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Nokia's CEO Memo Leaked [Updated]

David Gilbert

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Nokia's CEO Memo Leaked [Updated]

Internal memos are highly sensitive documents, which by their nature should not be seen by the eyes of the wider world. The leak of a 1,300 word memo by Nokia chief, Stephen Elop, starkly proves the point.

Stephen Elop

Engadget received the full memo yesterday and have since had it confirmed as real by several trusted sources. Snippets of the memo had previously been reported elsewhere and it seems as if they are consistent with what was sent yesterday. The memo opens with an allegory about a man standing on a burning oil platform about to be consumed by the flames. He is faced with a stark choice: being burned alive or jumping 30 metres into the forboding North Atlantic Sea. “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.”

Stirring stuff from Elop, who was brought in amid a storm of controversy last year as the first non-Finnish head of Nokia. Elop clearly believes that Apple and Android have made huge strides in the past couple of years while Nokia has been standing still. “There is intense heat coming from our competitors. 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.”

Speaking about its own products, Elop says there are “some brilliant sources of innovation inside Nokia” but things are not happening fast enough. Speaking about MeeGo, he said Nokia believed this could win them a large share of the high-end smartphone market, “however, at this rate, by the end of 2011, we might have only one MeeGo product in the market.”

Symbian is faring no better according to Elop. “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.”

On the financial side of things Elop speaks about rating agencies, Moody’s and Standard & Poor’s, who have both indicated they are putting Nokia’s credit ratings on negative credit watch. Not a good sign in anyone’s language. Looking forward, Elop says: “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 would all seem to point to something major happening this Friday at Nokia’s Strategy Briefing right here in London. Could we be seeing Nokia go into partnership with the likes of Microsoft or even Google? We will be bringing you all the news as it happens this Friday.

Update: It seems as if a tie-up between Nokia and Android is a non-runner following a tweet (below) by Google's Vic Gundotra. He tweeted: "Two turkeys do not make an Eagle" prefaced with a #feb11 hashtag which is the same day as Nokia's Strategic Briefing in London.

Source: Engadget

Stelph

February 9, 2011, 3:26 pm

Considering the memo slated Android and talks about ditching a flaming platform it does seem to suggest Nokia will be bringing out a Windows Phone 7 mobile phone, and given that they have only just released several symbian phones and no Meego phones as of yet it suggests it is Meego they will be killing off, which is a real shame IMO

Ben

February 9, 2011, 4:15 pm

A couple of Windows Phone 7 years will buy Nokia time to perfect Meego. I wouldn't bet a long term strategy on Microsoft in the mobile space, but for right now it'll work. Symbian will be the ultimate casualty I think, and Meego the ultimate saviour.

TechnicPuppet

February 9, 2011, 4:33 pm

I think they need to forget about Meego/Symbian and basically copy the HTC strategy. Get a range of handsets out on Android and WP7 leading with a top end Desire competitor.





As for the China thing, the ZTE/Orange San Fransisco phone has re-written the rules. That is going to be a big problem for all phone manufacturers in the coming years but Nokia can't afford to fall further behind.

Hamish Campbell

February 9, 2011, 5:11 pm

@Stelph - where did it slate Android? It looked more to me that Symbian was identified as a dead end as it was proving non-competitive, difficult to develop to customer demands and to take advantage of new hardware. Only thing suggested about MeeGo was that they were too slow. So my take would be, ditching symbian, concentrating on MeeGo and streamlining like an mf to get things faster to market. Plus the whole ecosystem thing :)

Pendejo Sin Nombre

February 9, 2011, 5:24 pm

HP and Nokia should sit down and do a deal.

Stelph

February 9, 2011, 6:07 pm

@haim - My mistake, how very odd, when I read the full memo on Edgadget I was convinced there was a section that said discussed Android and suggested that against all odds (and mentioned a technical drawbacks) Android was doing very well, im obviously going mad.





I agree that keeping Meego would make more sense, but how annoyed would you have been to have just bought an N8, C7 ect for Nokia to "kill" Symbian? Not sure even Nokia could take the public backlash

Stewart

February 9, 2011, 6:15 pm

So at last Nokia have admitted the problem to themselves.


The thing that was not mentioned was that they or any other manufacturer are unlikely to dominate the mobile space in the future like Nokia have in the past - not even Apple who even with their fanatical fan base are now seeing their market share eroded by groundswell that is Android.





