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 metres 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 per cent; by 2010 it escalated to 61 per cent. They are enjoying a tremendous growth trajectory with a 78 per cent 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 two 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 per cent, which is 8 per cent 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

Wow, its real.
http://www.engadget.com/2011/02/08/n...honest-burnin/

So Nokia are releasing a Windows 7 phone???? Just hope its not the size of a brick like the HTC is!!!

Nokia - will undoubtedly be a famous case study one day... how to go from market leader to inconsequential also-ran in 5 years...

So, on a more serious note, did they guy who initially jumped from the platform went on to pursuit his dream and became an Elvis impersonator?


I believe the CEO's statement basically sums it up on what's wrong with Europe...very reactionary, lack of leadership, resting on previous achievements, false ideology about ones status....but then again, it could be wrong...to me it seems to be a cultural issue.

It's very interesting to hear such testimony.

I must admit that it's also applicable to other companies that might face inevitable downturn, without pointing the fingers. The great achievers from the past still ride on an old wave of glory and forget that the competition doesn't sleep. They have always been like dormant volcanoes that anytime they can erupt. Well, employees become sluggish, less productive and selfcomplacent. Times have changed, so must one push harder for changes in working environment and prove we are worthy again...

I liked Nokia before and used to be a loyal customer and supporter of their products all the way. Two years ago I still couldn't make up my mind if I should choose between N96 and first IPhone. Nowadays, given a vast selection of various manufacturers, I would stick to IPhone 4G. Never know what it will be tomorrow, maybe Android. Sorry!

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- arrogance
- complacency

They should bite the bullet and produce a range of Android and Windows Phone 7 handsets. With their history in hardware design, build quality and ergonomics they should be able to steal market share off HTC.

the challenge is not technical skills but the lack of corporate culture to open up for other systems and partner. It requires a fundamental change.

Well it seems like change is coming.. moving their HQ from Finland to the US

that would be strong signal indeed.

Oh dear.
Nokia has joined forces with Microsoft in an attempt to regain ground lost to the iPhone and Android-based devices.
facepalm.

Have to say, as much as I like my Nokia 5800 MusicExpress, Symbian really sucks balls as an OS.

You think so ? Very good move I would say.

Wow, amazing speech. Takes balls to admit that they're wrong. But as someone has already stated: Microsoft? Really?

If I were them, I'd chuck my lot in with Google, invest in R&D and try and leapfrog everyone else when the market terrain changes.

Symbian didn't always suck balls. Before it became Symbian it was Epoc, and that was a very tight fast little system way ahead of it's time, which was perfectly suited to mobile devices. However that was a decade or more ago. It's the development that came after with Symbian, mostly lead by Nokia (a phone manufacturer, not an OS developer), that turned it into the monster it is today.

Nokia's smartphone philosophy was naturally to take a phone and bolt a computer and OS onto it. The late arrivals, Apple, Google etc, had exactly the opposite philosophy - take a really tiny computer and tight OS and then bolt a phone to it. It's quite obvious now which was the better method.

I'm curious to see if Nokia manages to pull itself out of the pit that it's in. It's interesting to read that Nokia may start producing WM devices, but they'll need to do something special to avoid becoming just another WM device clone manufacturer.

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...allegedly.

Nokia ADRs down 7.25% at COB yesterday, and down 8.64% so far in today's pre trading. Is that becuase of their announced partnership or becuase of their possible credit downgrade, or something else?

I agree that a more sane approach would be to go with Android. MeToo [sic] seems to have been stillborn. Nokia are no good at OSes.

How much market share is HTC in terms of smartphones shipped and as all mobile phones shipped?

I like Mokia.

Prophetic speculation with an apt headline:
Nokia and Windows Phone 7: Could Two Wrongs Make a Right?

I would have thought MS need Nokia much more than Nokia need MS. But then again, from Nokia and Microsoft form partnership I learned that "Stephen Elop was at Microsoft before taking over Nokia in September 2010". One of my colleagues quipped "perhaps Elop is concerned about his MS shares."

It will be interesting to see how this one plays out. But don't forget that Nokia only need to ship a few million units to become practically the WinPho manufacturer.

IMO that is why it is good for MS. They can now bleat about how great their mobile strategy is, and Ballmer will keep his job a little longer.

Windows Phone 7 has received very positve reviews. It is currently the best mobile platform, thought of course new versions are always being released from all vendors.

Phones no-one uses to run operating system no-one likes



Mobile phone manufacturer Nokia has announced a strategic partnership with Microsoft, creating the perfect marriage of phones nobody uses with an operating system nobody likes.

The announcement comes as Nokia’s CEO Stephan Elop admitted his firm were on a ‘burning platform’, surrounded by the twelve thousand different handsets his company makes, each with a target market of less than five.
He told reporters, “For many years now Nokia has been cultivating an image as a manufacturer of specialist phones that hardly anybody uses any more, and so the only way for us to really cement our position as the fastest shrinking mobile phone company is to use a Microsoft operating system.”
“I’m sure with the combined weight of two huge technology companies behind it, this venture will be taken to the heart of every technology fan. It will, won’t it?”

Nokia and Microsoft Alliance

The news has been met with a mixed reaction across the industry, with some manufacturers unsure how this latest development will play out.
An unnamed Apple iPhone source told us, “Oh no, woe is me!” before putting the back of his hand to his brow and looking into the distance.
“This is simply terrible terrible news. I can only hope they don’t waste – sorry, I mean invest – hundreds of millions of dollars in this venture that will absolutely definitely succeed.”
“I am terrified at what this means to my business, definitely.”
A spokesperson for Blackberry said, “Ha! That’s brilliant, I’m going to use that one in the pub later. Genius. Wait, what? You’re serious?”
“Oh, well, in that case I’ll go on record saying that it was nice knowing Nokia whilst they lasted.”

Newsthump