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Nokia's Burning Ships strategy

In the recent series of exposés on Nokia’s new strategy I sought to paint a background for what caused such a dramatic decision:

This gives a backdrop to the decision, but it does not explain the most crucial part of the decision: why did Stephen Elop decide to maintain an exclusive platform for Nokia rather than a multi-platform approach as chosen by successful competitors such as HTC, Samsung and Sony Ericsson.

Going from backing one “burning” platform exclusively to backing another “ice cold” alternative without bothering with a hedging alternative is very risky. This may be the biggest puzzle and mystery for outside observers.

Here I put forward a few reasons why exclusivity attracted Nokia:

  1. The lessons of product focus (see why focusing on a few products is hard).
  2. The costs associated with Symbian and Meego were unreasonably high. (see Nokia employs as many people to develop its smartphone software as Apple does to develop all its products).
  3. The psychology of change management.

This last one may be the most crucial of all.

What has to be appreciated is how bloated Nokia has become. It has 140 thousand employees. It’s been organized and re-organized countless times and is completely intractable even to insiders. Cutting headcount can only accomplish so much. It deals with costs, but not with motivation. What management needs to do is also incentivize the survivors.

This is where exclusivity comes in as a motivational tool.

To explain we need to dip into a new metaphor. Conquistador Hernan Cortés landed in Mexico with the intention to conquer it. Legend has it that as soon as he landed, he burned his ships to prevent his men from retreating and motivating them that conquest their only option.[1]

Leaders motivating their followers by removing the means to surrender or retreat is not uncommon. It’s harsh and brutal. It’s not a natural thing do do: destroying perfectly useful options is value destructive and generates outrage, even mutiny.

In Nokia’s case, institutional inertia with a vestigial Symbian effort would compel the organization to maintain the current platform while treating the new alternative as a pathogen.

Counter-distruption theory states that the response to a disruption requires a focused approach through an autonomous challenger protected from corporate antibodies by the CEO herself. In this case, the autonomous organization is outside the company (Microsoft). Protecting the new effort was not possible with a Chinese wall. The only alternative was to simply get rid of the old and start with a clean slate.

While there are times it makes sense to burn ships to eliminate any ideas of retreat, there are other times when doing so is reckless. You can do the calculation on the basis of cost of being wrong and levels of uncertainty [2], but even when armed with all the data linked above, this decision can hardly become something that can be quantified.

It’s a gut-level decision.

I would say that Nokia’s new CEO did not just jump off a “burning platform” but that once he jumped he made sure it kept burning so that nobody thought of going back on board.

Notes:

  1. There is a Microsoft precedent to this story. See Amazon.com: Burning the Ships: Transforming Your Company’s Culture Through Intellectual Property Strategy (9780470432150): Marshall Phelps, David Kline: Books Burning the Ships recounts the decision that forced Microsoft to face its own ‘succeed or die’ moment. It’s a lesson in strategy and survival that speaks about the courage required to embrace radical business transformation.
  2. See also: Burning Ships
  • Rob Scott

    The ship was not burning. He poured gasoline and lit the fire. It is all his making.
    I am of the opinion that this is going to be a major failure.

    I guess we will see in 3 – 5 years time.

    • FalKirk

      I disagree (and I rarely disagree with your opinions.)

      1) Both Symbian and MeeGo were "burning platforms". They had to be abandoned (or radically altered). And the sooner, the better.
      2) I am not thrilled with Elop's decision to jump into the "icy waters" of Windows Phone 7. Like you, I think this strategy may be a major failure.
      3) However, I do not see what alternative strategy Elop should have followed. What would you have recommended he do instead?

      • Rob-Starbucks-Scott

        100% agreement on 1.

        Unlike the other "Rob Scott" that posted the original comment, I believe that the strategy can be made to work.

        As for what else he could have followed, he could have chosen the model taken up by HTC, Samsung, and LG: Make both Android and WP7 devices. For that matter, he could have just gone android. There are many approaches that could succeed. It was taking guaranteed failureGo off the tableGo that was required.

