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(Left) Nokia CEO Stephen Elop, Microsoft CEO Steve Ballmer.  (Source: Wikipedia)
Company needs to act fast to avoid going down on "burning platform"

As anyone who's been following Nokia's descent knows, the Finnish mobile manufacturer is in trouble. Finally, executives at Nokia are admitting it and are making efforts -- a little late in the game, true -- to do something about it.

Yesterday, we reported Nokia CEO Stephen Elop's message to his employees in a memo: The company is "standing on a burning platform" and must change course. "Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable." he wrote.

Today's Nokia news suggests that the company might be acting on those strong statements. According to a Bloomberg Businessnews report, Nokia might be close to a software partnership with Microsoft. Elop, a former Microsoft executive himself, has met with Microsoft CEO Steve Ballmer to discuss the possibility of powering Nokia smartphones with Microsoft's Windows Phone 7 mobile software, an unidentified source said. Elop has also held talks with Google CEO Eric Schmidt, but those discussions are not likely to lead to a partnership with Android.

A possible deal -- rumors of which we reported on all the way back in December -- could be likened to a late-game Hail Mary pass, but it could benefit both companies. Nokia, the longtime leader in the worldwide mobile market, has been back and forth with its plans to unleash its new mobile OS, MeeGo. The new OS was supposed to replace Symbian -- until recently, the most widely used mobile OS in the world -- on all of its smartphone devices. But Elop pushed its launch back to 2011. And while Nokia is still the world's largest mobile phone vendor, it's market share dropped from 36.4 percent in 2009 to 28.9 percent last year.  

Microsoft, too, could benefit from a deal. Despite launching a revamped mobile OS with WP7, its stock has remained relatively flat. It moved 2 million licenses for WP7 in the last quarter of 2010 -- not enough to trigger a turnaround. But Nokia still claims 37.6 percent of smartphone sales, according to Gartner, potentially opening up the playing field for Microsoft.

One thing Nokia doesn't want to do is adopt the strategy of HTC, Samsung, and Motorola. That is, Nokia refuses to simply license Android from Google for its own devices -- a move a former Nokia exec once likened to "peeing your pants to stay warm". Rather, Nokia is aiming to forge a "strategic alliance" with a software company. 

"We need an attitudinal shift," Elop said last month, according to BusinessWeek. "We must improve the quality of our execution, accelerate the speed at which we execute, and enhance the effectiveness of our partnerships."

The changes Elop wants to implement could also mean additional changes to its executive leadership. The company's top executive losses have been well documented here on DailyTech and elsewhere, but a necessary "attitudinal shift" at Nokia may require additional shakeups. 

"Stephen Elop does realize what the problems are, but the question is whether there is a credible strategy and whether they can execute it without compromising their existing sales," Stuart O’Gorman, an investor at Henderson Global Investing Ltd., told BusinessWeek. "They’ve done the easy step that previous management didn’t take, which is realizing the problem. The harder steps are still to come."



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Peeing your pants to stay...
By SSDMaster on 2/10/2011 9:02:28 AM , Rating: 2
RICH.

Pride is the reason Nokia has been doing badly, and it's the same reason they will continue to fail.




RE: Peeing your pants to stay...
By SSDMaster on 2/10/2011 9:08:38 AM , Rating: 4
Also, I would just like to say I HATE dailytech's spam filter. I tried to sign on my computer and post a comment only to have it tell me I'm posting spam. So then I remote into one of our other server's on a different IP just to post 1 comment. Doesn't work. So I delete the quoted text. Vwalla. Works.

What's the point of having a quote button if it just blocks the quote?

Another time I had to remote into work from home to post a comment. Editing the post wouldn't help at all..


RE: Peeing your pants to stay...
By Kiffberet on 2/11/2011 8:51:29 AM , Rating: 2
At least the spam filter's beter than Tomshardware, which is just full of people posting adverts!