However good Meego is, as Elop says, they're competing against eco systems, and as we've seen with Nokia's repeated attempts with Ovi and other initiatives like Nokia with Music, they can't seem to get it right, even with compelling offerings like Ovi Maps. The only way Meego stands a chance is to get this eco system right and to hit the floor running with it. Maybe as both Android and Meemo are Linux based they can come up with an SDK that allows developers to easily port their Android apps to Meego. But even then have they missed the boat.





Of course their other options are to join the Android and/or WP7 players. Of the two I would think Android the best fit. WP7 is a closed system with little room for handset manufacturers to distinguish themselves on the software front, and as nice and different as WP7 is, it doesn't offer enough that's compelling, not even on the corporate front, to build a significant market share. Whereas going with Android would put them right back in the mix, allowing their software developers to concentrate on creating a value added experience like the HTC Sense/HTCSense.com.





It's not all gloom, as we've seen things change very quickly in the smartphone world today, as we've witnessed with the iPhone since 2007 and Android 2009, not to mention Motorola's transformation.





An E7 with new dual core innards, Android, and an HTC like UI and HTCSense.com cloud offering would be an unbeatable phone for me. Follow that up with Nokia's strength of a pile 'em high, sell 'em cheap model for Android based smartphones for the lower end of the market and they could be the networks' darlings again.

Heelo

February 9, 2011, 6:23 pm

Nokia still has hope that it won't become SonyEricsson (i.e., a once-proud but now-marginalized Android OEM), and the only plausible way to do that is to negotiate a 5-10 year exclusive licensing deal for WP7.





Basically they'd have to guarantee MS 10 million licenses every year (very doable on a worldwide scale), and get MS to natively implement some of their Ovi services (music/maps) into WP7.





Suddenly, Nokia would be sporting a modern, competitive software platform that differentiates its handsets from its competitors, and MS gets a hardware OEM with a massive global distribution network that's going to pimp the $#!+ out of WP7, instead of treating WP7 as a mere sideshow to their primary Android line of products.





Between Nokia's N8-generation hardware and WP7, the combination would pair up the most stylistically audacious hardware on the market with the most stylistically audacious OS on the market. The result would be a very compelling line of products.

Mad Iguana

February 9, 2011, 8:10 pm

I can't see Nokia ditching Symbian after the time and investment they've put into it, especially since the OS is on the verge of being competitive with other OSes (personally I prefer it to Android for usability and iOS for flexibility, but that's my opinion - YMMV etc.).


On the other hand, Meego has no hardware, no infrastructure behind it (yet) that can't be ditched with minimal write-off; the only damage that would be done is to their relationship with Intel.


If Meego was going to be their "high-end" OS, then they'd need something to replace it. Either a partnership with Android that has Android on the high-end Nokia phones and some form of app sharing between Ovi Store and Android marketplace on low/mid-end phones (possible given that a way of installing Android apps on other phones is being demoed, although it might take some time).


Or a partnership with Microsoft W7 phones at the high-end.





One of those two solutions sounds more sensible to me, but then I know nothing about this sh!t, and on Friday all will be revealed making all of this speculation moot.

Azagal

February 9, 2011, 8:35 pm

Nice topic for speculation, how do you save Nokia? Personally I doubt they'll ditch Symbian, they have some much time invested in it and it is very hard to develop a whole new system. If anything they'll put more effort into it and let go of MeeGo.


I really hope they don't go with Android, my experience with it is that it is buggy and as complete as a computer science project for a university course.

HarryGlass

February 9, 2011, 9:46 pm

What did Nokia shares do today? What will they do on Friday?





Well Elop is a former MS man, he has ties their still, you almost feel MS could have let him go as a trojan horse. What better coup for MS than for Nokia to turn around and make WP7 devices. With the copy/paste upgrade almost here WP7 is competitive, a Nokia/MS hookup on this would give both of them the leverage they need to compete with iOS & Android.





That said I don't see why they'd have to limit themselves to one OS. Sony, Motorola, LG, HTC, etc they all have WP7 & Android phones, Nokia should follow the same route. Sony have dropped Symbian I think Nokia should as well. Don't throw more good money after bad. But there's also the news about Dalvik running on Meego giving access to most Android apps. If Meego is the future for Nokia (and Intel - so they will not ditch it) and it can tie into Android they can have a foot in all camps.





@Heelo: Don't agree about SonyE being marginalised. Their own OS (and their Symbian phones) yes, but they are starting to compete with Android and when their Neo, Arc & Play phones are out with Gingerbread and Playstation games on them, they should be top of the pile.





So in summary, Symbian is history, Nokia are going with WM7 and in time with Meego that will run Android Apps (but through the Nokia store) instantly giving them a massive app catalog.