    • kevin

      I also disagree. First, I believe the Board decided at OPK's firing that Symbian/MeeGo/Qt was not the solution. I'm sure Elop was hired and charged by the Board to determine which outside entity to align with. Look at which executives left immediately upon Elop's hiring.
      Second, the smartphone segment was surely burning. MeeGo "almost" ready – the Board probably reviewed that in Sept and found the "almost" ready effort to be way short of iOS and Android. Comes with Music was already a failure. Ovi Store also looked grim, though, since then, it has gained some traction.
      Third, both smartphones and dumbphones had sharply dropping ASPs in the first half of last year. That was what was propping up sales to the point of almost no profits. Once OPK was fired, they tried to raise ASPs, and with that, market share started to decline, revealing Nokia's lack of pricing power in all segments.
      Fourth, one of OPK's few goals at his hiring was to fix North America. That effort resulted in nothing.

    • Rob-Starbucks-Scott

      Incorrect. It was the "fire" that necessitated new leadership to be brought in. The investor base recognized what the board apparently did not; that more of the same was not going work.

      In 3-5 years we'll see that the platform doesn't even really matter. By then HTML5 will have adequately supplanted the need to build client-side apps for everything.

      • kevin

        No. Anssi Vanjoki's departure on the day Elop was hired is more than enough of a clue that Symbian/MeeGo/Qt was no longer in the running as a solution. Remember Vanjoki made the comment about pee in the pants, so everyone knows where he stands regarding Android or WP7.

  • Sander van der Wal

    But why was all that drama necessary? Nokia had a strategy that would move them from troubled Symbian to a new OS, maemo, MeeGo, whatever. That strategy was Qt. Even now people in Nokia are talking publicly about putting Qt on S40.

    The Qt strategy failed. Now there is a new strategy, with WP7.x. Why did the Qt strategy failed so much that it is compared to a burning platform? I do of course have my own pet hypothesis, but I wold love to trade that one for a better one.

    • http://twitter.com/jammypup @jammypup

      I just read this post this morning. From someone who hard worked at Trolltech for several years: http://quixoticq.posterous.com/rendez-vous-with-r

      He makes some very good points about, and reasons for, Qt not being the correct dev platform for mobile.
      How does this jibe with your hypothesis?

      • Sander van der Wal

        My main hypothesis is that Qt on Symbian and MeeGo did not get any kind of traction with developers. Symbian developers loved it as it gave them a way to the future. But developers from competing platforms were not impressed enough to make the jump. So the developer base for Qt would stay tiny.

        Ir does confirm my problems with the Open Source lovefest that Nokia had become. Open Source had become the cure for all ailments, not something to use in very specific business situations, and certainly not in other ones.

        And itbhas a reason why Qt did not deliver in time. One gets suspicious after seeing the same demo time and again for two years.

  • Xavier Itzmann

    Well reasoned argument and certainly the key words are "organized and re-organized countless times and is completely intractable even to insiders".

    The question is: is Elop so uncertain of his skillset and Board support that he did not think he could accomplish what he has set out to do by merely disposing of the people and elements of the organization that make it intractable?

    S Jobs, for instance, re-made Apple in his own image in 1997. He shut down most projects existing at the time —over 95%, I've read—, including Newton. He took people who were already working at Apple, such as Jonathan Ive, and repositioned and empowered them.

    Jobs ruthlessly burned ships, and plenty… but selectively. This Elop guy, he just burned the fleet wholesale!

    • Pauli Ojala

      Jobs didn't return alone to Apple. He brought with him the NeXT operating system and a team of software engineers and managers who occupied key positions at Apple. Without the NeXT team, it would have been much more difficult for him to revamp the failed software operation at Apple.

      In fact, this is fundamentally not very different from what Elop has done: burn the existing fleet of rotten vessels, and fall back on a single "flagship" that you know and trust. The difference is that Jobs's new employer had acquired the flagship in 1996, whereas Elop had to license it.

      • Waveney

        It's an interesting comparison with Apple's late 90s position but the one key difference, is that Apple still had a viable profitable platform – Classic, with enough legs to run until OSX was ready. The timing of the Next purchase, with hindsight, was perfect and allowed a transition to OSX whilst updating Classic to 8.0 then 9.0 which kept existing customers on board. I would love a glimpse of the as yet unwritten 'Return of Jobs' story.
        I have a suspicion that Jobs was somewhat of an embarrassment initially but he still managed to get the CIO's position with a promise of 'Deliver OSX or die' scenario – hence the 'Interim CIO' title.
        At Nokia, it's not at all clear whether they have enough of a viable platform in Symbian to tide them over until MS delivers with WM 7. Their transition is also complicated by WM 7 not being fully baked and is thus a much bigger risk.
        One thing is for sure – their first phones will really have to be stunning right out of the gate and the os will have to be flawless. It's the probability of both conditions being met in a relatively small window of opportunity, that is ringing alarm bells even before they get going.
        I also think it is supremely important to Microsoft's self esteem, that they carry this one off. We are all much wiser now about their former modus operandi and everyone will be watching. The public, the workers, the investors, the board members… the whole world in fact. Microsoft's waterloo maybe?

