The Nokia "Burning Platform" Memo

The Nokia CEO is reported to have sent an internal memo describing the issues that the company faces; this is likely a prelude to the changes that he plans to announce on 11-Feb (this Friday). The memo is available at http://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troops-in-brutally-honest-burnin/

It is funny how quickly things change. A few years ago (aroun 2007) when I was working at the another mobile phone company, we used to marvel at Nokia's ability to do the right things. While we were still debating which platform to build phones on and struggling to put together our platform, Nokia seemed to have it all figured out. They had Series 40 for feature phones, Series 60 for Smart Phones and Maemo for high-end devices. It seemed as though we were still fighting last year's battles while Nokia had moved on to worry about other things such as how to respond to the increasing focus on mobile internet services.

While Nokia is still a major player in the mobile business (one-third of the 300 million smart-phones shipped in Q4 2010 were from Nokia), the general feeling seems to be that Nokia needs to make some changes if it needs to remain a leader in this business; this sentiment is also visible in the CEO's memo.

A detailed analysis of the reasons for the unenviable position that Nokia finds itself in is more than I can attempt at this time. However it is interesting to reflect on how things have changed since the time I first started work on mobile phone software:

- 10-12 years ago, innovation in the mobile industry was centred around Europe and Japan. Nokia had the cool devices and DoCoMo had put together a cool mobile internet service called i-mode. Since the past few years, the rise of Apple and Google has led to the United States being the hotspot for innovation.

- The success of Apple and Google has meant that internet on mobile is similar to the internet experience on the desktop; in other words, services popular on the wired internet are also popular on mobile phones - Twitter & Facebook, You Tube, the same mail services etc. The talk about how the internet experience on mobiles would be something completely different from the desktop internet seems to have remained just talk. Of course the story is a bit different for feature phones where mobile-specific services based SMS and voice have provided a different flavour. But given the rate at which smart-phone prices are dropping, is the market for services created specifically for feature phones large enough and profitable?

- An article I read some time ago (I think in the Vision Mobile blog) talked about how the technology-centric view of operators where they thought about new standards and services to drive ARPU (e.g. MMS, Mobile TV) has not been a great success. Instead the app-centric model has prevailed - thousands of developers are busy identifying and addressing user needs and making money in the process (and generating data revenues for operators). I know from personal experience that a lot of the standards that firms in the mobile industry spent time developing haven't really taken off. For e.g. OMA spent a lot of time developing standards for things like MMS, (advanced) DRM mechanisms, Mobile Ads, On-Device Portals (DCD); I seriously doubt whether operators are making a lot of money from services based on these standards.

- Did Nokia find itself out of depth when it had to compete with Apple and Google as opposed to competing with other mobile phone vendors? While Nokia's mobile phone competitors played by the same rules as Nokia, firms such as Apple and Google did not.

The Nokia CEO memo did get a lot of press on 9th and 10th Feb. One interesting tidbit was a tweet from a senior Google exec commenting on the rumoured tie-up between Nokia and Microsoft that "two turkeys don't make an eagle". Given that Nokia was at one time evaluating both Android and Windows Mobile, this tweet seems to indicate that they have preferred to bet on Windows.

Browsing through related content brought me to an article from some months ago that mentioned that a senior VP in Nokia passed a comment that "Nokia selecting Android would be like Finnish boys peeing in their pants in winter to stay warm". While this sounded rather crude at first, the comparison is actually quite smart; i.e. moving to Android would provide some temporary relief but would be a bad idea over the longer run..