NOKIA CEO'S LETTER TO EMPLOYEES

Forwarded message from S. Kalyanaraman

Thursday, February 10, 2011

Nokia CEO's letter to employees

TOI Tech, Feb 9, 2011, 01.05 pm IST

Indraprasth aka New Delhi - Finland-based Nokia
http://timesofindia.indiatimes.com/topic/search?q=Nokia
faces a key test this week when chief executive Stephen Elop
http://timesofindia.indiatimes.com/topic/search?q=Stephen Elop
finally unveils a plan to reverse a sharp slide in the fortunes of
the world's number one mobile phone maker.

Nokia holds a strategy and financial briefing in London
http://timesofindia.indiatimes.com/topic/London
on Friday, two weeks after it reported a 21 percent slump in fourth
quarter earnings and Elop promised: "The industry's changed and now
it's time for Nokia to change faster."

Engadget has reprinted a copy of the text from an internal Nokia memo
from the CEO Elop to the company's employees. Here's over to the
letter which several analysts have termed 'brutually honest'.


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 EU100. 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
http://timesofindia.indiatimes.com/topic/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
http://timesofindia.indiatimes.com/topic/North-America
Additionally, Symbian
http://timesofindia.indiatimes.com/topic/search?q=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
http://timesofindia.indiatimes.com/topic/Russia
, Germany, Indonesia
http://timesofindia.indiatimes.com/topic/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.

http://timesofindia.indiatimes.com/articleshow/7459579.cms?prtpage=1

End of forwarded message from S. Kalyanaraman

Jai Maharaj, Jyotishi
Om Shanti

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<snip>

Yep, I read about thar in yesterday's local newspaper. No surprise there.
The same happened to Palm and is happening to RIM for the same basic
reasons: management stupidity and sheer laziness.

Nokia is likely to be gone in a few years unles they manage to pull off a
minor miracle. According to some rumours they are looking at teaming up with
someone else, possibly Microsoft and using the new Windows phone OS ... that
will just sink them even faster. Their only real option is to jump on the
Android bandwagon.

Watch out for more greedy Nokia management rats jumping from the sinking
ship.

 

Oh dear, the rumours were true ... Nokia has just signed is death note. At
least it will be adding another nail in Microsoft's coffin at the same time.

This is from MacRumors (among other places) ...

Nokia and Microsoft Team Up in Smartphone Battle
-----------------------------------------------------------------------
----
Making official what has been widely expected for days, Nokia and
Microsoft have announced that the two companies are teaming up
in the smartphone market, with Nokia embracing Windows Phone
as its "primary smartphone strategy" while contributing its own
expertise to further development of the platform.

While the specific details of the deal are being worked
out, here's a quick summary of what we are working
towards:

- Nokia will adopt Windows Phone as its primary
smartphone strategy, innovating on top of the
platform in areas such as imaging, where Nokia
is a market leader.

- Nokia will help drive and define the future of
Windows Phone. Nokia will contribute its
expertise on hardware design, language support,
and help bring Windows Phone to a larger range
of price points, market segments and
geographies.

- Nokia and Microsoft will closely collaborate on
development, joint marketing initiatives and a
shared development roadmap to align on the
future evolution of mobile products.

Nokia has long been the world's smartphone market share leader
with its Symbian platform, but the company's dominant lead has
been quickly evaporating as iOS and Android have rapidly grown.
From the other perspective, Microsoft's new Windows Phone 7
platform has been fairly well regarded by reviewers, but has yet
to catch on as a latecomer to the increasingly crowded
smartphone space.

A purported memo from Nokia CEO Stephen Elop published
earlier this week outlined the challenges faced by Nokia in a
smartphone market that has shifted from a battle of devices to
a battle of "ecosystems", a theme echoed in the public
statements made today in support of the partnership with
Microsoft.

 

In message <ij51q0$q19$-september.org> Todd Allcock

Personally, I think it's as good as DOA unless they get some power-user
friendly APIs or functionality available yesterday.

iOS really needs some competition, and while Android is doing reasonably
well today, even I am starting to believe it's fragmentation will bite
it in the ass sooner rather than later since manufacturers are so
focused on selling more hardware rather than upgrading OSes on existing
gear.

If Microsoft can compete with iOS and Android without falling into the
traps of either, and can get power-user friendly in some of the ways
that iOS just isn't, they might have a chance. If nothing else, they
have the resources to lose money as long as it takes to get it right.

 

I first heard about the announcement that Nokia woudl adopt Windows
Mobile. Then I read the letter that started this thread. The letter
really shows a Nokia in disarray. That is scary.

So, they dump theor won OS and go with Windows be will become a "me too"
with hardware designed dictated/limited by the OS.