      • capnbob66

        I thought Jobs walked back in as Interim CEO (CIO is not an important position in Apple).
        Nokia is still in better shape now than Apple was in 1997. The die was cast, everything was in decline and only the iMac turned it around. Even then, the financial situation was still perilous in 2000. Macs and iPods turned Apple around a full 5 years after Steve came.
        Nokia is still making billions in profits and was growing its native platforms (if at a lower rate than competitors). I think this new strategy is accelerating the decline of the NOK strengths with precious little to replace it. An OS with no traction, that doesn't lack for OEMs already, is not an obvious lifeboat given all NOK's ships are burning. What incentives do carriers have to push Nokia WP7 over other WP7 or Android or iOS? What incentive do Symbian users have to switch to WP7 (on NOK hardware or not) vs. more mature, productive platforms. The MS Office integration/XBL/Zune gambits don't hold much water in the key developing markets that NOK has strength in. It doesn't help much in developing markets either given that the competition pretty much has this stuff covered too.

      • Hamranhansenhansen

        I don't really agree that Mac Classic in 1997 was any different than Symbian today. Classic was very looked down on after Windows 95, because it was seen as no longer being unique and it was seen as old and it was seen as competing with Microsoft. When Rhapsody (basically NeXT with a Mac skin) was rejected by 3rd party developers (equivalent to Meego), Apple went 100% into a dual system strategy. They did a parallel Mac OS v9 and v10 and made huge changes and improvements to both. Mac Classic got all kind of new features that we think of as Mac OS X features now, like USB and Wi-Fi and Carbon and Software Update. Mac OS X had to compete with 9 on teh snappy and many other measures and woo developers and users and prove itself. It wasn't until 10.2 that Mac OS X was even considered to be viable by most people. But then 10.3 was clearly the best PC operating system ever made.

        Right now, Symbian sells more phones and generates more profits than RIM and Android and Microsoft combined. Mac Classic was like 3% of PC sales. Symbian is in better shape in many ways.

    • berult

      You can anthropomorphize Apple's genesis ex post; easiest thing in the world to do. It makes for good story telling with some factual content intertwined with fiction-like word-of-mouth material. Apple is one in a million, best described as a singularity.

      I wouldn't dare anthropomorphize Nokia ex ante. Its fate rests almost entirely within the inner dynamics of a restless, human-like developing market. A measure of creative unpredictability soluble in self-aware determinism, whenever you link 'smart' with market and hook it to day-to-day reality you give it enough sense to manage a life of its own, in vivo.

      If the Elop/Ballmer partnership succeeds, and I guess it very well could, due credit to market hospitality; this particularly dynamic market begs any sort of disruption, even the most unlikely ones… It grows exponentially on its own smart and savvy.

  • Greg Bale

    i don't know about gut decision. i find it very suspicious that a former Microsoft exec would come in guns-a-blazing, or to use the metaphor here, torch-in-hand announcing very shortly after his arrival that they were all moving to the least successful platform on the market.

    Suspicious, i tell you. very suspicious

    • JohnatNokia

      Actually the decision was made after months of deliberating against a set of objectives, and it was the result of consensus among leadership team.

      • Hamranhansenhansen

        It just coincidentally stinks to high heaven.

    • Hamranhansenhansen

      Not only that, it is the classic Microsoft deal: the hardware maker must be monogamous to Windows, but Microsoft can still play the field with other hardware makers. It's the same deal that has killed dozens of hardware makers over the years by making them total commodities. After millions of years of evolution, most women won't take that deal. Elop comes in and he can't wait to take that deal.

      If you remember that today's HP is actually Compaq, the original DOS cloner, then it was amazing to see HP refute Microsoft recently with not only their own integrated phones and tablets, and not only their tablet OS on PC's, but their presentation was even made in Apple Keynote. And Nokia takes the Compaq deal.

  • George Bailey

    Cringely used this same comparison in his column:
    http://www.cringely.com/2011/02/burning-the-ships

    • asymco

      I completely did not see this article. Amazing coincidence.

  • Ajay

    Putting all your eggs in a obviously failed platform (WP7 sales is less than that of WM6.5), specially for a company as large as Nokia is madness at best and criminal at worst.

