Stephen Elop reveals the Group's dreadful situation in an internal memo. He went onto announce that they would abandon its Symbian and MeeGo software on Friday.
By Delphine Cuny.

The CEO sent his employees the explosive memo without kid gloves. Stephen Elop acknowledged the dreadful situation of the world's number one mobile phone manufacturing firm. The Canadian-born boss was recruited by Microsoft in September. In the beginning of his email, he compared Nokia's situation to a burning oil rig. “Nokia, our rig, is burning,” he told his troops a couple of days before the long-awaited conference about the new strategy with investors on Friday in London, according to the document revealed by the specialized website Engadget. The Finnish giant hasn’t denied the authenticity of this report yet.

Stephen Elop notes that Nokia is threatened from all sides: concerning top-of-the-range products, Apple has “disrupted the market, redefined the smartphone and focused developers’ attention on a closed but very powerful ecosystem.” Concerning middle-range products, Google’s software Android has been adopted by all of Nokia’s challengers including its biggest, Samsung. And of course, Chinese manufacturers are nibbling at its market share of low-range products in 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 models sold which operate with Google’s software has exceeded 32 million copies, slightly more than the number of smartphones operating with Symbian, Nokia’s traditional operating system.

While he talks about a “daring and courageous” decision without revealing his 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 markets such as North America,” notes the CEO, and that it even “impedes new product development”. It would be a revolution. But salvation will not come from MeeGo, the new OS created in partnership with Intel because “at this rate, we will only have one MeeGo product on the market before the end of 2011.”

Engaged Partnerships:

“Nokia does not fight with the right weapons,” thinks the first non-Finnish leader of the group.
“The battle over 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, speed up or join an ecosystem, Stephen Elop explains. But he doesn’t explain whether that means resigning themselves to adopting Android, even if it means that Nokia won’t differ from its competitors, or joining Microsoft, Mr. Elop’s former employer, in order to capitalize on the Windows Phone 7 system, which was just launched with uncertain success or even creating a new OS from scratch.

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