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Nokia CEO Stephen Elop

"S**t just got real"
Nokia CEO Stephen Elop tells his troops that it's time to face the music

It appears that Nokia's CEO has come to the realization that many of us came to months, if not years ago: Nokia's smartphone efforts are in trouble. The company has been a bit lacking on the innovation front and has never quite made its way back into the hearts of the consumer -- especially in North America -- since the arrival of the iPhone in 2007.

Stephen Elop, a former Microsoft Business Division executive, took over Nokia's CEO position back in late September. It didn't take long for him to see the writing on the wall when it comes to Nokia's position in the market, and he fired off a memo (which was obtained by Engadget) to state the sad position that the company is in. In fact, Elop says that the Nokia is standing on a "burning platform" and that the company must decide what it wants to do to stay relevant.

Here are a few highlights from the 1,300+ word memo:

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… The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. 

Love 'em or hate 'em, it's true that Apple really turned the smartphone market on its head. Apple knows how to create buzz for its products, and while the iPhone may not have the most dazzling array of hardware at any point in time compared to its competitors, the user experience (hardware + software ecosystem) is hard to fault.

Elop goes on to praise Google's Android platform which has taken a few short years to topple Nokia from the top of the worldwide sales charts:

Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable…

Android came in at the high-end, 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.

Elop continues in his memo talking about the company’s unhinged efforts with MeeGo, troubles with Symbian, and the fact that Chinese OEMs are able to crank out low-cost smartphones at a rapid pace. Basically, Nokia is being assaulted from all sides and isn't taking enough action to stay relevant. 

Nokia's CEO even goes so far as to say that the answer to Nokia's problems may be to adopt smartphone platform which has a strong ecosystem (Android, Windows Phone 7 perhaps?). Windows Phone 7 seems like a good choice given Elop's past ties to Microsoft, but we'll hear a little more about Nokia's plans for the future on February 11. 

You can read Stephen Elop’s full memo here.



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By kingius on 2/9/2011 8:54:05 AM , Rating: 2
Apple (at this point in time) owns the media; when was the last time anyone read anything bad about an Apple product?

Google can leverage its position as the world's gateway to information to prioritise search results to its own gain.

It's not hard to see how competing against these two, for a traditional nuts and bolts company, is going to be difficult.

In my view, I don't think it matters. I still use my N95, which is my favourite phone and all I ever do on it is send texts and make (and receive) calls. There are a lot of people out there that will just use a phone as a phone and occasionally use the extra features (GPS route finding, check an email on the web, etc). Apple's time is now, but these things are cyclical. Once people realise that apps are old hat and start to think about how much they are paying for a device which they are using only a few functions of, there will be a shift away from 'smart' phones.




By Tony Swash on 2/9/2011 10:01:59 AM , Rating: 1
quote:
Apple (at this point in time) owns the media; when was the last time anyone read anything bad about an Apple product?


I think Apple's advantages go much deeper. From a consumer/customer point of view Apple has the following advantages.

a) A reputation for quality. One may argue that this is deserved or undeserved but if Apple again and again tops reliability and customer service polls consumers will and do notice. Any consumer researching a possible purchase would come across this unambiguous message based on polls and surveys and not press releases.

b) A top class retail network. The Apple stores are one of the most successful retail operations on the planet and any visit to one would show the way that the stores both showcase the Apple products, allow purchaser to play with possible purchases and give them the opportunity to interact with apparently unhurried and helpful staff. The experience of interacting with an Apple retail store is often very much better than interacting with a carrier retail store.

b) Apple's App Store is the best. It is the most vibrant, the biggest has the largest group of developers. Finding, buying and installing apps is super easy and is done via an interface (iTunes) familiar to many hundreds of millions of consumers.

c) There are far more accessories for the iPhone. This means many more cases, speakers, car chargers, FM broadcasters, interface solutions, etc, than any other phone. This adds enormous value to the iPhone from the customers point of view (the iPhone is "compatible" the other phones are not) and is because Apple has a single physical form factor for accessory makers to target and the same manufacturers have often already developed an Apple orientated business working with iPods so adding iPhone accessories was a very easy step.

