That Nokia memo; How Nokia can still screw it up; and what I want to hear on Friday

I haven’t yet written about the Nokia Memo that’s been brilliantly leaked across the web today. I’ve had quite a few emails from people asking why not. I tweeted it. I scooped it (new tool I’ve been playing with). I figured those who were particularly interested had already found it on Engadget.

The memo is a brilliant piece of writing.

The leaking of the memo is a phenomenally good move for Nokia. The text accurately sums up precisely what the market has been thinking. It’s what almost ever Nokia staffer knew.

Oh, they knew the company was shifting a ton of Symbian handsets, they knew the ’10 year plan’ of focusing on the developing markets was a good one. It is. Nokia still makes a ton of money, even if things are pointing downward. The company has a huge cushion.

The problem was perception. Throughout last year the market lost faith. Benefit of the doubt gave way to skepticism. Even the Nokia faithful were finding it hard to keep a straight face.

The trouble is, there are still (senior) nutcases at Nokia — the ones I sometimes write about. Here’s an example from October last year.

This is me writing about trying to help the company with some advice:

I have sat in front of many [Nokia] executives and asked straight forward questions only to be met with total and complete ‘numbskullarity’ bordering on neolithic incompetence.

Witness, for example, me sitting in a meeting with one chap about 6 months ago explaining that Silicon Valley developers think the company is FU*KED. And they use that language. I attempted to explain why this was a problem, how it had come about and how precisely to deal with it. The arse of an executive responded that ‘there isn’t a problem’ and that he ‘couldn’t understand my viewpoint’. He even went on to explain that, ‘all the developers I speak to are delighted with Nokia.’ Utter tripe. The other executive — the smart one — who’d recognised the issue and asked me (and another chap) to propose a solution, had to sit in the corner with a pained look on his face, whilst this debacle ensued.

I had to laugh. I actually thanked the chap — after a meeting of perhaps 5 minutes — and admitted to him that he was right, ‘there is no problem.’ If he didn’t see a problem and wasn’t able to entertain my (and the rest of the market’s viewpoint), so be it. I did have to laugh. Because I knew — precisely — that I’d be able to write this text. And look like I’m a total flipping genius.

I am — it’s not difficult to look like a genius when you’re dealing with Nokia executives, is it?

Of course they’re not all dullards. The problem is a lot of the arses have been in side positions or haven’t had the authority to do anything beyond try and make their senior bosses understand just how bad the company’s reputation was — and what the substantial implications of this were — and were going to be.

I wrote that just over three months ago.

With today’s publication of the memo, followed by confirmation that it was genuine, the market has let out a collective sigh of relief. The nightmare is over. There’s been some speculation that the memo might have been taken out of context, especially given some of the figures used in the text. I don’t think that matters. Indeed, I think it needed a bit of exaggeration. The Nokia robot employees who haven’t noticed the perception issue needed a spectacular wake-up call.

And the market needed to know that — yes — Nokia’s back in the game. Perhaps that’s premature. What I mean to say is that clearly the senior people at Nokia get what the rest of the marketplace is thinking an are going to sort it all out.

The danger now is that Nokia doesn’t go far enough.

This is my concern.

The company’s complete inaction in the face of the rest of the industry — acknowledged by Elop himself — has left it with no choice whatsoever.

Let’s be clear here.

You read the memo, right? You read that section? Here it is again;

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Shocking. A ratings downgrade is ultra serious stuff. Agree or disagree with the ratings agencies, that’s irrelevant. We’re here. We’re at this stage now.

The critical point is that Nokia cannot announce steady-as-she-goes. That option evapourated half way through last year. The company could have got MeeGo out the door in the summertime before iPhone 4 hit. They could have stamped their mark on the industry, said ‘THIS is how it’s going to be,’ and provided the UI looked good and the tech blew everyone else away, the market would have — grudgingly — left the company alone. A reasonably coherent strategy semi-consistent with what the market was thinking would have been acceptable, provided it addressed a few nice high-spec devices to the West.

