The Burning Platform Memo: Elop supposedly on transforming Nokia

| February 8, 2011 | 133 Replies

You may have seen the rounds of a supposed Memo circulating internally at Nokia from new, Canadian CEO, Stephen Elop. Labelled Burning Platform, the sentiments of the memo echo the crisis Nokia faced which Elop sees MUST result in a change of behaviour from Nokia. Real or not, it is the honest truth about Nokia. Having followed Nokia from the 90s through the bright days of Symbian and early smartphones, it has been so frustrating to watch the awesome talent and innovation at Nokia dilute itself and give the competition such an easy time.

It seems Nokia will make a JUMP. A jump they would not otherwise do, and never something we would comprehend except under the current circumstances of a platform burning. Is WP7 the cold rough seas? Is Symbian the burning platform? What’s MeeGo doing in all of this? Is MeeGo the lifeboat that actually rescues the guy? Perhaps all suggestions I’ve given is something else entirely.

IS THE MEMO REAL?!

Engadget have posted the full memo:

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.

Real or Not, I want MeeGo to have a frikkin chance to do what it has been planned to do. I don’t want an either/or situation. I can’t wait for most of the speculation to be resolved on Feb 11. Then wait and see what happens at MWC.

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Category: Nokia

About the Author ()

Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and  Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.com

Comments (133)

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  1. Rabe says:

    Where Nokia is very very very late, is in the tablet market. I think they should not wait for Meego and release a Nokia Windows tablet.

    This would make a lot of sense on a short term, don’t you think ?

    • Alex says:

      i think nokia should take their time and step back from the market for a year or two, to get their mind straight, to analyse what’s happening with other operating systems and ask themselves how in the world the 1st smartphones company is now at the bottom of the tech-geeks choice list. They need to start focusing on the users needs and make their wishes come true. It would be almost impossible to even think about this suiciding self excluding strategy, but it’s better than this small steps strategy that proved itself quite boring. BTW i’m sick and tired of people in search of eyecandy UI’s. Nokia wake up from your nightmare and start living OUR dream!

  2. Zarsky says:

    Tomi’s update:
    UPDATE – I just read a brilliant comment by Terence Eden @edent on Twitter who said that this might be taken out of context. If this was part of a longer memo, where Stephen Elop said first “Others are saying this about us” – then yes, very clearly, this could be in a memo, but then Stephen Elop would know – and his employees would also know, that those statements are not reality. That would be fine, and then, Engadget would have been publishing deliberately or accidentially a partial excerpt that expressly communicates the opposite of what was intended.

    • chrom says:

      In which case, why wasn’t Engadget immediately contacted by Nokia’s PR department to issue a statement?

    • Don says:

      “””If this was part of a longer memo, where Stephen Elop said first “Others are saying this about us””””

      Um yeah, and IF it would start with “Haha lololorz read this for fun!!” it also wouldn’t be true.

      While I don’t really buy this memo this form, there is no reason why this would be part of a longer memo, nor any reason why that hypothetical longer memo would start with “Others are… “

  3. EmmanuelM says:

    Hum, from what I have seen from American managers in other companies this could be true…

    The problem of M. Elop is that jumping in freezing see water is for sure dangerous…

    Moving to WP 7 ? What competitive advantages against Samsung and HTC ? How mature is this platform ? What appetite has the market for this platform (and especially in strong NOKIA Markets i.e. Europe, China, India, …) ? For sure Microsoft is ready to spend HUGE amounts of money to make the platform successfull but would this be enough ?

    Moving to Android ? Again what would be the competitive advantage against Samsumg and HTC ? It could make sence if Android allowed to NOKIA to build a custom UI and manage its own App Store… At the end Android could be seen just has another open OS like Symbian was in recent past…

    Personnaly I’am very septikal regarding a move to WP7 but I still think that a move to Android could make great sence…

    Let see what will happen on Friday… :-)

  4. zonk0r says:

    “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.”

    I’m pretty sure this is the statement that is hanging on most people’s minds?

    it raises a few questions;

    1.Was there a version of harmattan/N9 ready for release december last year – if so – why did ELOP cancel it and push it back into this year only to come out with such a statement?
    2.I’m pretty sure Nokia mentioned 2 MeeGo devices this year? one to coincide with each release of MeeGo .. GSM version in april with PR1.2 and CDMA with PR1.3? Does this mean that there REALLY has been a device cancelled in order to wait for CDMA support for the beloved “American Markets”?
    3.Does it mean he’s going to push to do what HP are doing with Palm and just push out a plethora of devices running MeeGo towards the end of the year and actually DELIVER them?