    WP7 failed to take off despite support of major smartphone makers and Microsoft marketing muscle. It had a worldwide launch and failed in all markets. There have been no follow products from handset makers, making it quite clear that that nobody sees any potential in the platform

    Once has to have a hidden agenda or been too high on stuff to bet your company on such a product.

    • CndnRschr

      It's far too early to call in the hounds on WP7. The launch was less than impressive but Microsoft is in this for the long term and there is no doubt the platform will improve over time. Unlike Palm, they have the funds to keep up the development pressure and also have a few advantages with links to existing ecosystems and a well established programming tool box. Sure, sales have been lacklustre but that isn't surprising given the lack of several basic interface controls (copy and paste is still coming…).

      Who knows what the real reasons were for Elop to select WP7. It will be difficult to shrug off the Trojan Horse monicker and he clearly is unable to be objective about Microsoft compared to other companies. That said, he's made his bed and will live by it. WP7 will not be a top three platform in the near future (RIM is too strong). It will be almost certainly be one of the top 5 in a few years (the other being webOS). That might not be enough for Microsoft but its licensees will probably be happy.

      • Hamranhansenhansen

        No, it is a failure by any measure:

        • Microsoft paid $500 million in marketing and sold 2 million software licenses … that is -$250 per software license
        • many of the above software licenses have not even been put into phones, let alone sold to consumers
        • v7 was outsold by the pre-iPhone v6.x, which was publicly killed 1 year ago by Microsoft
        • Microsoft put off complaints about basic missing features (it has no HTML5, it has no Copy/Paste, it has no multitasking of 3rd party apps, it has lesser Exchange support than iPhone) by saying there will be a big update in January 2011 and that did not ship
        • Paul Thurott, whose veins contain Microsoft Kool-Aid, has already complained loudly about the failure of Windows Phone 7, even after buying into the ridiculous "v7 is a 1.0" expectations-setting, he is honestly disappointed
        • Nokia announced they are moving from Meego to Windows Phone and their stock tanked (Meego!)

        There is no amount of excusifying that fixes this.

      • CndnRschr

        This is Microsofts modus operandi. They ship and then fix later. For whatever reason, they rarely get things right (or polished) in version 1 (or 2). Look at Windows. The difference is that Windows on the desktop was very different from the thriving, existing ecosystems they are now trying to re-establish a presence in on mobile devices. Moreover, WP7 does not have many (any?) advantages over the existing kings – certainly none in terms of the hardware it runs on and that will not change. Hence, Microsofts idea that WP7 will achieve anything like majority status among mobile phones is laughable. I am not making excuses for the poor launch and delivery of WP7. Personally, I wouldn't touch it with a barge pole, but I think it is a mistake to count out Microsoft in the longer term. Just look at Horaces' charts on the timeline of the various phone OSs. Nothing is sacred. I also agree that Elop's moves are perplexing (being generous) to outright foolish. The mistake I think people make in discounting Microsoft in this game is that phones, by their very nature, have a 2 year longevity (if that) with owners. Therefore, if you have deep enough pockets, you always have a second or third or fourth chance. Moreover, strategically, it would be disastrous for Microsoft to cede this entire market. It simply cannot afford to – even it uses most of its cash reserve as the incendiary for Nokia's transformation. The bigger question is not whether Microsoft will persist (that is a given) but whether Nokia has the long term stomach and tenacity to carry it through the next 2-3 years of what looks like a barren wasteland.

      • Harvey Gartner

        I do agree that RIM, Android, others, can deliver mobile competition to individuals. People who can drop an individual purchase. Not so from big dollars invested in a total computing ecosystem.
        All of the mobile OSes depend on desktops to be able to be most useful. Not owning their own desktop means that the desktop OS owners can leave them behind almost at will. Something that they can easily port back to but leaves their installed base behind.
        The desktop OS owners can take care of their legacy. Hard for the mobile OS owners to do the same. Controlling software across a whole spectrum is the key to the future.
        Apple has it.
        Microsoft will do it.
        HP is trying.
        Android can't.
        RIM can't.
        Just my take on things.
        Harvey

  • David

    The Chinese General Xiang Yu was actually far earlier than Cortes in the ship burning department.