But no.

That’s all gone now.

The ratings agencies have tired. Some might say they’ve bought the Android and Apple spin. I think there’s an element to that. The ratings agencies wouldn’t know how to make a device ecosystem at all — what do they know? That’s fine. They’re just measuring sentiment. Measuring the sentiment across the West and also taking a close look at Nokia’s balance sheet, which, alas, doesn’t quite look as good as it should.

It certainly doesn’t stop and end with the ratings agencies. They’re the last warning before it gets really, really bad. Before words like ‘beleagured’, ‘struggling,’ ‘misguided’ and so on start appearing with alarming frequency in the Financial Times and the Wall Street Journal. That’s a one-way road to investor melt-down and real, real trouble.

We’ve not been far off that across last year.

Elop’s message has been expertly timed for the wider market. Everyone has bought it. Even Google is worried — enough to make their ‘two turkeys don’t make an eagle‘ unofficial statement. Everyone has bought that Nokia’s top man gets the problem and has described it perfectly.

The challenge on Friday and across Mobile World Congress week is to manage expectations.

Nothing short of BIG NEWS will work.

The announcements, the vision, the thinking, the logic — it needs to be enough to cause half the market to call same-day emergency board meetings — such as what often happens when Google and Apple step up to the plate with their announcements.

A limp-wristed, ‘we’re going to make one Windows Phone 7 device which will be out next year,’ will not work. No. If you’re going to do a partnership with Microsoft, you need to own that. You need to shift the market. You need people to change their strategies because of you. To be afraid of you. To start worrying. Anything less and the market will pounce. It’ll be far too easy for the quiet spinners working behind the scenes on behalf of Google, Apple, Samsung and RIM to bury the announcement as irrelevant.

Make no mistake, the 800lb gorilla in the mobile industry is still most definitely Nokia. Or could definitely be Nokia. A super-smart strategy announcing the complete integration of WP7, a raft of devices, worldwide carrier support, WP7.5 arriving (with complete ground-level Ovi integration) by June, WP8 arriving in October, plans to ship 50 million units by Christmas with advance orders of 25 million units already in the bag. Now we’re paying attention. Now the developers Nokia has been chasing for so long will be knocking on their doors. Because those same board directors who’ve been urging their teams to focus on iPhone and Android will all of a sudden start asking about Windows’n’Nokia.

Statements from Elop like, ‘We let you down, we took our eye off the ball, but we’re back — and by 2012, Nokia will ship 150m smartphone units,’ will start to get people rather hot.

Then remind the market that Nokia has sold half a billion handsets a year for the last five years. Yes. Let’s add in some slightly outrageous Apple-esque semi-accurate stats, shall we? Remind the market that, although the ball was dropped on the high end, fixing that is a piece of cake. The real work is getting your technology to scale into the billions of units and developing the developing markets. Let’s have some nice throw-away lines from Elop at this point. Something like, “And you know, we reckon that — right now — 670 million people will use a Nokia phone. Today. Tooo-day.”

That will get people thinking.

“And my message to you is that we’re working super-hard to make sure that those 670 million customers go out next year and buy a new Nokia. Within 2 years, we fully expect 70% of those customers to be smartphone customers.”

Yup. Bring on the Jobsian ego.

“Our plan is simple, ladies and gentlemen. We catch them with Symbian — the most efficient and powerful operating system on-the-planet today — and then we migrate them to NOKWP7. I know we’ve all been impressed with Microsoft’s clean UI and attention to experience. But, ladies and gentlemen, let me tell you, you haven’t seen anything yet.”

And then start showing some screenshots.

Start spinning the wheel, showing the joy. Show us what it COULD be. Show us what the world COULD look like.

A nice explanation of where MeeGo fits into the on-going strategy will be important, too. Mobile computing, tablets, netbooks, the whole shebang.

The important thing is to talk up WP7. That’s what the market wants to hear. HOW are you going to make my wife, my brother, my sister-in-law, all want a Nokia phone again?

I’ll stop there.

