "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."
Nokia is stuck at a point where it must figure out how to quickly catch up with its competition while also finding new ways to innovate above them. Saddled with older platforms and weaker handset models, Elop has said that Nokia needs to reshape its entire approach to the smartphone and the mobile space.
"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, catalyze or join an ecosystem," he writes. "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."
Elop outlines some major issues that Nokia must address quickly:
- Symbian has been "non-competitive" in North America and the company has had hard times making any inroads there.
- Symbian is slowly fading and becoming a harder platform to push because it cannot keep up with consumer demands.
- Nokia has struggled to rapidly develop new products with the latest hardware, a trend Elop said means the company "will get further and further behind."
- MeeGo has stumbled from the word "go" and Elop said "at this rate, by the end of 2011, we might have only one MeeGo product in the market."
- The mentality of approaching price ranges on a device-by-device basis hasn’t worked, and Nokia needs to address this with an ecosystem approach.
In the past few months, calls have come in from a variety of analysts for Nokia to drop MeeGo, Symbian, or both, in favor of Android or Windows Phone 7 (WP7), which are not the best choices and not something Nokia would be fond of doing.
As Nokia joins Microsoft’s WP7 because of its brand recognition, Microsoft has created a solid platform that can compete with the likes of Android and iOS, but as Steve Ballmer said, the company is having a hard time of getting anyone major to really bite.
One factor is that WP7 isn’t the priority for any vendor or developer at the moment, with the big names like Samsung, LG and HTC focusing mainly on Android.
Carolina Milanesi, research VP at Gartner, said that a Nokia-Microsoft partnership makes more sense than one with Google. While Google might be happy to offer better hardware at lower prices, there isn’t a big services foothold to be gained. Picking Android would also mean Nokia is still years behind its competitors in terms of devices, UIs and customer experience. The UI is a big worry since most are developing their own Android UIs to differentiate themselves, and one big reason Symbian struggled was because of its UI design.
The one issue that will come out with a possible Microsoft pairing is that the Windows overlord likes to have tight control over its OS. Elop puts Nokia in a good place to negotiate with Microsoft and the adoption of its services like Bing could help the two bridge the gap. Speaking of Bing, it is one of the existing connections between the two: Nokia’s Navteq service provides maps for Bing.
The one thing that may end up working out for Nokia was the timing of this ‘leaked’ memo. It hit the week before the Mobile World Congress and just a few days before Nokia was set to announce its new strategy on February 11. With the announcement Friday and Nokia’s press conference on Sunday, there’s a lot of focus on Nokia in the media, something that hasn’t been too commonplace lately.
Elop ended his memo on a positive note, saying "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 future is coming, and Nokia better be ready.
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