    From Wikipedia, (207 BC)
    "In a decision which has become legendary in Chinese history, after crossing the river, Xiang ordered his men to sink their boats and destroy all but three days worth of rations, in order to force his men to choose between prevailing against overwhelming odds within three days or die trapped before the walls of the city with no supplies or hope of escape. Despite being heavily outnumbered, the Chu forces scored a great victory after nine engagements, defeating the 300,000 strong Qin army."

    Of course the flaw with the Nokia strategy is not that burning the ships is a bad idea, it is that Microsoft doesn't have near the institutional urgency or need as Nokia. Relying heavily on a partner that is not in a remotely similar position could turn out to be a huge mistake.

    • Clodoaldo

      It's all fine and dandy having these anecdotes, but does history really tell us that ship-burning is a one-way bet, or are we just hearing victors' history, with its natural biases? Can some knowledgeable soul let us know whether history furnishes any cases of ship-burning that came to a sadder end than Cortés' and Xiang Yu's — or are Elop/Nokia in line for a possible first here?

      • asymco

        The Soviet Union in WWII used the threat and action of shooting attacking troops who retreated. Typically, NKVD Troops played the role of barrier troops, preventing regular troops on the lines from disobedience and desertion. See: http://en.wikipedia.org/wiki/Barrier_troops

        That did not work all that well in 1941.

      • Xavier Itzmann

        I respectfully disagree.

        Stalin's strategy of not letting civilians abandon the front lines at Volgograd and of shoving hordes of infantry to the forward line, and of shooting anyone coming back alive, paid handsome dividends.

        For Stalin and his admirers, anyway.

      • asymco

        I mentioned that it did not work in 1941.

      • KenC

        Seems to me the correct approach to an invader "burning the ships" is to burn the city he is invading, and all the foodstuffs, and leaving quickly. Thus, the invader has no way to go home, has no shelter and has no food.

    • FalKirk

      "Of course the flaw with the Nokia strategy is not that burning the ships is a bad idea, it is that Microsoft doesn't have near the institutional urgency or need as Nokia."-David

      That's an interesting point. Whenever I make the mistake of even suggesting that Microsoft's future may be in jeopardy, I am pelted with a virtual firestorm of rebuttals all forcefully pointing out that Microsoft can't be failing because Microsoft makes more money than God. I suspect that the people within Microsoft have to feel the same way. How can they have a sense of urgency when they see all that gold coin pouring into their overflowing coffers?

      Microsoft is not afraid. But they should be. They should be very afraid.

      • http://twitter.com/davidchu @davidchu

        Microsoft is in a lose-lose situation. If they do nothing, then mobile platforms will begin eating up their PC profits. If they make a huge bet in mobile platforms, then they will need to learn to live with less lower margins. Although MS is pushing WinPhone hard, I don't think they will make the 'bet the farm, push needed to make it a real success.

        Like Clodoaldo mentioned, only Nokia is burning a ship here. MS is just handing them torches.

      • Harvey Gartner

        Believe me, they are. But they can do it. The sooner the better.
        Harvey

  • Guest

    You may be right, but I've lived through enough "boat burnings" to know idiocy when I see it. It does not work except in books or if your life is at stake. In real life, the best people just find a better job elsewhere.

    Contrast with Apple's strategy. Keep the old product in production (Apple II). Motivate a small team to make a new one. If it fails (Lisa), rinse and Repeat (Mac). The point is 140k people can't be motivated. Find the 100 that can be.

    • Childermass

      You are right. But that leaves you still paying for the unproductive 139,900. In the end this poker playing with platforms and ecosystems will mean nothing unless the people at Nokia can become productive again. It isn't the system cull that will decide Nokia's future but the people cull (or lack of it).

      • WaltFrench

        I think it is in the book, "Taking Charge of Change" that an author has said (I paraphrase as I can't locate it): Change is impossibly hard. Do anything else if you possibly can. Bring in a new team and spin out or sever the old. And if you DO go ahead and announce a major change, 10% will like the idea and see opportunities for fresh work and will help you carry out your plan. 70% will take a "show me" attitude and will not understand how to give up their old priorities but will be open. And 20% will never adapt; previously productive employees tuned in to how things happen, they will do everything they can to sabotage your effort."

        This is a 20-year-old recollection, so take with a grain of salt. But Elop indeed has a huge challenge ahead of him. Not the least that it's life-or-death for Nokia, but an already subsidized, misled group at Microsoft.

      • Childermass

        I remember the book. As we know, in the real world, change isn't optional. In this case Nokia has chosen to ignore all the evidence (not unusual in large companies with dominant positions) and change is now being forced upon them. As a consequence it will be bloodier and more destructive than it need have been. As "Taking Charge of Change" said, and as you point out, the solution is with the people, not the technology.

