If you think that former cell phone giant Nokia is going down in flames in their battle against Apple and Google, you’re not alone. Look no further than a leaked memo from the company’s new CEO, where he lays out the brutally honest truth.
Engadget is reporting that a 1,300 word memo to employees from Nokia CEO Stephen Elop has made the company’s grim reality a public spectacle. Elop, a former Microsoft executive, is planning to shake things up at Nokia in a big way, starting with sharing the company’s “new strategy” on February 11.
“The first iPhone shipped in 2007, and we still don't have a product that is close to their experience,” Elop states about midway through the exhaustive memo. “Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.”
That single paragraph amply describes the challenge faced by longtime smartphone giants Nokia and Research in Motion against upstarts who have essentially removed them from their lofty throne in a few short years.
Elop begins his honest memo by comparing Nokia to a man standing on a burning oil rig platform, who faces two choices -- stand in one place and be consumed by the flames, or “plunge 30 meters into the freezing waters,” which Elop considers a behavioral shift, taking “a bold and brave step into an uncertain future.”
The CEO’s “multiple points of scorching heat that are fuelling a blazing fire around us” are led by Apple, who Elop claims “disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful system.
“In 2008, Apple's market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent,” Elop continues. “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.”
Of course, Google’s Android is also to blame for Nokia’s woes. Elop explains, “Android came in at the high-end [and] 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.”
While Elop doesn’t yet lay out his plan to turn Nokia’s ship around, it’s clear that the fresh executive at least realizes the extent of the problem, so it should be interesting to see what he’ll do about it. A number of pundits believe that the Finnish cell phone giant will latch onto Windows Phone 7 in an effort to right the ship -- but we’ll all know when Elop unveils his grand scheme on February 11, just hours before Mobile World Congress kicks off in Barcelona, Spain.
Follow this article’s author, J.R. Bookwalter on Twitter
(Image courtesy of Engadget)
