Nokia into the Breach

Inquiring minds want to know: would you buy a handset from a man on a burning raft?

I have spent significant time this week trying to get to the bottom of the apparently-authentic "burning platform" (raft, IMHO, is a better analogy, so I'll use that here) memo issued by Nokia's new CEO, Stephen Elop. Mr. Elop comes to Nokia from Microsoft, a fact of increasing importance this week as all of this unfolded, and ethics therefore dictate that I must again declare my personal bias against all things Microsoft here. Such may be coloring the conclusions I will reach, just so you know.

Anyway, all of this started with said memo that positively reeks of amateurish narcissism. Are you kidding me? What kind of a fool would write such a document for general distribution, and, of course, knowing full well that such, if released, could do substantial harm? Would you (Mr. or Ms. Carrier) buy a phone from a man on a burning raft? Is such worth the risk? If I were a board member at Nokia, Mr. Elop would have some splainin' to do.

Next, there are reports today that significant layoffs can be expected at Nokia. No surprise here; the first step in any turnaround is to stabilize the financial picture and that inevitably means cutting costs. People are the biggest cost, and people therefore usually take the brunt of initial cost-cutting measures. Such measures, however, ripple, affecting suppliers but more importantly reputation. History shows that such can be recovered from over time, but we're talking years here. And with the requirement for an essentially new direction in product strategy, years it will be - at best. Success cannot be guaranteed in this case.

But there are more missteps regarding product direction already. Nokia today said they'll go with Windows Phone as the vehicle to differentiate their (revamped) product line. This is not unexpected, given, as I noted above, that Nokia's CEO came from Microsoft. But this move is downright foolish from my perspective; Windows Phone offers nothing of value above Android, and adds significant cost. It would be better for Nokia to use Android (or Meego, in which they also have a stake) and add customization - for example, something like the integration-layer user interface on Windows Phone 7.  The choice of OS today is really all about buzz and apps, and not the OS itself - so adding cost and placing one's bets on what can never be more than the Number 4 mobile OS (and I personally don't see how it ever ranks that high) is just plain dumb. And what will Nokia do when today's high-end smartphones become tomorrow's low-priced commodities? $50 Android phones are already on the market. A $50 Windows Phone-based phone is an abstract, theoretical concept.

As I write this, Nokia's stock is getting crushed. Hey, Elop, get in here. It's splainin' time.

Nokia, and this is important, remains a great brand. They have significant presence in the developing world, and they do, in general, build good products. They absolutely understand how to innovate and engineer great handsets, albeit at a slower pace and higher cost, at present, anyway, than the market demands. But I'm not sure if a manager who writes "burning platform" memos is a good choice to lead the turnaround that is both absolutely required and eminently possible here. Let me be clear: Nokia can indeed experience much better days ahead if the right decisions are made. At this point, though, that's going to take a while, and more changes in management - and key strategic decisions - may yet be required.

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