Wednesday, 9 February 2011

Nokia played the fiddle while their platform burned

Ok, so I'm mixing metaphors (or something like that) but in light of Nokia CEO Stephen Elop's leaked memo to his staff (which is looking increasingly plausible by the minute) it feels very appropriate.


You can read the full memo, and the Engadget take on it, here.  To save you some time, the key points that I have taken from it are:

  1. If you're in unavoidable trouble (the "burning platform") then you need to take drastic action (jump off the platform) to avoid the inevitable peril.
  2. Nokia have lost the top end of the device market (mainly to Apple).
  3. Nokia are starting to lose the mid-range market (mainly to Google).
  4. Nokia are starting to be squeezed in the low end of the market too (by Eastern manufacturers).
  5. Nokia have historically been crap at executing.
  6. Nokia have ignored the way the market has evolved.
  7. Nokia are at "crisis point" and need to catch up and catch up very quickly.
  8. To catch up, Nokia need to do something 'different'. 
For me to cover off all of my thoughts about Nokia, what I think of the memo and and why I think they are where they are would take an awfully long time.  So I'll try not to ramble on too far - I know from reading a couple of Tomi's blogs that once you see how far down the scroll-bar on the right goes, you soon start skim reading.  I'd also like to state the context of my position early on - I used to work for a Mobile Marketing and technology company, that was acquired by Nokia as part of their shift into the services space in 2007, and then worked for them for two years.  So I am no Nokia expert but I certainly have an understanding of how the business works and, more importantly, how they were executing in a digital ecosystem.  However, I also have no "agenda" against Nokia (as I know some ex-Nokians do).  Indeed, I would much rather they succeed than  fail as the market needs a credible alternative to the fast-becoming Apple/Google duopoly.

To be honest, the content of the memo is pretty damning stuff - especially considering that this is from the CEO of one of the largest, most respected, most trusted and most successful multi-national businesses out there.  That it is the most read story on the BBC News website also says something about it's significance.


Unsurprisingly, ex-Nokia executive turned author, public speaker and (way too verbose - which coming from me, says something), blogger, Tomi Ahonen has had his say in a blog post that both suggests the memo is a fake and then provides a range of, primarily semantic, rebuttals to the points in Elop's memo.  Ahonen's position is nothing less than symptomatic of the internal issues that Nokia has faced for a number of years.  Nokia became a victim of their own success - I have talked previously about how Symbian (their proprietary operating system) was the Woolly Mammoth of operating systems, unable to adapt to the changing ecosystem.  Well, for "Symbian" read "Nokia"...  So I won't dwell on Ahonen's points here because, to be frank, I don't see that they are that relevant. 

Nokia was the undisputed king of mobile devices with the largest market share and foothold in pretty much every market and device category.  As many Nokia-philes will go to great pains to tell you, they pioneered many of the features that other manufacturers have subsequently emulated and bettered, such as mobile browsing, mobile applications and touchscreens.  

And this, in itself, tells the story... 

Nokia did things well, and they did them efficiently and on a large scale (they are ultimately a very good manufacturing company after all).  But then they seemed to be content (dare I say arrogant?) with this position and the market evolved around them, not least catalysed by the growth of the digital channel in general and the emergence of the iPhone.  Nokia's response was to try and move with the market, but to do so in a way that was poorly judged and poorly executed - their higher-end devices were roundly criticised and their ecosystem (Ovi and services) was a hotch-potch of acquisitions and (often duplicated or competing) internal development projects all shoved together with (apparently) little strategic thought.  But that was just the top-end of the market, Nokia could still rely on the mid and lower end (such as emerging markets) couldn't they?  

Uh oh...

They could... but of course those markets changed too.  And Nokia (apparently) still refused to see what most people outside of the business have seen for a while.  Nokia became like King Canute, convinced that they could hold back the inevitable tide.  Until they did away with their previous CEO, Olli-Pekka Kallasvuo, and brought in ex-Microsoft man Stephen Elop.  The significance of this is that they recruited from the outside rather than, as was usually the case previously, internally.  Now it seems that the fresh pair of eyes, directed internally, is starting to realise that significant action is needed in order to get Nokia back into it's stride.

And so what should they do and how can they address this?

Well, there have been persistent rumours that Nokia will buddy up with Microsoft (Elop is ex-Microsoft after all) and run Windows Phone 7 in some of its devices.  Whether that is instead of, or alongside, Maemo and Symbian remains to be seen (indeed, the WP7 thing is still only a rumour of course).  There has also been talk about Nokia partnering with Google to run Android in their devices instead but I don't even see this as a starter to be honest - there are too many areas in which Nokia and Android compete, not least with mapping (i.e. Nokia Maps vs. Google Maps), that there would be undoubted friction in such a relationship.  After all, services, and the advertising running on them, is where the money is.  That is not so say that there isn't overlap with WP7, it's just that Microsoft also seems prepared to compromise given its need to re-gain a foothold in the market (witness the partnership with Yahoo for search).  Perhaps the two, much-maligned, former-behemoths would form a formidable partnership, capable of competing with Apple, Google and the plethora of mid/lower-range competitors in the mobile space.  Only time will tell if it even happens and whether, if it does, it will be a success, although Google's VP of Engineering seems relatively unconcerned with the prospect, tweeting "Two turkeys do not make an eagle", as reported by Ewan at MIR.

One thing is for sure, the entire market seems to be waiting with baited breath for an announcement that is reportedly due on Friday and whatever other news comes out at Mobile World Congress next week.  

And we thought 2010 was an exciting year, jeez 2011 is getting interesting already...

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