      • Hamranhansenhansen

        No, the rest are not unproductive, they are paying the bills. A small team made the first iPad, but the rest who were supporting iPhone were not only paying the bills, they were working on iPad without knowing it, because later, iPad adopted iOS 4 from iPhone. The Mac and iPod not only paid the bills while iPhone was developed, the Mac contributed its core OS X software and iPod its hardware and iTunes for Mac/PC.

        Nokia could have accomplished the same thing by buying Palm if they couldn't do it internally. They could have paid Symbian money for Palm and all of (the new) Palm's development becomes a Nokia skunkworks.

  • berult

    Google has introduced the dynamics of chaos into the developing mobile market. Apple is right in the middle of it as a fully determined slowing factor in its development's unpredictability, while Nokia is also in the middle of it albeit as a market fueling agent.

    Nokia is being consumed by Google business model's running and fast spreading entropy.

    Creating a new pole of localized order out of a waning giant and a free radical makes a whole lot of sense in that context …while it's not to late for a highly expansionary market to overdetermine another localized element.

    Sincere apology in advance for offending bonded radicals…

    • Evan

      oh yeah, platform wars have not been so much fun in a long time, Google's business model is entirely different from microsoft , there are a few points in common, but in essence they are radically different, a point which Apple fans can't seem to get their minds around.

      • Hamranhansenhansen

        What Apple fans can't get their minds around is why people use devices from other companies. Period. The user is the top of the pyramid on Apple platforms, not advertisers or carriers or hardware makers. Apple fans don't worry about Google or Microsoft, they worry about Google or Microsoft users: "did you get dropped on your head when you were a baby?"

        Google has not been all that disruptive. All they did was split the generic handsets into multiple separate systems. In other words, what is the Android/Tapas/OMS/Windows user base right now would have been the Windows user base otherwise. As far as Apple is concerned, that is good for Apple, because if Android/Tapas/OMS/Windows was one platform, it might compete with App Store, which it currently does not.

      • Evan

        user is top of the pyramid on Apple platforms ? so Apple taking a 30 percent cut on subscription revenue benefits Apple users ? so consumers benefit if Apple benefits(bit like the institution of catholic church which claimed masses benefitted if the church benefitted) it benefits Apple and its shareholder, nothing wrong with it as such. And I said Apple fans, I did not say Apple product users, Apple product users don't hate microsoft or google or facebook or other competing platforms. In fact lot of Apple product users still use microsoft or google or facebook or IBM or whatever, it is only the fans who go out of the way to denigrate rival companies.

      • Evan

        Android has more or less forced Nokia's hand in abandoning symbian, that has got to be the biggest platform disruption ever. Windows mobile had hardly made any dent in symbian ecosystem. And in any case, the more Apple dominates the mobile, the more OEMs line up behind Android, so I would say Apple iOS devices are helping to make android ecosystem stronger. Google is ok with a duopoly. Apple is helping Google directly and indirectly. And Apple users don't worry about microsoft or google users, platforms are not religions(except for fans) and even normal religious folks don't worry about other religions or have a desire to convert or kill people from other religions. It is only those who wish to capture power and spread their memes/idealogies or those fired by fanatical zeal who think of such things, normal people have a lot to bother about in their everyday lives(giving good eduction to their kids for instance).

  • http://www.digitalmonkeys.org digitalmonkey

    Elop could have accomplished similar goals with leveraged risks by stayiing with Symbian. The problem here was not the platform, but the whole user interface look and feel. Consolidating design and models with some clever marketing could be done without changing over the platform. This is especially true as Nokia owns Qt (pronounced cute), the programming library for GUI design. Qt essentially gives you complete freedom on how to design the look and feel of the interface, moreso than Microsoft's Silverlight. Microsoft's strategy is to pursue to main application programming interfaces – Silverlight and XNA. Qt would have unified both functionalities under one neat roof. That's why so many developers are against this move.

    I think Elop's past with Microsoft, the 1 billion dollar enticements, and a lack of creativity are the main reasons for his choice. Look at Borders in the USA, they decided to "outsources" their e-tailing to Amazon and eventually that lack of intellectual investment proved fatal. Nokia has lost control of its platform infrastructure and are now subject to the whims of Microsoft's product strategy.