    For Me – Nokia’s strategy is sound – Looking at Dev progress for Qt you can see the potenetial to carve this ecosystem – and push it onto chinese devices with Meego (like android has) as a low cost license free platform that these people can push out cheap smartphones with. Keep Symbian for feature phones/smartphones – dump S^1 and S40 and reallocate those staff developers to the other 2 platforms.

    Looking at all the amazing R & D projects Nokia has been working on – they have the tech to produce a standout device and not just another plastic black slate with the latest and greatest SoC on it. Creating a closed eco-system like apple is fine – but creating a device that does something truly different, like their morph concept, would instantly make people think a lot more of the brand.

    At the moment they are like Volkswagon producing the passat CC – meant to be like a 5 series or 7 series – but they just dont have the same “cool” reputation anymore to do so..

    COME ON NOKIA – GIVE US SOMETHING DIFFERENT!

    • IMarius says:

      Yea but when it does launch Meego should easily be the best product on the market. And 1 product, at first , but look at the list of partners it a mile long, ones meego is done to a consumer level , you can bet those other companies will start releasing products using meego.

      I know its hard , but its not a single race , its a on going marathon in the smartphone world.

      • zonk0r says:

        let’s hope so

        the potential is there.. but imo, it’s not just delays that harm nokia, it’s their useless PR

        Sure the N8 has had no amount of virals and events advertising the device… but how many primetime tv adds have you seen for the other S^3 devices? not many

        let’s hope this deal with microsoft includes some PR – being that they have spent £500 million in advertising WP7 (granted it’s not gained too much momentum here in the UK), but tbh – im yet to see an advert.. only mobile add’s ive seen over and over are HTC, samsung and Apple

  5. Damen says:

    If there is still someone doubting the authenticity of the memo, this is what I found on BBC:

    “Nokia’s new CEO has sent an outspoken and frank memo to his staff that suggests the phone giant is in crisis.

    Stephen Elop describes the company as standing on a “burning platform” surrounded by innovative competitors who are grabbing its market share.

    In particular, he said, the firm had been caught off guard by the success of Google’s Android operating system and Apple’s iPhone.

    BBC News has verified that the memo is genuine.”

    You cand find the news article on BBC News website, it’s titled: “Nokia at crisis point warns new boss Stephen Elop”.

    • Don says:

      And Helsingin Sanomat has sources saying it is an edited version from a nokia internal blog write-up of a recent speech. So?

      • alex68 says:

        No wonder some insider info is quite true. This explained it.

      • Damen says:

        Yes, Helsingin Sanomat also seems to confirm it’s real:

        “Last Thursday Elop addressed Nokia’s staff from the company’s main headquarters in Espoo.
        The CEO did not pull any punches.
        In his speech, which was subsequently put up on an internal blog and then apparently leaked to the Net, he likened Nokia’s position to that of a man standing on a burning oil platform – an expression suggesting an urgent need for change, possibly of a radical and hitherto unthought-of nature.”

        • KeiZka says:

          But Helsingin Sanomat says as well that the memo circling now the web is an edited version.

          How is that? What was omitted? Added?

          • Damen says:

            Can you point out where exactly does it say it is an edited version?

          • alex68 says:

            At lease, anything specific regarding symbian and meego was added…

          • Damen says:

            Mark Guim of The Nokia Blog says:

            “Update: 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.”

            So perhaps the notions about Symbian and Meego were added by Elop after the speech and he posted a revised version of it on the blog?

          • KeiZka says:

            Helsingin sanomat says “A speech made by Elop that was later on made available on internal blog”, nowhere saying anything about Elop’s own blog.

  6. Shawn says:

    I dont think this is real but i hope nokia sticks with symbian and meego.. and so wat if they wud only have one meego phone out.. how many iphones are made a year… ONE.. no more than one phone.. anyways.. i need that meego phone.. and they should have already been working on the new symbian UI.. and bring it out earlier than Q3.. that makes more sense

    • Damen says:

      @Shawn

      You don’t think it’s real? So you think BBC got incorrect info when they say they’ve verified its authenticity? Besides, don’t you think Nokia would have reacted immediately if it was fake?

      • KeiZka says:

        Nokia doesn’t comment on rumours, and if BBC happened to ask from someone who is going to be laid off? Where and from whom did BBC verify the authenticity?

