Stephen Elop’s internal memo
Hello there, There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.Stephen Elop, CEO of NOKIA (ex- Microsoft)
As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.
He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.
We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.
Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.
I have learned that we are standing on a burning platform.
And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.
For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.
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.
And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. 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.
Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.
While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.
The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.
We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. 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.
At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.
At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.
And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.
The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.
This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.
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.
Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.
How did we get to this point? Why did we fall behind when the world around us evolved?
This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.
Nokia, our platform is burning.
We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.
The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.
Stephen.
Online IDs providers market share
On 46% of the cases when people use an online ID to sign-in to a website, they use Facebook.
Design collaboration in virtual worlds with Post3D
Dassault System, the editor of Solidworks, one of the reference software for 3D modeling just announced a new platform, Post3D, letting you collaborate in a virtual environment to discuss the design of an object created using solidworks. In the past I’ve covered such used cases on Second Life, but one of the pain point, aside from the non-enterprise-friendliness of Second Life, was that you had to actually redesign your object with SL’s tools inworld. Here the feature is incorporated within the production chain in a very fluid and clever way.
Check out the video below for a sneak peek.
2D Barcode Mobile Payment at Starbucks
Starbucks is rolling out in the US their “Starbucks card” mobile app. The app is an e-wallet tied to your starbucks account and enabling you to pay your caramel macchiato by snapping a 2D barcode printed by the cashier.
Funny enough I had the same idea some time ago since it’s clearly a very time to market way to provide mobile payment with ease (especially since NFC won’t be mainstream before a while). But I found this patent filled by a French guy in Accenture (US2009240626A1) which exactly covers this method… I’d be interested to know how they are evading this obvious IP infringement. Maybe they actually paid Accenture to use the patent but I really doubt anyone would want to pay for that, especially since it’s more of a buzz feature than an actual improvement of the POS workflow. Indeed I’m pretty sure paying with that application is longer than swiping a card, but it may help if you leave home and forgot your purse… which is a really marginal use-case.
UPDATE : Seems I misread the application description (and since it’s US only I could not test it) – the app is actually just a digital version of your fidelity card and shows up a barcode when required to be scanned and to debit your e-wallet of the amount of the order. Actually nothing new under the sun, except the fact that you can recharge your e-wallet from that same app. Fairly disappointing.
Google Goggles’ Big Bang
The latest update of google goggles for Android brings in… sudoku solving ! The video below demonstrates the feature … not far from last week’s “Big Bang Theory” where Leonard & buddies making an app to solve differential equations !
VR-Wear’s dream lives on
One of my previous projects, VR-WEAR, died 2 years ago. Financing of the prototyping phase failed - happens, was the crisis and anyways the prototype was still expensive and probably a bit to in advance… For those who don’t remember the idea was to create a set of virtual reality devices enabling strong engagement in video-games both enabling immersion and interaction with sensors monitoring facial expression, eyeballs motions and body language. We built proof of concepts of the headsets and the glove and bound the sensors to Second Life enhancing the avatars with their puppet masters body language.
This year at CES2011 are showing that the vision I had still lives – and we’re getting closer and closer :
- Microsoft announced that “Avatar Kinect” is coming to the Xbox 360 and will apparently be a place where you can virtually hang out with your “friends” using the ability for Kinect to detect facial gestures like eyebrows, smiles, and laughs.
- Sony unveiled a crazy 3D prototype of Head Mounted Display with 720p OLED displays and 5.1 sounds (no price nor release date)
CES 2011 – My list for Santa
Promise, next year I’ll be at CES again ( missed it 2 years in a row – this just can’t be happening anymore !). But I kept a pretty close look at the gadget show and selected a few stuff that put me in awe. I’m gonna skip the analysis side of the CES since the Internet is plagued already by gazillion of those explaining why 2011 is the year of tablets (which I disagree – imh a Tablet without apps is useless – I almost never use the browser of my iPad ).
The 50-cent headphones just rox. Firstly they are wireless using a dedicated tiny dongle to transmit the music , secondly the materials used to build them are splendid. They’ll probably replace my beats by dre when they reach EOL. www.sleekby50.com
The Nike+ sportswatch is super-nice. Although I’m not a fan of the Nike+ service, I do like the device made by tomtom for Nike.
I’ve been willing to put my hands on those Olympus micro-4/3 cameras for a while now and with the new Olympus E-PL2 that feeling even got stronger. This baby must take gorgeous underwater pictures with good housing and lights.