    • FalKirk

      "Elop could have (stayed) with Symbian. The problem here was not the platform…"

      Vehemently disagree. Symbian had to go. MeeGo too. Elop appears to have diagnosed the problem perfectly. Neither were ready to compete against modern mobile ecosystems. And neither was going to be ready any time soon.

      His diagnosis was just fine. It is his proposed solution that gives one pause.

    • dms

      First, how is the UI not a part of the platform? Cocoa Touch is a HUGE part of iOS. You make it sound like a good UI is trivial to execute. I'd argue that the UI was mainly what the 2007 iPhone was sold on.

      Second, you're missing the whole discussion about how ecosystem is different from platform. Elop didn't abandon Symbian simply for it's technical merits. He did it because of it's lack of developer momentum and tie-ins to services/e-commerce like Apple has with iTunes and the App Store.

      He went with Msoft on the assumption that Msoft can attract the developers (which they have shown historically) and other assets like XBOX Live, Zune Marketplace, Office, and Bing that they could leverage.

    • Hamranhansenhansen

      That is why Nokia not outbidding HP for Palm still amazes me. The consensus on the new Palm was a great user experience on crappy hardware. Yes, they also had a crappy API, but they were opening up a C API and they had a Unix-like core, they were making it easy to port iOS apps when the company failed. They were modifying their strategy of attracting Web developers with "native HTML5" to one of attracting iOS developers with native C. Nobody but Apple offers mobile C development. It is so ignored that C language is a huge reason for iOS developer success, and for the success of iPhone in general.

      What Palm lacked was high-end hardware and a low-end feature phone that sold in the billions to support their high-end development as it ramped up. Nokia lacked high-end software with a great user experience and Silicon Valley offices, and Palm had both.

      • Carlos

        I agree with you, and I think that going with WP7 that does not support third party native development is a big mistake. MS talks a lot about XBox, but they not say that it's a "XBox lite" at most. You only have to look that Angry birds still is not available in WP7 (I know they have announced it) and it's available in Maemo and WebOS.

        If they allowed C++, it would be easy to port games from another platforms and their "games ecosystem" would be much better.

      • KenC

        Well, clearly, Nokia's board had not come to the realization that it was at a crossroads, where drastic change needed to take place. They still believed Olli Pekka and his approach.

  • timnash

    Samsung's aim is to overtake Nokia within 3 years. Thanks to Elop, Samsung should do that comfortably.

  • Rob Scott

    The move to WP7 makes sense, just the timing seems a bit off.

    The Osborne effect aspect is one that could have been minimized or avoided almost completely, but doing so would have removed the element of shock to wake the troops. Perhaps Elop sensed that this need was greater than the value in maintaining any of the legacy; that is, if he kept any legacy it would end up being the too-little-too-late aspect of Nokia.

    There are multiple paths that Nokia could have taken. In my opinion, this is one of the paths that could lead to a comeback.

    • JohnatNokia

      Elop said at Mobile World Congress that Nokia was courted by two of the world's top tech companies, Google and Microsoft, but that the idea of a duopoly was less appealing than being a swing factor in creating a third competitive ecosystem … one that among other things held more opportunities for differentiation than the Android camp.

    • Evan

      I don't do as much analysis as asymco, but I guess the biggest markets for Nokia are India and China. So how does tie up with WP7 help nokia fend off Android which is going to sub 100 dollar smartphones.

  • alex

    To correct the facts, even that doesn't impact the message of this article:

    140,000 is not the applicable number of employees, since roughly half work for the Nokia Siemens Networks joint venture, which is operationally totally separate from Nokia. NSN employees just show up in the total figure because NSN is financially consolidated into Nokia.

    Current number according to Wikipedia: 132,000 total, of which 66,000 at Nokia Siemens.
    That leaves 66,000 for Nokia.

    • http://twitter.com/tnleeuw @tnleeuw

      And out of that, SOME work on Symbian, SOME on Meego, SOME on S40, and a lot on Hardware.

    • Hamranhansenhansen

      Similarly, about 10,000 of Apple's 30,000 employees work for Apple Retail.

      • KenC

        Apple now has over 52.6k employees, 29.7k work in retail, leaving about 22k.

  • Mark Newton

    That Nokia needs to take the battle to Apple and Google is without question. Thier homeland is being plundered.

    It’s just so uncomfortable to watch them choose Microsoft as their strategic ally. In choosing Windows Phone 7, Elop is arming his troops with knives and sending them into a gun fight. It’s awkwardly obvious to everyone how this story is going to end.