d) The iPhone has the best value stack. An iPhone user finds an easily accessed and familiar interface to accessing the largest music and digital media business on any phone.

e) Customer have been "trained" via the Apple product gradient. Apple has sold over 250 million iPods so countless millions of consumers have grown used to accessing the iTunes interface and already have active accounts ready to go from the moment they purchase the iPhone. The music player of the iPhone is a built in iPod, again known and understood by many millions. The most popular iPod is the iPod Touch which runs the same iOS as on the iPhone and is effectively and iPhone minus the phone. All this means that for many, many consumers buying the iPhone seems safe, familiar and a logical and obvious step.

f) Now consumers know that their iPhones will connect with and be very similar to the most popular tablet on the planet the iPad. Again this seems to add value to the iPhone and make it seem and obvious and a safe choice of phone.

So for many reasons the iPhone seems a desirable, uniquely safe and useable device to buy. Apple has been building this super eco-system for a decade and now having occupied a lot of key territory (digital music dominance, super retail network etc) they will be very hard to imitate.


By Denigrate on 2/9/2011 10:11:58 AM , Rating: 2
quote:
a) A reputation for quality. One may argue that this is deserved or undeserved but if Apple again and again tops reliability and customer service polls consumers will and do notice. Any consumer researching a possible purchase would come across this unambiguous message based on polls and surveys and not press releases.


I guess you missed Marketing 101. This IS media attention and bias TOWARDS Apple.


By Pirks on 2/9/2011 10:38:46 AM , Rating: 1
Why isn't this a "quality" bias towards Dell, Samsung, LG, HP, IBM, SE, Nokia, Acer, or any other electronics maker? Why Apple and only Apple has this bias in the press speaking about their "quality"? Why no such bias for other OEMs?


By Denigrate on 2/9/2011 11:44:44 AM , Rating: 2
It's because you morons have convinced yourselves that there is a reason you pay a 60% premium, and a lot of mediots use Apple products.


By Hiawa23 on 2/9/2011 12:03:23 PM , Rating: 2
It's because you morons have convinced yourselves that there is a reason you pay a 60% premium, and a lot of mediots use Apple products.

wow, you may be true, but, I say live & let live, if they want to pay, then pay & be happy. Not me, though...

Obviously, many Apple owners are happy with their products no matter how much they cost, or how the quality is perceived by many.


By Pirks on 2/9/2011 12:13:53 PM , Rating: 2
Why no bias then about expensive Dell or Alienware or Sony or HP products with the same 60% premium? Why 60% premium from Apple gets the PR and the media bias while the same 60% premium from others does not?


By Tony Swash on 2/9/2011 1:20:48 PM , Rating: 2
quote:
quote:
a) A reputation for quality. One may argue that this is deserved or undeserved but if Apple again and again tops reliability and customer service polls consumers will and do notice. Any consumer researching a possible purchase would come across this unambiguous message based on polls and surveys and not press releases.

I guess you missed Marketing 101. This IS media attention and bias TOWARDS Apple.


Oh dear I didn't realise I was going have to spell things out quite so simply. Here goes. Try to concentrate.

The original post said that Apple benefited from media attention.

My point is that almost all surveys and polls of users place Apple at or near the top of user satisfaction ratings.

Why is that important?

I assume discerning consumers search for such surveys and reports before making a purchase decision. I know I do and I am fairly sure quite a lot of consumers also do so.

What I look, and most consumers, are looking for is not press releases or news stories or press reports but actual data, product data. I, and I assume most consumers, spend a lot of time trying to scrape away the press fluff and get the actual data. Actual data is very important in guiding my purchase decisions.

My point is that the actual data about Apple customer satisfaction ratings would sway a lot people towards Apple products. Not the press releases, not PR campaigns, not the articles, not the media coverage. The actual data.

Can you see the difference?


"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)














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