The latest Sony PJ camera series is pure awesomeness with its built-in pico-projector. It’s definitely useless but so cool!
The Razer switchblade may be the most interesting device I saw at CES. Super-small form-factor, OLED keyboard with keys customizable to match dedicated in-game actions and a good CPU/GPU mix letting you play PC games. I totally can see myself play WoW on this device !
The skype camera plugin for Sony Bravia TVs. The coolest video-conferencing setup I could have imagined. and at a slice of the price of those über expensive telepresence setups.
The Griffin CarTrip is a bluetooth device connected to the ODB-II port of your cart and running efficiency diagnostics giving you a performance dashboard of your car – all that for 89.9USD. Hope we’ll be able to change the settings of the car from the iPhone to put som boost in the engine (yes it’s possible). This is really one of the coolest hack-my-car app i’ve seen in a while. iTSX has been showing the same thing for iPad and apparently they do provide some modding capabilities. but at a hefty 350 USD price.
Samsung’s flexible and transparent displays are opening up possibilities for more awesome new types of devices hopefully for 2012.
It’s not really a CES gadget but the Ustream LiveU Mobile package used by Techcrunch to stream live the show is some amazing backpack. Stuffed with 6 wireless modems, it gave their firewire camera streaming capabilities throughout the whole show
The latest Microsoft Surface table “V 2.0″ is something quite amazing, slimmer, support up to 20 simultaneous touches, can scan pages laying on its surface and a price drop at 7,500USD makes it pretty desirable. I’m sure those devices will have a great future and change the way we interact with computers, but it’s still at least 5 years away from us.
The Liquid Image Xtreme Sport Cam goggles let you snap Full-HD videos underwater on-the-go. The setup is pretty impressive and let you go down 100m with them. Only drawback, it’s a just a gadget, there’s is no way you can actually take decent pics without proper aiming and the long-range videos can’t be enhanced by the 2 small lights on the sides… still pretty fun to see !
Last but not least, the iCade which started as an April’s fool prank on Thinkgeek apparently actually got real ! If you haven’t followed the story, it’s an arcade cabinet where you can fin your iPad in and play old MAME-style games. Estimated retail price of about 99€.
Android brand values vs reality
I love android phones. Their integration with Google is simply fantastic. They do a much better work in integrating with Gmail than my iPhone does and the Gtalk app is just incredible, it lets me chat on the go seamlessly (and there is nothing like this experience on iPhones… ). The OS itself is OK, it’s young and rapidly evolving into something more consumer-friendly, it’s far from being as polished as iOS. The apps portfolio available through the android market is getting better everyday now even featuring the iOS blockbusters and Epic’s UTEngine games.
SO basically if I were to sum up the unique selling points of android it’s Gmail/Google Integration and the Android market … only those are not Android features, they are Google phones features. The core OS being OpenSource, any device manufacturer can take the OS and port it to their device, but they won’t get any of the Google applications (no market access, no gmail….). Yet they can write on their datasheet and on billboards and shout to the world “my device runs Android”.
With even more fragmentation coming to the device market with the new tablets announced at CES today (for instance Lenovo’s LePad) the fact that the Android brand, which is one of the key brand values end-users will be relying on, does not actually mean anything and does not reflect the end-users expectations is pretty scary.
The fact that there are so many flavors on Android not featured by google even created market opportunities for Amazon or getjar to provide third-party apps marketplace, which sounds a bit like an oddity when you look at how integrated the iOS experience is. I remember last summer at GDC how developers were complaining that 70% of the users of android could not buy their product (non-availability of billing in their countries, non-google-approved devices…) and that was a huge issue that is actually stopping developers to target Android. Angry Birds even totally gave up the paying model to only put a free version + ads since it seems to be the only realistic way today.
I think it’s important to create brands to differentiate the core OS (which nobody really cares abouts, it’s no better/worse than Bada, WebOS or any other) to the set of tools that create the value of the platform and basically let you know that the device will have access to all the cool resources of the Android world.
My Running Blog (FR)
- Décrassage de 8km après une soirée un peu arrosée… Et... January 24, 2012
- Chouette course, rapide au début (4:30/km) sur 4km puis un peu... January 21, 2012
- Les 5km réglementaires prescrits à petit trot … (comment... November 29, 2011
- 1500€ plus tard... November 29, 2011
- Petite reprise en douceur 6km, accélération progressive,... September 27, 2011
