Holy words from Nokia CEO, Stephen Elop. Please, Read.

Today I’m posting a memo which has been posted on an internal Nokia employee system

The whole message is very interesting, I suggest everyone read it carefully…I really liked it!

Hello there,

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.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

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.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.

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.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

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.

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.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. 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 burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

18 thoughts on “Holy words from Nokia CEO, Stephen Elop. Please, Read.

  1. Anche se ognuno ha quel che si merita mi dispiace per nokia.
    Vediamo cosa si inventera’ ma certo la vedo tosta,perche ormai symbian e’ considerato vecchio e non a torto, anche se secondo me, sara’ per il fatto che mi ha accompagnato per anni,e’ molto funzionale.
    Per questo non ho cambiato il mio omnia hd con n8,ma sicuramente mi spostero sul prossimo galaxy s2.Quindi anche io passero ad android mio malgrado e come me lo faranno tanti altri…
    Arrivederci Nokia 😉

  2. Faenil, thanks to share.

    The nokia is for most users mobiles as a passion, and in my opinion, a good way to attract users, it would open doors to humility and listen to these same users about what they would have on Nokia devices. Financial costs of this action have? Sure … A short-term investment for the medium term prosperous and solid. Just as the sacrifice of falling into the icy waters to save his life.

    Hug 🙂

    1. while RIP symbian is probably true…(in 3 years approx, I hope we get the PR2.0 before…)

      RIP Nokia seems an immature sentence to me…WP7 is a GREAT platform, why shouldn’t they rock? They’re just both trying to give WP7 more strength while lowering the price at the same moment…

      I’m looking forward to WP7 Nokia devices with a stunning camera such as the N8’s one…

      that would be amazing!

      1. Have you seen how ugly that thing (OS) is? Is there really a definition of what they’re doing on UI level? I say they should fire their whole UI department and hire real experts. My kid could do better then what WP7 phone OS is offering re GUI. You can’t offer that to users, as much it could be OK under the hood, it’s bogus (at least).

        I’m looking forward to new Android stuff and dual cores etc, but not to this oddity. Might suite some, but not me. And about camera capabilities – every other manufacturer will be there in time. Just a reminder – it wasn’t Nokia who pushed camera phones, they never wanted to do so, it was Siemens so praising Nokias for their cameras and multimedia is not going to help.

        At the end, crucial is to see and acknowledge the downfall, accepting it the second step and pulling away is the third and utmost needed. They did so, but they chose flaws and immature OS instead of something else. At this point, redefined Symbian would have better chances then WP7 OS IMHO.

        1. Ugly? I really like it 🙂 yes they’re building a smart design as they say in their presentations, and I really like their idea…

          Anyway, best cameraphones are from Nokia, you can’t deny that. (N95, N8, N86,…) and Nokia’s the company which produces more cameras in the world…

          No doubt Symbian with new UI would have been better imho…They were pointing on Qt, “Qt all the way” Elop said back in October when he was appointed CEO at Nokia…

          WHERE IS QT NOOOOOOOOOOW!!! I love Qt, I won’t leave it.

          Conclusion: I’m going to wait for the Meego device later this year, and that will be my main platform for the next months.
          N900 with newer hardware, that’s what I’m waiting for. And a meego device is just like that!

          Cheers

          1. Anyways, best camera phones are not made or implemented by Nokia, and we some knows that, it’s SE and none can argue it. Nevermind that ‘stupid’ writing saying “Karl-Zeiss” on the phone itself, it’s not even mediocre Zeiss optics there, while Sony does indeed implement their mid range quality optics in its SE top of the gamma.

            Nuf said from me, I don’t mean to change opinions or something else, but my hunch is telling me Nokia lost it in my eyes, so did Symbian and that is the end of Symbian or previous Nokia story.

            New chapter might be opened with M$ partnership, but I don’t even care to bother start on “reading” it.

            1. oh bro don’t push it too far…name the phones using mechanical shutter which are Nokias and those which are not Nokias…

              btw, don’t want to convince you about anything…I’m shocked by Nokia’s news too, but I just said WP7 on Nokia devices could be a great idea, if it follows the right path…

              I really hope Intel will keep Meego alive, too…

  3. RIP symbian wil not happen because european union gives money for this platform. so nokia will steal money from the european tax payer as far as it could.
    about windows – it is a crap. the better and the only one choise for nokia was droid. yeah windows gave to nokia the rights to modify every part of the os but with crapy os nothing could be done. so as i read not long ago – android will become “windows” for phones, symbian will continue due to its low hardware requirements and ios will be like apple pc’s. i think that wiil happen. cheers and good evening.

    1. It will happen and it has nothing to do with EU or anything. You’re ready to buy a Nokia device with low HW specs and outdated OS in 2012? GHO ahead, if you find it on the market that is… I know neither you nor me are that stupid 😉

      And Symbian and i8910 proved that it has a lot to do with hardware, else it can’t be explained how i8910 is running this S^1 on snappier and better level then any other Nokia puppy… 😀

  4. Faenil
    I have read all the comments above and why i think only you are on the other side to like WP7 on Nokia.
    I dont want to change anyones view over liking WP7.

    I just want you to be equal for all the opportunities coming in this world.
    But seriously I laughed a lot over this s**t combination of Nokia and WP7.

    Long live my Samsung i8910 HD

    1. only time will tell 😉

      I think it’s not a bad combo. The only thing I’m sad about is the future of Qt…

      I’ll probably get myself the meego device that will come out later this year, so I honestly don’t care about what’s going to happen with wp7…

      but I like wp7. You may not like the UI, but it works, smooth and easy.

      Multitasking is being added, copy&paste too, IE9 is coming…

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