Forwarded message from S. Kalyanaraman\n\nThursday, February 10, 2011\n\nNokia CEO's letter to employees\n\nTOI Tech, Feb 9, 2011, 01.05 pm IST\n\nIndraprasth aka New Delhi - Finland-based Nokia\n[url]http://timesofindia.indiatimes.com/topic/search?q=Nokia[/url]\nfaces a key test this week when chief executive Stephen Elop\n[url]http://timesofindia.indiatimes.com/topic/search?q=Stephen%20Elop[/url]\nfinally unveils a plan to reverse a sharp slide in the fortunes of\nthe world's number one mobile phone maker.\n\nNokia holds a strategy and financial briefing in London\n[url]http://timesofindia.indiatimes.com/topic/London[/url]\non Friday, two weeks after it reported a 21 percent slump in fourth\nquarter earnings and Elop promised: "The industry's changed and now\nit's time for Nokia to change faster."\n\nEngadget has reprinted a copy of the text from an internal Nokia memo\nfrom the CEO Elop to the company's employees. Here's over to the\nletter which several analysts have termed 'brutually honest'.\n\n\nHello there,\n\nThere is a pertinent story about a man who was working on an oil\nplatform in the North Sea. He woke up one night from a loud\nexplosion, which suddenly set his entire oil platform on fire. In\nmere moments, he was surrounded by flames. Through the smoke and\nheat, he barely made his way out of the chaos to the platform's edge.\nWhen he looked down over the edge, all he could see were the dark,\ncold, foreboding Atlantic waters.\n\nAs the fire approached him, the man had mere seconds to react. He\ncould stand on the platform, and inevitably be consumed by the\nburning flames. Or, he could plunge 30 meters in to the freezing\nwaters. The man was standing upon a "burning platform," and he needed\nto make a choice.\n\nHe decided to jump. It was unexpected. In ordinary circumstances, the\nman would never consider plunging into icy waters. But these were not\nordinary times - his platform was on fire. The man survived the fall\nand the waters. After he was rescued, he noted that a "burning\nplatform" caused a radical change in his behaviour.\n\nWe too, are standing on a "burning platform," and we must decide how\nwe are going to change our behaviour.\n\nOver the past few months, I've shared with you what I've heard from\nour shareholders, operators, developers, suppliers and from you.\nToday, I'm going to share what I've learned and what I have come to\nbelieve.\n\nI have learned that we are standing on a burning platform.\n\nAnd, we have more than one explosion - we have multiple points of\nscorching heat that are fuelling a blazing fire around us.\n\nFor example, there is intense heat coming from our competitors, more\nrapidly than we ever expected. Apple disrupted the market by\nredefining the smartphone and attracting developers to a closed, but\nvery powerful ecosystem.\n\nIn 2008, Apple's market share in the 0+ price range was 25\npercent; by 2010 it escalated to 61 percent. They are enjoying a\ntremendous growth trajectory with a 78 percent earnings growth year\nover year in Q4 2010. Apple demonstrated that if designed well,\nconsumers would buy a high-priced phone with a great experience and\ndevelopers would build applications. They changed the game, and\ntoday, Apple owns the high-end range.\n\nAnd then, there is Android. In about two years, Android created a\nplatform that attracts application developers, service providers and\nhardware manufacturers. Android came in at the high-end, they are now\nwinning the mid-range, and quickly they are going downstream to\nphones under EU100. Google has become a gravitational force, drawing\nmuch of the industry's innovation to its core.\n\nLet's not forget about the low-end price range. In 2008, MediaTek\nsupplied complete reference designs for phone chipsets, which enabled\nmanufacturers in the Shenzhen region of China\n[url]http://timesofindia.indiatimes.com/topic/China[/url]\nto produce phones at an unbelievable pace. By some accounts, this\necosystem now produces more than one third of the phones sold\nglobally - taking share from us in emerging markets.\n\nWhile competitors poured flames on our market share, what happened at\nNokia? We fell behind, we missed big trends, and we lost time. At\nthat time, we thought we were making the right decisions; but, with\nthe benefit of hindsight, we now find ourselves years behind.\n\nThe first iPhone shipped in 2007, and we still don't have a product\nthat is close to their experience. Android came on the scene just\nover 2 years ago, and this week they took our leadership position in\nsmartphone volumes. Unbelievable.