Stephen Elop reveals in an intern memo the dreadful situation of the group. He could announce then abandon of its Symbian and MeeGo software on friday. (In the Press)

The CEO sent to his contributors the explosive memo without kid gloves. Stephen Elop acknowledges the dreadful situation of the first mobile building firm in the world. The Canadian born boss was recruited by Microsoft in September. In the beginning of his mail, he compares his situation and Nokia’s one to a burning oil rig. “Nokia, our rig, is burning”, he told his troop a couple of days before the long-awaited conference about the new strategy to the investors on Friday in London according to the document revealed by the specialized website Engadget. The Finnish giant hasn’t denied the authenticity yet.

Stephen Elop notes that Nokia is threatened from everywhere: concerning top-of-the-range products, Apple has “disrupted the market, redefined the Smartphone and focused the developers’ attention on a closed but very powerful ecosystem”, concerning middle-of-the-range products Google’s software Android has been adopted by all Nokia’s challengers including Samsung the first one, and of course concerning low-of-the-range products for which Chinese manufacturer are nibbling at its positions in the developing countries. According to Gartner, the market share of the global leader fell from 36.4% to 28.9% in 2010.

“The first iPhone was launched in 2007 and we still don’t have a similar product. Android arrived more than two years ago and this week they took our leading position in volume in smartphones.
Unbelievable” says an alarmed Stephen Elop. In the fourth quarter of 2010, according to the research firm Canalys, the number of sold models operating with Google’s software has exceeded 32 million copies, slightly more than smartphones operating with Symbian, Nokia’s historical operating system.

Whether he talks about a “daring and courageous” decision without revealing its choices, the leader gives some clues. He seems to be ready to drop Symbian because this system “has demonstrated that it was not competitive in major market such as North America, notes the CEO, and that it even “impedes new product development”. It would be a revolution. But the salvation will not either come with MeeGo, the new OS created in partnership with Intel because “at that rate, we will only have one MeeGo product on the market until the end of 2011”.

Engaged Partnerships

“Nokia does not fight with the right weapons”, thinks the first non-Finish leader of the group.
“The battle of terminals has become a war of ecosystems”, including devices, software, developers, applications, online business, advertisement etc. so Nokia will have to decide either to build or to speed up or to join an ecosystem, Stephen Elop explains. But he doesn’t point out if that means resigning themselves to adopt, after all the others, Androïd, even if it means that Nokia won’t differ from its competitors, or to join Microsoft, Mr Elop’s former employer, in order to capitalize on the Windows Phone 7 system, which was just launched on the market with uncertain success or even to create from scratch a new OS.

“Choosing Android will be very risky for Nokia, which would became dependent from Google, unless Nokia does it only for the American market”, considers Carolina Milanesi, from Gartner.
As far as Microsoft is concerned, “the partnership would be a better balance, but they are both confronted to the same problem : their brands are not very attractive for consumers. And yet Nokia desperately needs quick results. Therefore the negotiation remains opened until Friday. At this stage, the only thing that is known, is that several managers will have to pay for the past mistakes, as the CEO judges that the management has not taken its responsibilities.