RE: Peeing your pants to stay...
By Suntan on 2/10/2011 10:01:08 AM , Rating: 2
Yes and no.

Perhaps what Nokia really means (but doesn’t want to say publicly) is that, “We don’t want to (or can’t) compete, based solely on price, with the likes of HTC.”

If so, then they would seem to be making a prudent choice by staying out of the Android-phone-a-month rat race.

Whether or not they can make a better return going with WP7 remains to be seen. If WP7 picks up popularity, you would expect all those manufacturers, currently stepping on top of each other to come up with the latest Android phone, to jump into the WP7 arena too.

-Suntan


RE: Peeing your pants to stay...
By SSDMaster on 2/10/2011 10:16:26 AM , Rating: 2
They got ousted from the top by Android. They want to take their crown back. They could be making boat loads of cash in a very short time if they supported android. Why don't they?

These execs aren't stupid. They realize the popularity of Android. Unfortunately they are undervaluing the choice of the OS. Honestly I think they need to go out and buy an Android, or iPhone and then a Windows phone and give them to their kids. Could save them millions+ seeing first hand what phones end up getting the most use.


RE: Peeing your pants to stay...
By Tony Swash on 2/10/11, Rating: 0
RE: Peeing your pants to stay...
By SSDMaster on 2/10/2011 11:50:29 AM , Rating: 2
quote:
Samsung and Nokia profit per device is quite small but they “make it up in volume”.


So they noticed that the strategy they've been using this whole time is working? Nokia's profit should be much much higher. Nokia needs to move a lot of phones in order to keep itself afloat. A big company like that only has one option at the moment. WP7 is not going to suddenly explode in popularity..

Also, if those numbers include apple's app market at all, then there's no comparison.


RE: Peeing your pants to stay...
By Tony Swash on 2/10/2011 6:48:39 PM , Rating: 2
quote:
So they noticed that the strategy they've been using this whole time is working? Nokia's profit should be much much higher. Nokia needs to move a lot of phones in order to keep itself afloat. A big company like that only has one option at the moment. WP7 is not going to suddenly explode in popularity..

Also, if those numbers include apple's app market at all, then there's no comparison.


Nokia's strategy is not working but the Android option may not be great for them, the WP7 option is also not good for them, they are between a rock and hard place. Nothing is going to be good, easy or safe for Nokia.

Check this out re trends in handset maker sales. Very interesting.

http://www.asymco.com/2011/02/07/smartphone-users-...

The Asymco blog is maintained by Horace Dediu an ex-Nokia executive. He seems to know his stuff and his articles are always interesting and informative.


RE: Peeing your pants to stay...
By kc77 on 2/10/2011 7:01:49 PM , Rating: 2
Maemo / Meego / Android / and to some extent Web OS all make some kind of sense because of the their market position and their support environment. WP7 makes none. Let's say Nokia puts WP7 on their flag ship. Who in the UK who is used to Symbian is going to buy a phone with less features in it? WTH are they going to use for Nav? Telmap? While Symbian needed some help OviMaps blows that away..... in spades.


RE: Peeing your pants to stay...
By Fleeb on 2/10/2011 12:21:47 PM , Rating: 2
By theapparition on 2/10/2011 12:36:19 PM , Rating: 3
Funny that the only company in your own link who didn't make any profit was LG, who was famously late to the Android party.

The other handset makers are profitable.

Your second fail is singling out Nokia, who on a per phone sold basis makes signifigantly less than HTC, and HTC is almost on par with RIM.

But who needs facts when you can twist your commentary.


RE: Peeing your pants to stay...
By Da W on 2/10/2011 1:47:20 PM , Rating: 2
A phone is a phone is a phone. What's differentiate a phone from another more and more is the OS. Why go with Android and look like everybody else? "Oh geez, another 1Ghz snapdragon phone with a 3,7" amoled screen and a 5MPX camera!" Nokia wants something special.