Let’s go back to the real world.

On Friday we need big, big thinking, big news, big market-moving strategy, confidence, mixed with some tub-thumping rallying cries to remind the world just how good Nokia was, is and can be.

The next problem after that will be managing the internal organisation. Right now, it’s all about the external message though.

If Friday’s news gives the market an ‘oh, right… well…‘ reaction, it’s game over. It’ll be a long and painful to watch.

This week Nokia was given a break by the market. The negativity has stopped, temporarily. Get stuck in there Nokia, get stuck right in.

Let’s have you back to your best.

,

  • http://twitter.com/mikebutcher Mike Butcher

    I think you are expecting too much of them. “big, big thinking, big news, big market-moving strategy, confidence.” Just not in their DNA.

  • http://www.mobileindustryreview.com Ewan

    Mike, alas I think you are entirely correct. :|

  • http://www.mobileindustryreview.com Ewan

    Mike, alas I think you are entirely correct. :|

  • http://www.facebook.com/people/Rolf-Smeds/1567142313 Rolf Smeds

    I think we can be quite certain now that Nokia will indeed adopt WP7 as their high-end smartphone OS, keeping Symbian for the low-to-mid-end devices, and relegating Meego, for the time being at least, to tables and such.
    The problem is, however, if Nokia will be able to innovate the WP7 platform in any meaningful way. Microsoft has made it clear that vendors and operators won’t have much freedom to modify the OS. As I understand, adding their own pre-installed “hubs” are pretty much it. A Ovi-hub would probably be Nokias only contribution to the platform.
    So what would an Ovi-hub offer that isn’t already available on WP7? Let’s see… Ovi Store? Doesn’t really make sense, seeing as how Microsoft already has its own app store for WP7. Ovi Maps (the only Ovi service that, in my mind, is in many ways superior to other vendors navigation apps)? Well, WP7 already has Bing maps, and I find it hard to believe that Microsoft — who aren’t exactly known for adopting third party solutions in favor of their own — would allow Nokia to replace Bing maps with Ovi Maps. Not sure if they’d even allow third party navigation services on the platform at all. As for the other Ovi-services: Sync? Too immature, and WP7 already has synching. Ovi Mail? Wouldn’t offer anything new. Ovi Files? Discontinuned. Ovi Music? WP7 already has Zune.
    So I’m afraid I can’t really see Nokia bringing anything meaningful, software-wise, to the WP7 table. The only way for them to differentiate themselves is by building better hardware than other WP7 device vendors. Which they very well might be able to do.

  • http://www.mobileindustryreview.com Ewan

    So do a short term WP7 play. The market has no patience left.

  • DigitalFreedom

    I sure hope they don’t go with the WP7 crap. Even compared to the Symbian 3 I just don’t like it. And it is a way to closed platform to be a good longterm choice for anyone but Microsoft itself. Nokia should just step uop with their work on MeeGo, which is technically even better than Android and over which Nokia can have as much needed control as they want. And it is completely open source so this is also very good, even indirectly for users who don’t care about such things because they think it’s not relevant (democracy is still relevant even if you don’t do politics). And speaking as a developer MeeGo has already extremely nice tools for developing apps for it, The MeeGo SDK supports writing apps in 3 way, native C++/Qt, native declerative Qt Quick and HTML5 apps, And that’s not all, Dalvik has laready been ported to MeeGo so it can even run Android apps and as it is a true Linux-based operating system (unlike Android which is only the kernel), it can even run Linux apps. So that’s what I want Nokia to do, focus 200% on MeeGo and slowly just transition away from Symbian and stay clear of Windows Phone trap

  • http://www.mobileindustryreview.com Ewan

    The market won’t wear it. They’ve had their opportunity to decide their own future.

  • http://www.thewestring.co.uk Iain51

    I just don’t see WP7 as high end. It’s akin to a first gen iphone but with 3g. Not really going to cut it nowadays.

    One can only hope for Nokia’s sake that @selop knows when WP7 is getting an update, and that it happens before they make use of it.