        • Damen says:

          Well, if BBC still does journalism properly, and I believe they do, they’ve got this from a reliable source and double-checked it. The source(s) probably want to keep their jobs which is why they don’t want to be named. It’s very often you see respected newspapers referring to their sources as “people familiar with the matter” or “sources who didn’t want to be named/wanted to remain anonymous”. For the source to be able to reveal the information there has to be confidentiality and mutual trust between the journalist and the source.

  7. ryzvonusef says:

    Nokia response:

    http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=auto&tl=en&u=http%3A%2F%2Fwww.matuk.com%2F2011%2F02%2F08%2Fnokia-nos-responde%2F&act=url

    “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 “

  8. N900_Nexus_S says:

    Friday can’t come soon enough. I am either going to be so happy or disappointed. There’s no middle ground for my reaction. And I am sure that the blogs (no name calling) cant wait to paint us a picture if they don’t like what Nokia announces.

    Please Nokia, do not disappoint me!!!!!

  9. Gary H says:

    Nokia should stick to their guns, and should never under talk their own products. Sign of a bad boss. If everybody bought a smartphone today that wasn’t a Nokia device, well even that’s no great disaster because smartphone contracts last for two years, and Google, HTC & Apple show us what happens in that time. Next time customer choose Nokia. The E7 has got to show it’s a good workhorse, so that iPhone users see their phone as pretty screen for shallow user. But then that’s what market wants

    • Borat says:

      I agree!

      He shouldn’t talk about Nokia products and services from such a negative perspective. Now everybody believes that Nokia is in real deep shit and doesn’t have anything to offer to compete on the market.
      He has just successfully pushed many customers away from Nokia products and services.

      He should have been fired immediately

      • alex68 says:

        His speech and article were for internal Nokia people only. As a ceo, he needs to be honest to his people, right?

        The real trouble is how his writing was leaked. Nokia is having crisis anyone with some insider knowledge and info can not deny. Nokia needs to take action, radical actions, every unit and every management level, NOW!

  10. Mazze says:

    To me this seems like the big shareholders were pushing for a Nokia/Microsoft coalition. And Elop obviously is the perfect guy to get this done.

    Honestly, I think this wouldn’t be a bad idea as they would perfectly complement one another. Microsoft is huge in software development and Nokia’s hardware is really well designed. Both have suffered in the past from Google and Apple and could now focus on their strengths and fight back.

    I have always been very happy with the Nokia hardware (I use a bluetooth receiver to stream from my N8 to my amplifier and also love the amazing BH-905i headphones) but the software, well, I need to be careful as criticism is not really allowed in this blog even if it’s constructive, but I just don’t like it too much. And since when has the first iPhone been around? 2007? Nokia, that’s 4 years!!! I really think Symbian^3 has a lot of strengths over iOS like the homescreen widgets and real multi-tasking but it lacks smoothness, a reasonable way to launch apps, a decent browser and even some really simple stuff like a QWERTY portrait keyboard.

    Just my opinion. In the end I really don’t care too much as there’ll be plenty of choices anyway. But it would be a shame if Nokia kept on losing market share just because they can’t keep up with the software development. I truly believe a Microsoft/Nokia phone would attract plenty of new buyers and also convince the Nokia critics.

  11. Rain says:

    What does it mean for symbian? more in detail, what will be the consequences for the n8? If nokia really make the contract with windows, does the support stop for symbian devices?? I like my nokia n8 with symbian, but i also want more fixes and further developments

    • outdated os says:

      see nokia’s response on previous comment posts.

      I have my fingers crossed. My dog does the same with his paws.

  12. Moe says:

    Here is my 5 cents

    The agreement is for Meego’s sake,
    Nokia propobly wants to make sure everything is there from the get go.

    And the only Compony with a complete ecosystem is Microsoft; therefore the agreement will revolve over some Microsoft services:

    Zune – Nokia failed with Xpress music, no time to build another one.

    Xbox live – Nokia failed with Ngage, no time to build another one.

    Office – Agreement is already there for Symbian.

    Email – Agreement is already there Symbian.

    Social – Agreement is already there Symbian.

    Bing – This is the most important part for Microsoft and a very big hit for Google.

    Hardware – an agreement to build a phone for Microsoft at the time of Mango’s release (Microsoft and Nokia go)

  13. alex68 says:

    Last week Elop did give a 13-14 min speech via internal video channel. Basically he did talked about things written in this so-called “internal memo”, EXPECT that he did not mention anything specific about either Symbian or Meego at all. Not sure if certain people did receive the so-called “internal memo”.