Since very few manufacturers are pushing a windows phone and they certainly don't push their best hardware in it, Nokia fully embracing WP7 on a shit load of different devices hitting every wireless providers might provide them with GROWTH. Which is what companies want.

WP7 just need visibility to succeed. Up here in Canada it's still iPhone everywhere (cause they where on every carriers at launch), and *some* android phones being pushed by carriers, but they definitly leave their windows phone on the shelf. You have to know about WP7 and ask for it for the vendor to show you. Nokia might change that.

Yet in the bus every WP7 user i meet is proud of his machine. I know i love mine. I don't have all the same apps my girlfriend's iPhone has, but the library is growing everyday. Great for music, Shazam+zune pass rocks!


Licensing an OS...and old OSes...
By Qapa on 2/10/2011 9:12:44 AM , Rating: 2
If they are licensing an OS, then why not Android?

Ok, granted it would be harder to stand apart and be noticed.

But I assume that WM7 is more expensive and then Android market is the most dynamic one and will keep growing faster than all others.

So, this is somewhat a strange "solution" for the burning platform.

And finally, what will they do with their OSes (Symbian, Meego, ...) ?
- keep evolving so that there will be a comeback later on?
- make it available for cheaper phones?
- kill them altogether?




RE: Licensing an OS...and old OSes...
By Calin on 2/10/2011 9:23:58 AM , Rating: 2
Not to mention Maemo, which was already abandoned in favour of MeeGo


RE: Licensing an OS...and old OSes...
By kc77 on 2/10/2011 6:31:21 PM , Rating: 2
Simple because the CEO is a former Microsoft Exec. When this was announced last year I knew this would happen. Think about it. Just listen to what he's talking about..."adopt smartphone platform which has a strong ecosystem" .....um that's not Windows Phone 7. As of right now WP7 DOES NOT even compare to the amount of developers behind Android or the iPhone at this time. Yet you're going to move your entire line up to a new OS that's behind both of the market leaders? Even Web OS would have made more sense as it has more features than WP7 has, and it's development community is pretty strong. From what I recall Google doesn't even charge for Android so I'm not quite so sure it even makes sense from a profit point of view.

Nokia has a market segmentation / marketing problem. It does not necessarily have a software problem when it comes to features. If anything Symbian, and Maemo for that matter have MORE features than WP7.


RE: Licensing an OS...and old OSes...
By usju on 2/11/2011 4:14:37 AM , Rating: 2
I've been using symbian phones for eternity and IMHO, they really DO have a large feature set. But the OS itself feels inefficient, as though there is a large CPU overhead for running anything. Can't open a pdf without heavy slowdowns on my Nokia 5800. I've tried that on a 600mhz android and the pdf files work like a charm with text anti aliased to fit the screen and all...


impressive
By AssBall on 2/10/2011 9:11:28 AM , Rating: 2
I don't know how the CEO managed to message his employees with a memo, but I hope to receive such a memo.




RE: impressive
By AssBall on 2/10/2011 9:14:13 AM , Rating: 5
/fail

Guess I should hit the coffee before I comment in the morning next time.


best photo choice
By tastyratz on 2/10/2011 9:16:18 AM , Rating: 2
xoxoxo to the battletoads and double dragon photo. You have had some good creating photos for your articles lately.




RE: best photo choice
By Mitch101 on 2/10/2011 4:48:47 PM , Rating: 2
Isnt that Tango and Cash at the top or did they change it after your post?


Such a smart move
By KoolAidMan1 on 2/11/2011 4:36:01 AM , Rating: 2
This is honestly a great move for Nokia and Microsoft.

Nokia makes good handsets but have a crap OS, while Windows Phone 7 is an OS with the potential to go toe to toe with iOS in terms of usability (just needs upcoming features to be patched in) and is already a much better foundation than Android (puke). The main thing it needs is momentum with consumers and developers in order to compete in terms of app selection.