When PSION offloaded its EPOC32 operating system, it did so to a
consortium. That consortium did nothing with it for years. It in fact
needed a big rewrite because it was so proprietary it was useless.
Eventually Nokia did buy the consortium and gained full control over it
but I think the number of years wasted was fatal.

Had Nokia bought EPO32 direct from PSION, and started the major rework
to the UI and file handling aspects right away, it might have been a
different story. It should also be pointed out that in the last 1990s,
most phones didn't have the "humph!" to run a multi tasking OS like
that, so EPOC/Symbian was really restricted to a few smaprt phones.
(yes, they existed well before the iPhone).


The big question is whether this deal will just help Windows Mobile stay
on life support longer, or whether it would really be able to launch it
into success.

Just switching OS from Symbian to Windows will not solve the problems at
Nokia that have lead it to this state. Nokia is a bit like Digital
Equipment Corp. DEC was blindsighted by the PC revolution.

Note that there are normal cycles in industry. Motorola used to be the
predeminant mobile phone player. Nokia came in with uglier but better
designed phones (and cheaper too). You can also look at printers, where
Centronics was replaced by Epson and then by HP. Perhaps Nokia's days
are over.

By going Windows Mobile, they become a slave, and if Microsoft slows
development of the OS (as it did to its previous incarnation), it will
leave Nokia with old stale products. When HP/Compaq's iPaq became stale
because of lack of development of the OS by Windows, it could still
continue to get fat profits from coloured alchool in expensive plastic
containers. But Nokia is betting the farm on Microsoft here. If
Microsoft fails to deveklop that OS rapidly enough, HTC and others will
continue with Android, but Nokia will be dead in its tracks.

I think Nokia should have adopted a dual Android and Windows policy from
the day it decided to abandon its own OS strategy.

Lets not forget that HP spent a gazillion dollars buying Palm,
supposedly to get access to its OS. Will they squander this and never do
much with it (as they did with the iPaq) or will they come out with
full force and become a serious competitor to the iphone ? Personally,
I think HP will squander that investment, but I could be wrong.

With Nokia out of the game permanently, Apple now has one fewer
competitor and just need to keep abreast of what RIM, Microsoft and
Google/Android are up to.

 

Microsoft doesn't have the ability to actually compete with anyone ... never
has. All they do is steal or buy out someone else, and then screw that up
with their incompetence. Microsoft and Nokia are both on the slow slide to
non-existence, it's just that Microsoft will take longer thanks to idiots in
big business entrenching it so deeply in the first place.

 

Maybe, maybe not. Don't judge them only by their past crappy operating
systems (or by Vista). Windows 2000 and XP weren't great, but they
were usable. I've heard W7 is pretty good.

Yes, PowerPoint sucks, and Access is so-so, but Word isn't bad, and
Excel still beats Numbers, IMHO.

MS still churns out some garbage, but they also have some more expensive
products that actually work, e.g., SQL Server

 

Whether it's the Windows or Mac versions, Word is bloated garbage, Excel
is better, but still bloated, Access is far too over-complicated for it's
own good - you can make the same database in FileMaker Pro in minutes
rather than hours, PowerPoint, although getting better, is dismal when
compared to Apple's presentation software.

Microsoft's user interface is simply awful and the software purposely
tries to annoy you at every turn with bad design, whatever you want to do
is just so damn difficult ... and that's before you even get to all the
bugs.

Plus there's the over-complicated pricing structure with 95 versions of
each product at different prices and agreement levels. :-\

 

Opinions, maybe so ... but the facts are still true.

 

Excel: $149 (MS Office for the Mac, home and student edition; component
software is not sold separately any more.)
Numbers: $20 through the Mac App Store, or $79 as part of iWork.

With that price difference, one would hope that Excel beats Numbers.

 

The danger here is that a special relationship between MS and Nokia may
cause others like HTC to drop MS products and focus on Android. And
Microsoft would have to be very careful about compatibility in some
application marketplace. (app store).



The other issue is that unless Nokia fixes whatever got it to be
lethargic, its efforts with Windows will as succesful as its efforts
with Symbian.

Sorry, but Microsoft is to blame. Compaq was first to market with the
iPaq, (and had an exclusive arrangement with MS for that class of
device). HP inherited it, and while it is easy to blame HP, Microosft
shares the blame because it stop agressively developping that platform.

How quickly HP can do something with Palm will determine whether HP is
to enter the mobile market or just write off that investment as a dud.

I think that Apple's APP Store is one very mighty asset that makes it
VERY hard for new entrants. And on that front, both Microsoft/Nokia and
HP/Palm are new entrants.