    It seems he has realized and admitted that the Nokia is in crisis and does need radical changes. Let’s see how he will lead Nokia to make a real turnaround that OPK management had failed dreadfully before.

    • alex68 says:

      I am just wondering if the so-called “internal memo” does exist, it would not be so difficult to show the evidence, a piece of screenshot of the partial memo that would not risk anyone’s job or career.

      Therefore, I would take this “internal memo” a speculative writing, an edited version of Elop’s speech.

      • SoVatar says:

        Thank you, what you write makes a lot of sense.

      • alex68 says:

        Another source just confirmed that internal blog content was basically consistent with that of Elop’s speech, as well as with that of media’s “memo”. However, he did not compare, word by word, the media’s content with that of internal blog.

        The last question is how original is the media’s so-called memo?

  14. Sayan says:

    friday’s announcement will be about OVI services, and OVI ecosystem, they could adopt Microsoft’s live services and have a deeper integration with Windows.

  15. stylinred says:

    The Rumor Mill seems to say MeeGO is getting dropped they just re-iterated that rumor almost as Fact on BBC News

    • thebrain says:

      so far nokia n9 is dropped

      but analysts want nokia to produce another meego powered device to appear on friday even though it wont be completely finished.

      why the f**k did they drop n9 what was wrong with it? too perfect?

      if they dont make a good device soon im never coming back to nokia again
      theres a limit to being disappointed
      nokia is going backwards

      • Jay Montano says:

        No – they are reporting on old news that N9-00 is dropped. N9-01 is still there.

        http://mynokiablog.com/2011/01/25/nokia-n9-is-not-dead-eldar-waiting-on-man-with-n9-01-another-murtazin-leak-soon/

        N9 has never been acknowledged or announced by Nokia.
        It is common for many variants of a handset to be in development and whittled down. Hence, the “first” variant might be cut. Like when you write an essay – your first draft might be cut but so what? Nooooone of the other versions except the one you hand in matters.

        • Johnny Tremaine says:

          With all due respect, the N9-x is still… *where*?

          Can I go out in the next month or two and pick it up in a shop?

          Meego, for whatever reason, as I don’t know what internal Nokia development is like, has been really, REALLY delayed.

          Nokia, as a for-profit publicly owned corporation, can’t just sit around on its hands and bleed money with no high margin device, while Meego development crawls along.

          At some point Meego may be ready, but WP7 is the likely stop gap until it is.

    • stylinred says:

      what’s worse is the BBC tech guy they had come in to talk about Nokia was saying MeeGo sucks there’s nothing special/innovative there so it looks like its going to get Cut -_-

  16. cata_rave says:

    Thank you Stephen. I BELIEVE in Nokia!!!

  17. Jorge says:

    Guess what engadget just ereased the article from their site, also ereased an Editorial that trashed nokia

    • stylinred says:

      they have an editorial that im looking at now titled “engadger on nokia’s friday announcement” is that what you’re referring to?

      and the sinking ship memo page is still there

    • Johnny Tremaine says:

      They didn’t erase anything. It’s simply an older post and you have to go back into the ‘Older News’ section.

    • outdated os says:

      last time I checked before sleeping, 3 BREAKING NEWS are Nokia related.

      And just now, saw an article debunking the Nokia-Android theory. Haha.

  18. Sayan says:

    Nokia’s Response About Dropping Symbian from Nseries by 2012 http://t.co/EHGYNXB

    sad :(

  19. maid'n says:

    They need to start focusing in core business, the war on OS is lost, they either adapt android, merge with MS or simply die out -
    sorry to say, but I had predicted the death of nokia since I saw them making terrible decissions towards the US market – this showed their incompetence and inability to adapt – believe me you all, latest 2012, nokia will NOT be the leading phone manufacturer, and THOUSANDS of people will have lost their jobs
    this happens when there is too much pride and ego and a TOTAL lack of reality. unless they realize what down spiral they are about to face and prepare for it, the downspiral will bring them down to a cheap phone manufacturer status with a bad OS and will en up begging for someone to buy their business in an environment where no one will do so..

  20. luke10 says:

    Either way, if you are jumping off a North Sea oil platform, you are jumping into the North Sea. Not ‘the Atlantic’ waters.

    Carry on though Elop, the company definately needed a rocket up its a**e.

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