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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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RE: ?
By MrBlastman on 2/9/2011 9:42:18 AM , Rating: 2
I'm right there with you, but, alas, I feel we are a fleeting breed--or one that is waiting to be repopulated. You'd think with the recession and the toll it has taken on everyone, they would be looking at purchases such as phones in a more miserly... and responsible manner--but, the power of hype is strong in one corner and in the other, the want (notice I didn't say need) for nifty gadgets is in the other.

People apparently want these expensive phones and expensive contracts. It must be nice for them to be able to piss so much money down the drain, along with pissing it down the drain on premium cable and many other "services" we don't really need to live.

I've got a baby in the house, I have college to save for, a mortgage to pay, skyrocketing medical costs to deal with, insurance premiums and everything else that comes with raising a family. I don't have any money in my pocket for this frilly crap like fancy phones, cable etc.--heck, I maybe watching 2 hours of television a week. I'd rather spend my money on the weekend doing stuff with my wife and kid... Or, just time with them doing free things like hiking on the trails.

What you highlight is a fundamental depreciation of net worth in America. Sure, if people keep pissing money down the drain on services, the money will keep others employed, but, employed is just it. It will give them cash flow. Cash flow that they can then spend and flow into other's pockets. Their real ownership of their own "life" will not be appreciating by much as the money that comes in goes right back out.

This is the deep issue that I fear many in our country are facing right now. It isn't an issue at this moment, as long as they are able and willing to work. As they grow older though, and approach retirement, it will then become a much larger issue as their true net savings (not necessarily money) will be much lower than it could be.

However, as a proponent of the free-market system, I have to say, it is everyone's choice to spend their money how they see fit. If they want fancy gadgets and phones, that's their choice. If they don't--that is their choice too. This is how it is, and should be.

For myself and others like you, we'll just diligently decide how to spend our money on things that are more important to us, just like everyone else is doing.

As far as Nokia, they better get with the program as they really messed up a huge opportunity they had a few years ago.


RE: ?
By bah12 on 2/9/2011 9:51:11 AM , Rating: 4
quote:
People apparently want these expensive phones and expensive contracts. It must be nice for them to be able to piss so much money down the drain, along with pissing it down the drain on premium cable and many other "services" we don't really need to live
To me it is a matter of useage. My iPhone is the single most consistantly used device I've ever purchased.

I had a pleathora of computers, notebooks, netbooks, game consoles, gamboys, ps2's, older "smart phones", PDA's, mp3 players, mobile dvd players, even first gen eBooks.

But if I'm honest with myself those had a very short shelf life, they were all relegated to novelty status rather quickly and only used on occassion. Good bad or indifferent my iPhone is on me and in use daily if not hourly. NO device that I have ever owned has been that useful to me (barring maybe the TV). I'm not saying it is a productive use of my time, but dollar for dollar it is, bar none, the most used.


RE: ?
By bah12 on 2/9/2011 9:55:57 AM , Rating: 2
Oh and to my quote from your post...yes it is nice. To paraphrase Louis CK.

I'm not saying people that are well off are better, just that being well off is CLEARLY better. Who could even argue that. If it were and option I'd reup every year.


RE: ?
By The Raven on 2/9/2011 12:15:49 PM , Rating: 2
I think you missed his point. I think he is saying that it is not a smart choice (in his opinion, for himself) but that many other people do not get that (for themselves) despite the 'great recession' that we experienced.

I too am surprised that people waste money the way they do. I used to work at Hollywood Video and we introduced a program that made it highly economical for frequent renters save a buttload of money (>%50 of their cost) if they would just wait 2 weeks to get new releases. (Brings to mind people waiting in line for hours/days for an iPhone/copy of COD:BOps)

But they could not even wait 2 weeks to see the movies. I told them, "Hey, you've waited 3-6 months to see it on DVD, you may as well wait another 2 weeks to save a ton of $$$!"

But the answer was almost always 'no'.

Did it keep them entertained and 'busy', yes. Were they movie critics (more specifically DVD critics lol), no. THerefore they could make no $$ with it and it was economically a waste. Just like the iPhone is a big money suck for (I would guess at least >50% of) the people who buy them.


RE: ?
By ClownPuncher on 2/9/2011 3:20:59 PM , Rating: 2
Well, it's more about not wanting to sign up for things and not wanting to be hassled by the clerk at the counter, it's not about wanting to waste money.


RE: ?
By ClownPuncher on 2/9/2011 3:22:19 PM , Rating: 1
"Well off" = white.


