In a leaked memo sent to his staff, Nokia’s new head Stephen Elop (photo, from aljazeera.net) suggests the phone giant is in crisis, describing the company as standing on a “burning platform” surrounded by innovative competitors who are grabbing its market share.
Mr Elop compared the situation faced by the company to a story of a man who jumps into freezing waters to escape a burning oil rig. “In ordinary circumstances, the man would never consider plunging into icy waters,” the memo, obtained by the AFP news agency, said.
“We too, are standing on a ‘burning platform,’ and we must decide how we are going to change our behaviour.
Nokia’s new head said there were “multiple points of scorching heat” fuelling the “blazing fire around us”.
“For example, there is intense heat coming from our competitors, more rapidly than we ever expected.”
Mr Elop said the success of Google’s Android operating system and Apple’s iPhone had caught the firm off guard and criticised Nokia for being slow to respond to changes in trends.
“The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience,” chief executive Mr Elop wrote in the note that was distributed to the Finnish company’s staff and was first published by technology website Engadget.
“Android came on the scene just over two years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.”
Meego operating system
Nokia’s overall share has been gradually declining, even though in term of handset sales the company still leads the global smartphone market.
Research firm IDC said Nokia’s share fell from 38% in 2009 to 28% by the end of 2010, while its rivals, including Apple and HTC have seen their share increase or remain constant.
According to Ben Wood, an analyst at research firm CCS insight, the memo showed that Mr Elop has a “deep understanding of the severe structural problems Nokia is facing”.
“I think it shows that he has inherited an organisation that is in much worse shape than he anticipated and the work that will be required to get it back on track should not be underestimated,” he told BBC News.
The leaked memo from Nokia’s new head also suggests that the company is being squeezed at the lower, non-smartphone end of the market by Chinese manufacturers.
“They are fast, they are cheap, and they are challenging us,” he wrote.
According to the leaked memo, Nokia has stopped developing its first smartphone using a MeeGo operating system. That was seen as key to the firm’s battle in the high-end smartphone market.
“We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market,” Mr Elop wrote.
On Friday Nokia is expected to publicly address its future strategy during a media event.