Nokia will be getting a solid user-friendly OS while Microsoft gets to be tied with one of the biggest phone brands in the world.

As for why not go with Android instead, two reasons:

1) Every other handset company uses Android. It is pointless to race to the bottom with HTC, Samsung, Motorola, and every other company out there. Commiting to WP7 sets Nokia apart.

2) Two years on and Android is still a disaster on everything but the Nexus One and Nexus S. WP7 is slick, polished, consistent, and has very strictly enforced hardware and UI standards from a single very committed source.

Google is absolutely clueless compared to Apple and Microsoft when it comes to curating and enforcing standards within their platform. This "bad parenting" approach is why Android is such a mess across hardware platforms and carriers. Windows Phone 7 is the best shot Nokia has at competing with Apple and HP (whenever they launch their WebOS phones...) in terms of delivering a consistent user experience.

Again, smart move.




Drowning together
By Tony Swash on 2/10/11, Rating: -1
RE: Drowning together
By Flunk on 2/10/2011 9:09:16 AM , Rating: 4
Don't underestimate creativity. They could go with Android. But then they'd be just like everyone else. A partnership with Microsoft could be really good. Nokia's hardware + WP7's fantastic interface is a pretty good combination. At least on paper.


RE: Drowning together
By SSDMaster on 2/10/11, Rating: -1
RE: Drowning together
By themaster08 on 2/10/2011 3:52:49 PM , Rating: 2
Messages rotate sideways.

Emails rotate sideways.

Web browser rotates sideways.

Images rotate sideways.

Calculator rotates sideways.

Games rotate sideways.

Third party apps rotate sideways.

Office documents rotate sideways

Maps rotate sideways.

Pathetic is the word for your comment.


RE: Drowning together
By bug77 on 2/10/2011 10:17:38 AM , Rating: 2
quote:
They could go with Android. But then they'd be just like everyone else.


Last I checked, it was WP7 that didn't allow UI skinning.
TBH, I think Nokia is large enough to pursue both platforms. You know, spreading the eggs in several baskets. Works fine for HTC.


RE: Drowning together
By mckinney on 2/10/2011 10:20:52 AM , Rating: 2
Nokia should have bought Palm. WebOs would have been great for them.


RE: Drowning together
By semo on 2/10/2011 9:21:07 AM , Rating: 2
Kind of true. They had a good thing going with Maemo (as a niche at least) but that turned into vapor ware as soon as they partnered up with Intel.

My impression of Intel is that they are always late to the game but they always manage to get away with it (SSDs, integrated memory controllers for their CPUs, 64-bit CPUs)... not sure if they'll catch up with decent SoCs


RE: Drowning together
By Hiawa23 on 2/10/2011 9:42:16 AM , Rating: 2
Microsoft to the rescue.....

MS as a company is far from drowning, so this might be good for both.


RE: Drowning together
By Tony Swash on 2/10/2011 9:51:31 AM , Rating: 1
quote:
MS as a company is far from drowning,


Microsoft is drowning in the mobile OS market.


RE: Drowning together
By Da W on 2/10/2011 10:13:36 AM , Rating: 2
Come back here and say the same thing next year.


RE: Drowning together
By themaster08 on 2/10/2011 3:54:18 PM , Rating: 2
Tony Swash is drowning in Kool Aid.


RE: Drowning together
By MeesterNid on 2/10/2011 9:50:53 AM , Rating: 2
So one company that's in trouble because it didn't innovate (Nokia) is partnering with another that's always playing catch up? I'll stick with Anroid thankyouverymuch.


RE: Drowning together
By superPC on 2/10/2011 11:31:08 AM , Rating: 2
we don't know a thing about this alliance. it could be that nokia plans to install full windows 7 OS in its next generation hardware that feature intel processor. that kind of phone with atrix like docks would be awesome, especially with nokia great build quality.


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