\n\nWe have some brilliant sources of innovation inside Nokia, but we are\nnot bringing it to market fast enough. We thought MeeGo would be a\nplatform for winning high-end smartphones. However, at this rate, by\nthe end of 2011, we might have only one MeeGo product in the market.\n\nAt the midrange, we have Symbian. It has proven to be non-competitive\nin leading markets like North America\n[url]http://timesofindia.indiatimes.com/topic/North-America[/url]\nAdditionally, Symbian\n[url]http://timesofindia.indiatimes.com/topic/search?q=Symbian[/url]\nis proving to be an increasingly difficult environment in which to\ndevelop to meet the continuously expanding consumer requirements,\nleading to slowness in product development and also creating a\ndisadvantage when we seek to take advantage of new hardware\nplatforms. As a result, if we continue like before, we will get\nfurther and further behind, while our competitors advance further and\nfurther ahead.\n\nAt the lower-end price range, Chinese OEMs are cranking out a device\nmuch faster than, as one Nokia employee said only partially in jest,\n"the time that it takes us to polish a PowerPoint presentation." They\nare fast, they are cheap, and they are challenging us.\n\nAnd the truly perplexing aspect is that we're not even fighting with\nthe right weapons. We are still too often trying to approach each\nprice range on a device-to-device basis.\n\nThe battle of devices has now become a war of ecosystems, where\necosystems include not only the hardware and software of the device,\nbut developers, applications, ecommerce, advertising, search, social\napplications, location-based services, unified communications and\nmany other things. Our competitors aren't taking our market share\nwith devices; they are taking our market share with an entire\necosystem. This means we're going to have to decide how we either\nbuild, catalyse or join an ecosystem.\n\nThis is one of the decisions we need to make. In the meantime, we've\nlost market share, we've lost mind share and we've lost time.\n\nOn Tuesday, Standard & Poor's informed that they will put our A long\nterm and A-1 short term ratings on negative credit watch. This is a\nsimilar rating action to the one that Moody's took last week.\nBasically it means that during the next few weeks they will make an\nanalysis of Nokia, and decide on a possible credit rating downgrade.\nWhy are these credit agencies contemplating these changes? Because\nthey are concerned about our competitiveness.\n\nConsumer preference for Nokia declined worldwide. In the UK, our\nbrand preference has slipped to 20 percent, which is 8 percent lower\nthan last year. That means only 1 out of 5 people in the UK prefer\nNokia to other brands. It's also down in the other markets, which are\ntraditionally our strongholds: Russia\n[url]http://timesofindia.indiatimes.com/topic/Russia[/url]\n, Germany, Indonesia\n[url]http://timesofindia.indiatimes.com/topic/Indonesia[/url]\n, UAE, and on and on and on.\n\nHow did we get to this point? Why did we fall behind when the world\naround us evolved?\n\nThis is what I have been trying to understand. I believe at least\nsome of it has been due to our attitude inside Nokia. We poured\ngasoline on our own burning platform. I believe we have lacked\naccountability and leadership to align and direct the company through\nthese disruptive times. We had a series of misses. We haven't been\ndelivering innovation fast enough. We're not collaborating\ninternally.\n\nNokia, our platform is burning.\n\nWe are working on a path forward -\- a path to rebuild our market\nleadership. When we share the new strategy on February 11, it will be\na huge effort to transform our company. But, I believe that together,\nwe can face the challenges ahead of us. Together, we can choose to\ndefine our future.\n\nThe burning platform, upon which the man found himself, caused the\nman to shift his behaviour, and take a bold and brave step into an\nuncertain future. He was able to tell his story. Now, we have a great\nopportunity to do the same.\n\nStephen.\n\n[url]http://timesofindia.indiatimes.com/articleshow/7459579.cms?prtpage=1[/url]\n\nEnd of forwarded message from S. Kalyanaraman\n\nJai Maharaj, Jyotishi\nOm Shanti\n\no Not for commercial use. Solely to be fairly used for the educational\npurposes of research and open discussion. The contents of this post may not\nhave been authored by, and do not necessarily represent the opinion of the\nposter. 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