RE: ?
By bah12 on 2/9/2011 4:52:03 PM , Rating: 2
Just don't travel to the future though :)


RE: ?
By ClownPuncher on 2/16/2011 7:57:21 PM , Rating: 2
Rate me down, because I actually wrote what Louis CK said in his stand up. Tip: CK never used "well off" in that joke.


RE: ?
By Dr of crap on 2/9/2011 2:52:14 PM , Rating: 2
So you are good at throwing away money is what you're saying.
You didn't Need those other things, and you didn't use them much either. So why not WAIT for the new thing to be proven that it is what they say it is?
That is the problem I see.


RE: ?
By The Raven on 2/10/2011 11:16:45 AM , Rating: 2
quote:
So you are good at throwing away money is what you're saying.

Money and time. But then again time is money, right?
quote:
I'm not saying it is a productive use of my time, but dollar for dollar it is, bar none, the most used.


RE: ?
By MeesterNid on 2/9/2011 9:50:55 AM , Rating: 2
I agree with you 100%! Though what I think will happen down the road, when the "money pissers" approach retirement, people like us that save our money will be on the hook to pay for their expenses since it's our "patriotic duty"! Makes me sick just thinking about it...but we'll be getting a preview of how that unfolds in a the near future here when states can no longer cover the pension payments for retired public sector workers.


RE: ?
By bah12 on 2/9/2011 9:59:06 AM , Rating: 4
Shouldn't you two be on your front porch yelling at the neighborhood kids shaking your cane. Seriously if some people can afford it let them, envy is one of the 7 deadly sins remember.


RE: ?
By MrBlastman on 2/9/2011 10:21:39 AM , Rating: 3
Be fair now. I never spited people for being able to "afford" it--I just spoke of the bleak realities of things. If people really can afford it, and are well off, then good for them! If you peruse my words again you'll see that I absolutely believe in the free-market system.

This "afford" thing though--for clarification, if they are able to manage to put 11-15% away towards their 401k, additional money towards their IRA's, money towards their college savings accounts for their kids, pay all their bills... and maintain 12 months of a cushion in savings, then absolutely, they can "afford" whatever they want, and they should have it.

The problem is, most people you see in those big, nice and lavish homes, are only as rich as their next paycheck. This is why these non-conforming properties (over the 417k limit) have seen by far the largest and most torturous decline in value. The world isn't as rosy once you realize this.

The wealthiest people I know live in average homes and drive modest cars, fyi.


RE: ?
By kingius on 2/9/2011 10:53:26 AM , Rating: 2
I think you may be being too fair in your appraisal.

Advertising now leverages psychological studies to increase its effectiveness... and now we are in a recession and people are still buying luxury devices... its not hard to see that these two things are connected. That's one thing that nobody ever thought about with the free market; what if advertising has achieved its goal of overcoming the rational decision making process?


RE: ?
By MrBlastman on 2/9/2011 11:10:45 AM , Rating: 2
That _is_ the ultimate goal of advertising. Remember when back in the 50's and 60's they slipped subliminal advertising inbetween the frames in movie houses? They actually noticed an increase in concessions sales as a result (as that was the goal).

Being a sly fox, I tried this in an 8th grade computing project that I had programmed by slipping the text "Give us an A" between the frames of animation in the show and... guess what? It worked. :) Now, by my own conjecture alone I can not say that it was because of the apparent flashes on the screen that caused it. The project _was_ well done... and, being that it was a computing class, the teacher did have access to the source code. ;)

But yes, advertising ultimately wants to override the rational modus and lead us to a compulsive outlet instead as increasing revenues are what they are really seeking.


RE: ?
By Dr of crap on 2/9/2011 2:59:08 PM , Rating: 3
What IF - IT has!

It seems no one can come up a real thought process and not buy the crap that the marketers spit out of the TV or radio billboards.

No one can do the math on so called sales to see what they are getting or even think to do their 1040EZ forms for themsleves.


RE: ?
By The Raven on 2/10/2011 11:19:34 AM , Rating: 3
They don't need to deal with those complicated forms... President Obama is just gonna hand it out from his stash! ;-)


RE: ?
By bah12 on 2/9/2011 11:24:32 AM , Rating: 3
Yah that was more aimed at his response, but I agree 100% if you can afford it they are WELL worth it. IMO if used to their full potential they are not strictly a luxury.

Assuming you are doing all the things you listed, I assume you may want to keep tabs on those investments. Streamline your bill payment and manage your budgets. Or even more consumerish things like find cheaper gas, or coupons. Not to sound cliche, but "theres and app for that".