    **Edit – just seen a tweet from El Reg talking about 1.1 in March…

  • Alex Kerr

    > The memo is a brilliant piece of writing.

    Ha ha, Tomi Ahonen (amongst many others) would radically disagree with you.
    http://communities-dominate.blogs.com/brands/2011/02/the-nokia-ceo-burning-platform-memo-at-engagdget-doesnt-ring-true-to-my-ears.html

    His points are solid, and deserve answers.

    Pretty much everyone jumping and screaming and shouting about this memo is either against Nokia or against Symbian and this memo supports their positions and delights them.

    Saying “Symbian is crap”, “Nokia is doomed”, or that they should adopt Windoze Phone or Android, is not support Nokia, no matter if one wraps it up in “wanting the best for them, and they could be great again”. They will never be great adopting anyone else’s OS.

    Symbian is still the best. A thousand voices screaming it’s not will not change the fact that it is. MeeGo *sounds* amazing but it is totally unproven. Symbian has *proven* itself to be the best.

    I think a partnership with MS is on the cards however. Google are clearly bitter about not doing a deal and it shows in the immature and bitter tweet their VP of Engineering put out. Lame.

    The real joy is that Nokia will actually continue to be at the top of the tree, the top of the mobile industry, IF they don’t do anything stupid tomorrow (like ditching Symbian or S40). Meanwhile the monekys will continue to jump around in their pens screaming and squawking just because Nokia didn’t follow all the utterly misguided plans suggested to them.

  • http://www.mobileindustryreview.com Ewan

    That’s a totally irrelevant set of points Alex, the market has moved on. The company is under substantial and sustained pressure. Fail to deliver on Friday with a strategy that the market likes and the company will be toast. Slowly.

  • Anonymous

    I hope you are being ironic and just joking in you rant.

    Why the h*ll would Nokia want to downgrade to a piece of crap OS like WP7?

    Going WP7 would be suicide and i sure would never buy Nokia again.

    Stephen Elop needs to be kicked out of the company if that memo is even half written by him. Its full of fact errors and shows a person that does not have a clue about the mobile market in the world.

    Claiming that Nokia is having a hard time catchin up, when they are still in the lead????
    That America is the mobile market leader?? In what universe is that?

    Everyone knows that it is Japan, then rest of Asia, then Western Europe, then maybe then America.
    the apple fad is already fading. ….the new enemy is Samsung. Apple is not even on the threat map anymore. Android is not a company, just an OS, and most of the companies that have adopted it har not going to well. Not if you look at their sailes … HTC and Samsung stand out though.

  • Anonymous

    no wonder . it is a looked down piece of crap, that hardly even supports Micorsofts own services. Xbox live is harly a selling point for business users and true tech geeks. Windows Mobile 6.5 was more advanced then WP7 is even close to being.

    Nokai using WP7 would be like taking you brand new gaming computer, and putting Windows 3.11 on it. Not being able to use any of the fancy hardware you actually have. And a Windows 3.11 designed by Steve jobs. Looks fancy, but you can do jack shit, if master Jobs does not approve

  • http://www.ewanspence.com/blog Ewan Spence

    To back up Ewan (oh the irony), the technical argument has been lost. Technical solutions do not matter to Moodys or Standards and Poors. They are ONLy looking at the economic health and prospects of the company. The failure to engage with them and other analysts means that the befeits of Symbian are not worth a dime in the eyes of the city. THAT’S what *Something must be done*. There are limited options to do that – staying the current course is not one of them.

    Given THOSE circumstances, what would you do?

  • http://www.mobileindustryreview.com Ewan

    Eloquently put, Mr Spence!

  • http://twitter.com/kgutteridge kgutteridge

    I hope your right, but that level of brashness is not Nokias style; much to their current detriment in the tech press it seems.

    It will be a sad day for Europe if Nokia does decide to rebase into the US, as I am sure mobile software peeps, who already perhaps believe the grass looks greener, will suddenly find it even more tempting to up sticks

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