Ikillgiants

February 9, 2011, 9:55 pm

I appreciate his frankness, especially with regards to the lower-end of the market. Nokia&#8217s phone&#8217s there haven&#8217t been up to scratch for quite a while. Too heavily loaded with feature&#8217s when the basic&#8217s needed work (I&#8217m referring to software, not hardware). My father&#8217s low end Nokia is especially disappointing, it struggles with the ovi maps feature, and the texting/calling UI is overly complicated.





I have a love for Nokia has been undermined by my C7. I&#8217ve had weird instability problems and the constant tapping through menu&#8217s/sub-menu&#8217s is frustrating. But I love the hardware, it feels great in the hand, video playback is superb (although I find it easier to use the file browser). And I love being able to use windows explorer rather than a silly application (like Zune or iTunes) to manage the content on my phone. However, I&#8217ve also learnt that I hate texting/typing with a touch screen. An expensive lesson, but touch screens just aren&#8217t for me.





The E7 pulls at my desire for a decent qwerty phone, but then I remembered it&#8217s still running symbian. My idealised phone atm, is E7 like hardware with Win7 OS. A guy can dream can&#8217t he? There&#8217s a market for a quality phone with a quality OS that sits within a working ecosystem and someone needs to become the pretender to Apple&#8217s crown. The question is, can Nokia do it, or is HTC already there?

Gk.pm

February 9, 2011, 11:23 pm

I think this would be a prime opportunity for Apple to licence it's iOS to competitors. They lost the PC market because they failed to let clones occupy the cheaper positions that PC clones took, when the time was right. Even SJ acknowledged this.





Now history appears to be repeating itself with the Android. If Apple learnt their lesson they would let Nokia take iOS to the lower end of the market. Both would make a killing on this deal, Apple still makes money in many ways, and Android/WP7/etc would take a massive, MASSIVE, hit from which they would probably never recover (well WP7 certainly)





We also have to remember that Nokia's new CEO was little more than two years at MS, so maybe he didn't like it too much there?

Hans Gruber

February 10, 2011, 12:31 am

Nokia have finally woken up and smelled the erm, smoke?





Guess their CEO's only real choice is to throw the baby out of the pram and sack half the workforce in order to maintain competitiveness. This means Symbian will likely be the Guy on the bonfire I guess. I wonder whether they will cook MeeGo a little more or diversify, and have a little WM7 on the side?





Seems logical that Nokia will continue to develop MeeGo if they can somehow get control of their own 'ecosystem' whilst catering in the meantime for those hungry for a bit of Windows Mobile 7 action at the higher end of the smartphone market. They don't want to completely relinquish control of the money making app marketplace/e-commerce sphere just yet.





And all the while the flames get higher, Chinese OEMs continue to capitalise on availability of inexpensive chipsets and an open platform in Android that is ready and willing for even more to join its party and become part of the Google 'ecosystem'. But Nokia cannot look to Android as a long term solution unless they can do a deal with Google and get their own cut from developers' application sales.





How much time does Nokia have to fill the void it will seemingly create if it ditches Symbian altogether? Is there enough space for effectively another Android or iOS Appstore in MeeGo? What will Nokia bring to the table that's different in terms of what you can expect your smartphone to do?





Will people still want to just buy (small) dumbphones in future if they're not much less expensive than fully featured internet-usable smartphones? Aren't applications just spin offs from increased hardware specs and a synergism of cheaply produced but very clever hardware chips such as GPS, WIFI, Bluetooth, Accelerometers, Motion/Proximity Sensors etc? But apps represent the future and Nokia, amongst all the handset giants, knows this only too well. The internal hardware components - the essential ingredients of any smarter phone these days - has matured.





It seems to be all about continued payment models nowadays; they all want a slice of developer profits and I suppose this is the main reason Nokia are having a barbie as Symbian cannot deliver and they don't have the time, ability, interest or skill to put it right? Sounds like desperate times indeed... Can't fix Nokia's credit rating with a change of snap on cover anymore. I wonder what the big problems in the mobile tech market will be 10 years from now? Regardless, I hope Nokia make the right decisions so they'll at least still be around then. No phone I've had since the N95 was anywhere near as good at making and receiving calls!

lifethroughalens

February 10, 2011, 1:20 am

Pendejo Sin Nombre - 'HP and Nokia should sit down and do a deal'





Spot-on, that would make things interesting. Ironically, does Nokia need HP (Web OS) more than HP needs nokia?

Kaurisol

February 11, 2011, 2:19 pm

And today's the day for the big announcements....





Tried Meego 1.1 on my N900 last night - prefer Maemo, but that may just be because they haven't realised a full working version of Meego yet.....

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