I'd argue that the $$ people spend on going out to eat or even sat/cable would be better served toward a smartphone.

My contention is that it is far less "pissed away" money that other items in the average US home. Hell just the ability to stay connected with customers/colleagues via Facebook, Twitter, Linked-In, and Sales Force can be a have very positive effects. As the old saying goes its not necessarily what you know but who you know, even if your not in sales, networking has benefits.

I'm sorry but if you and I have the same customer, who do you think will get the job one who responds day or night to an email anywhere in the world, or one with a brick phone that only checks it when he/she is at his computer laptop.

I realise Joe bob teenager does not have this usage pattern, but again there are a far more wasted dollars elsewhere that get very little usage.


RE: ?
By Hiawa23 on 2/9/2011 11:55:10 AM , Rating: 1
This "afford" thing though--for clarification, if they are able to manage to put 11-15% away towards their 401k, additional money towards their IRA's, money towards their college savings accounts for their kids, pay all their bills... and maintain 12 months of a cushion in savings, then absolutely, they can "afford" whatever they want, and they should have it.

Come, on, most folks will work their entire life & not be able to do what you say here, so why even bring it up? I say enjoy life the best you can, if you like these phones, or videogames, or Tvs, substitute anything in place, then do just that, enjoy it, cause life can be taken away from you at any given time, hell most of us may not even make to retirement age, so live it up, as far as I am concerned.

I am 36, college educated, I have a home, car, kid, 14 years out of school, I do okay. My parents woked all their whole adult lives own their home, cars, my dad has his business, but they made enough to live, I had to borrow $20k to finish college, so when some people get on their soap box on message boards telling people what & how much they should be saving & what they should or should not buy, realistically, most folks, can't do that or don't do that, or not able to do it, yet still maintain decent lives, & buys these items, & it sounds good from the soap box. As far as I am concern buy whatever you can pay the note on. Some sound like our political leaders trying to tell everyday Americans what they should do yet managed to run deficits, & start wars unfunded, print & borrow money, then comes back & says we can manage the budget but on the backs of the middle, poor, old, or handicap, by ripping the programs that help many in these classes.


RE: ?
By The Raven on 2/10/2011 11:30:47 AM , Rating: 2
quote:
Come, on, most folks will work their entire life & not be able to do what you say here, so why even bring it up?

Everyone can afford 11-15%. It is a percentage after all. As far as the bills go, we are talking about smart phones here which are attached to bills. Kids can save their own money. Whatever, it IS doable even if you are on minimum wage in California (as I did). Lower your expectations as to what you need/deserve and you will find that it really isn't that bad.

Go to some poor neighborhood and look at the kids having a "ball" while they use a rock as a soccer ball. It really brings you back to the reality of what is important. And a smartphone is not, in the grand scheme of things (unless it actually is a device that adds value to what you bring to the table where you work. If you use it to play games, etc. then it is just a money pit.)

I have an Xbox, DS, PC, Wii, etc. and I know that these are trivial things even thought they keep me connected to my family (which is important). If I had a smart phone it would be the same thing. I guess the difference is that 1) I am aware of this and 2) I don't spend nearly as much on those devices combined as I would on a smart phone.


RE: ?
By davmat787 on 2/9/2011 3:55:16 PM , Rating: 2
Hipsters don't have to worry about all of those silly things you listed. :)


RE: ?
By Hiawa23 on 2/9/2011 10:50:53 AM , Rating: 2
I'm right there with you, but, alas, I feel we are a fleeting breed--or one that is waiting to be repopulated. You'd think with the recession and the toll it has taken on everyone, they would be looking at purchases such as phones in a more miserly... and responsible manner--but, the power of hype is strong in one corner and in the other, the want (notice I didn't say need) for nifty gadgets is in the other.

Come on, really, people still have credit cards, it's the American way. Personally, I think it's ridiculous what people pay for these smart phones, but it's their money. The recession has taken it's toll on me as I look to save more put more away for my daughter's education or rough times, & just waste less, but if you can aford it then I say why not, you only live once & you can't take it with you when you die. Enjoy life a little bit.


RE: ?
By kaosstar on 2/9/2011 11:07:54 AM , Rating: 3
Recessions tend to hit the lower classes the hardest. People who can't really afford an Iphone now couldn't afford one three years ago either. For the rest of us, they can really make sense. My Droid X has largely displaced my laptop, digital camera, and Nintendo DS.


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