RIM may remain in the business market because of their proprietary
services/mail.

Yep, but it sold its sole to Microsoft, and Nokia's survival is now at
the sole discretion of Microsoft. All its eggs are in the Microsoft
basket. Big risk considering that Microsoft does not have a solid
history in the mobile market.


Consider that HP, traditionally a pseudo subsidiary of Microsoft,
elected to give MS a big finger and buy Palm instead. Not exactly a show
of confidence by HP in Microsoft's mobile future.

Or was Nokia really desperate ?

I don't think the market can support more than 3 mainstream platforms,
and I say this in terms of available applications. IOS and Android get
the first 2 spots. Who will get the 3rd ? Microsoft ? RIM ? HP ? Will
Nokia try to have its own ?

It remains to be seen (and we will see it later this year) whether
Android's market share was due to Apple's artificial limitations (aka:
not available on verizon).

It is quite possible that if iphone becomes widely available on any/all
networks, that there may only be room or ios, android and rim. This
would mean that microsoft and HP's proprietary solutions would not get
much market traction. And that could mean the end of Nokia.

 

Large doesn't automatically equal garbage. Word does the job, and so
does Excel.

I'm no fan of Access, but hours? Sounds like you need some training.

I haven't used Keynote, but I already said PowerPoint sucks.

You are describing what it used to be (well, what PowerPoint still is)

Agreed. Only it's more like a dozen than 95. One thing I hate is that
the development tools have all the features of the most expensive
edition, so if you aren't deploying to that addition, you have to
remember which features to not use.

 

And it does. BUT, doesn't Word/Pages have the same price difference?

And Pages seems to be about equal to Word.

Doesn't PowerPoint/Keynote have the same difference? But PowerPoint
sucks and Keynote (I'm told) is fantastic.

 

From memory, Apple's office applications are quite cheap on the Mac App
store. The "Home & Student" version of Microsoft Mac Office is almost
identical to Apple's iWork ... of course Microsoft again has multiple
versions and makes business users pay for the privilege of using buggy
software.

The real problem is that unless you're fairly self-contained in your needs,
you HAVE to use Microsoft Office since it the only software that (nearly)
fully compatible itself. It's all very well making a gorgeous presentation
in Keynote, only to find that the conference centre only has PowerPoint and
won't allow people to use their own laptop thanks to the malware fears of
inept IT departments.

 

They do the job (most of the time), IF you can be bothered working around
the awful interface, kludgey control and bugs.

Ewwww... training in Acces, good God, NO!

Yes, Access is in some ways more powerful (and again there's the bloat since
it's mostly ways very few people use), but it's simply far easier in to
create a workable and user-friendly database in FileMaker Pro.

One of the real problems with PowerPoint is that unless you're going to be
using your own equipment, you never know what version the place where you
doing the presentation actually has ... which means no matter how many fancy
transistions, etc. Microsoft add, you stuck with using the standard old ones
and it gets kludgey and difficult to do anything interesting for the
audience.

Nope. I have yet to use the very latest version, but the previous version of
Mac Office is awful - the horrible Formatting Toolbox with options hidden
away where you can't find them, and it still has bugs galore (including
brand new ones!).

The new "ribbon" interface sounds equally appalling and is disliked by many
users.

You just get used to the idiocies of one version and then Microsoft
completely change it. :-\

A dozen, 95. Semantics. ;-)
Apple only has TWO version of it's OS.

 

And it does. BUT, doesn't Word/Pages have the same price difference?

And Pages seems to be about equal to Word.

Doesn't PowerPoint/Keynote have the same difference? But PowerPoint
sucks and Keynote (I'm told) is fantastic.[/QUOTE]

You do have a point.

 

Um, as I posted, it's $149 to $79, almost double.

There are only two versions of MS Office for the Mac. The differences are
that the Home and Student version doesn't have Outlook, and has only 90
days tech support instead of a full year of tech support. The price
difference between the two is $130.

Make it in Keynote and save it as a PowerPoint file.

 

Perhaps, but in the past open standards have succeeded against a closed
architecture despite the stability and non-fragmented nature of the
closed architecture.

Microsoft doesn't give up on key market segments. The difference here is
that it's not just Apple they have to compete against, it's Google as well.

 

That's the MSRP for each. Home and Student edition is on sale regularly
for less than $100, and iWork sells for $50.

With Open Office at $0, even $100 for Office or $50 for iWork, is high.

 

That's the MSRP for each. Home and Student edition is on sale regularly
for less than $100, and iWork sells for $50.[/QUOTE]

But when making comparisons, you need a stable basis; searching for the
best price is good when you're buying, but not for making this sort of
comparison.

If your only criterion is price, that is.