“Burning Platform” of Nokia CEO Stephen Elop

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Right here is an experience which, individually, pronounces a big turning level within the historical past of Nokia . The agency is doing badly, because the free up of the iPhone is the tumble, falling amplified with the aid of the advent of Android and its fantastic ascent in up to date months.

On February eleven stands the Nokia Capital Markets Day in London , a day devoted technique and monetary diagnosis. We knew that eleven can be a vital date for Nokia, on the eve of MWC 2011, however the experience took heightened following the newsletter of an inner memo written via CEO of Nokia, Stephen Elop, entitled "Burning platform " .


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The CEO refers to an oil rig on fire and tells the story of a man who had taken the most important decision of his life, jumping from the platform into the icy waters or rest on the platform and die burned. The man finally decided to skip, survived and was able to tell his story. This man, now and after Elop is Nokia. The firm must now take a decision, a decision that will determine the future of the mobile giant plummeting.

The memo in question is really powerful, I invite you to read the end of the article. Here are some comments and selected pieces.

Elop begins by telling his story as a platform on fire and then concludes:

We too, are standing was "burning platform," And We must decide how we are going to change o comportement.

 

Then he says in recent months, he listened, learned, shareholders, operators, developers, suppliers and employees from Nokia and that this memo is the " record "of these few months: they stand on a platform fire and explosions responsible for the situation are manifold.

I Have Learned That we are standing there burning platform.

 

Elop says the competition is tough is that it evolves more quickly than expected. He begins by Apple , which has redefined the smartphone market with its iPhone has managed to attract developers in its closed ecosystem but powerful. The CEO then discusses Apple's market share in mobile and concludes with an observation: Apple now has the luxury segment.

For example, There Is intense heat coming from our Competitors, More Rapidly Than We Ever Expected.Apple The Market Disrupted by Redefining the smartphone and Attracting developers to a closed, purpose 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 trajectory Tremendous Growth With a 78 percent year over year earnings Growth in Q4 2010. That if Apple Demonstrated Designed well, Consumers Would Buy a high-priced Phones With a great experience and build applications Would developers. THEY changed the game, and today, Apple Owns the high-end range.

 

The CEO then turns Android , which in just two years has attacked the high-end market, attracting developers and it now takes mid-range segment with devices below 100 €.

And Then, There Is Android. In about Two Years, Android platform has Created That Attracts application developers, service providers and Hardware Manufacturers. Android Came In At The high-end, now They Are Winning the mid-range, and They Are Quickly going downstream to phones Under € 100. Google has Become a gravitational force, drawing Much of the Industry's innovation to icts core.

 

Finally, there is the segment entry , initially largely occupied by Nokia, which since 2008 has seen an impressive number of manufacturers in the region of Shenzhen in China offer terminals with very low prices. According to some analysts, these manufacturers alone produce nearly 1 / 3 of the phones sold worldwide, and eat the market share of Nokia in emerging markets.

Let's not forget about The Low-end price range. In 2008, MediaTek Supplied complete reference design for phone chipsets, Which enabled Manufacturers In The Shenzhen region of China to Produce phones at unbelievable pace year. By Some Accounts, this ecosystem now Produces More Than One Third Of The phones sold Globally – taking share from us in emerging markets.

 

In these few lines, Elop recalls the difficult situation in which there is Nokia, the top segment is attacked and occupied even by Apple and, increasingly, for Android smartphones, which are also found in mid-range and units Nokia's market on market entry are reduced to a trickle due to Chinese manufacturers who produce mobile phones in less time than it takes to "Nokia to make a Powerpoint presentation" (quote memo, dixit an employee of the firm, in a tone half-humorous, half realistic).

Below is a phrase that sums up the situation so hard and honest, but realistic:

The iPhone first shipped in 2007, and We Still Do not Have a Product That Is Close to Their experiment. On The Android cam scene just over two years ago, and this week THEY o Took leadership position in smartphone volumes. Unbelievable.

 

Stephen then explained that Nokia is able to innovate but does not fast enough , eg with MeeGo , Nokia platform promising but slow to arrive. According Elop, at this rate, "the end of 2011 there will be only one equipped mobile MeeGo in our catalog" .

MeeGo after he tackles Symbian . Which "proved not to be competitive in some market leaders such as North America.In addition, Symbian has proven to be a difficult development environment " in which it is almost impossible to get to meet the growing needs of users. "If Nokia continues [in this direction] as before, we find ourselves more and more behind, while our competitors continue to move forward again and again. "

Elop said then that the worst part of this story is that Nokia does battle not with the right weapons , is trying to retaliate by moving mobile while today, "the battle turned into war machines of ecosystems, which include not only hardware and software, but also developers, applications, e-commerce, advertising, research, social applications, location based services, unified communications and many other things " . Stephen is right, I want to say that's what Nokia has tried to do since 2009 with Ovi, without major success.

It is time to take a decision, the competition does not take market share with mobile but entire ecosystems:

Our Competitors Are not Taking Our market share with Device; They Are Taking Our market share With An Entire ecosystem. This Means We're Going to Have to decide how WE Either build, join gold catalysis year ecosystem.

This Is One Of The We Need to make decisions. In the Meantime, we've lost market share, mind share we've lost and we've lost time.

 

Yesterday, the credit ratings of Nokia in the long term and short term A-1 (notations A and A-1 on long and short term) have been questioned as Standard & Poor's doubts about the competitiveness of the firm. Regarding consumers, the reputation of Nokia is far less good than before, especially in England where "only 1 in 5 people prefer other brands Nokia" . This is true in most markets where Nokia has traditionally been a leader.

Elop will conclude by explaining that he sought to understand where the problem came in recent months and that the firm is ready to move forward. "On 11 February, Nokia will announce its new strategy, which will be a major effort to transform the company."

When We Share the New Strategy on February 11, It Will Be a huge effort to transform o company. Goal, I Believe That Together, We Can Face the challenges ahead of us. Together, we can choose to define our future.

 

Prepare yourself, therefore, a big announcement on February 11, with potentially fine Presentations Sunday, February 13 on the eve of the MWC. We will be on hand to cover the conference. For once, I will refrain from making assumptions or forecasts, we have only a few days to wait, I prefer to stick to the facts.[via Engadget]

Read the full memo after the break. 

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 rescu
ed, 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, Sym
bian 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 dev
ice, 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.

Consume
r 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.

 

 

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