    • Steko

      Judging WP7 by it's 1.0 release and first quarter would be like judging android by it's first crop of phones. The Metro theme is slick and refreshingly original and the underlying problems with the ui can only get better.

      • Evan

        true, but android came into a market with only one smartphone platform available on very few carriers(in US only on AT&T), now android devices are well established in consumers, developers, operators, OEM minds and available on multiple carriers worldwide and iphones are available on multiple carriers and is well known by consumers.

      • unhinged

        Or like judging the iPhone by its first release…

  • Mark Hernandez

    Often when people comment about Apple making a big mistake with one of its moves, I think it should be standard procedure to ask oneself…

    "What does Apple know that we don't know?"

    …as part of the analytical process. After all, Apple has a lot of smart people that run through all the scenarios, has amazing upcoming technology already in their labs just waiting for the right time, in addition to the important fact that they are in close contact with their suppliers, mfgrs, software companies, and know a ton of inside info.

    Likewise…

    What does Elop know that we don't know? What does he know about what's brewing at Microsoft?

    Apple isn't the only company that can play the "surprise 'em and catch 'em with their pants down" strategy. Apple may do that more consistently, but other companies may have similar opportunities from time to time.

    Certainly Elop knows some big things we don't know, and we should keep a placeholder for the possibility/probability that the Nokia/Microsoft relationship has a card in its back pocket, or a surprise waiting in the wings.

    • dms

      Apple and Nokia are in very different positions. Apple is the market leader, arguably, and the most copied consumer product company in the world. They can and should keep their cards as close to their vest as possible.

      Nokia and Msoft, on the other hand, are in serious catch-up position. Nokia especially needs to make public a believable roadmap so investors AND developers can rally behind their strategy.

      • Evan

        why should developers rally behind Nokia, they are just a glorified OEM and have outsourced the platform to Microsoft.

      • Sander van der Wal

        Nokia needs to sell WP phones, and plenty of them, to people who will buy apps. Developers follow a strategy that will make them money, not just any old strategy.

    • KenC

      I was thinking that the surprise would be that Nokia had a skunkworks project where they were running Meego on N9 prototypes against WP7 on N9 prototypes and Android on N9 prototypes and that WP7 was best, and that they would release it in a couple weeks. That's what I was thinking would be the "card in [Elop's] back pocket" but I was wrong.

  • Evan

    nice article but I guess Cortes example was not well put, I guess aztecans, the incans, the toltecs who were all decimated, their culture destroyed by the spaniards/portugese in their quest for gold and religious bigotry, would object to calling Cortes a great leader or conqueror.
    Even though British colonialism was every bit as bad as spanish/portugese colonialism, british atleast introduced the concept of democracy, church state separation and other progressive stuff.

    PS: I do know all the bad points of azteca culture too, they indulged in human sacrifice.

    • Clodoaldo

      OK, but this isn't a discussion about ethics. It's about realpolitik — which strategies succeed or fail, and why. An intelligent Aztec might acknowledge Cortes' leadership qualities while deploring their consequences.

      • Evan

        I guess you have the same admiration for Osama Bin Laden or Adolf Hitler. How Osama using just a few hundred thousand dollars shook the American Empire, lots to admire isn't it? And how Adolf Hitler used industrial scale techniques to ahem, I won't talk about it. I put Cortes in the same category as Osama and Hitler.

      • asymco

        You're the only one judging Cortes. Nobody else considers it relevant.

      • Evan

        oh yeah I know that. Just wanted to make a simple observation, that is all. I find it odd that we pick successful strategies of known murderers and genocide committing 'heroes', who advanced western culture. If Hitler had committed/conceptualized/engineered holocaust against non-europeans, I guess, the world who would have still loved him :) Lets close it.

    • Guest

      Yes, we only have to take a look at the indian reservations and surely we will find a lot of gratefuls souls.

  • Evan

    hey asymco, can you remove this duplicate comment. My bad

  • http://twitter.com/aegisdesign @aegisdesign

    Qt may have become more popular with developers from other platforms if Nokia had seen the sense in spreading Qt onto those platforms. Qt on Android for instance might have been huge and would have brought in a lot of developers to Nokia's platforms also. Instead of expecting the developers to go where Qt was, they needed to take Qt where the developers are.

    There's a nice demo showing a home automation system built on MeeGo running on an Eeetop desktop and N900. All Qt and QML…
    http://www.meegoexperts.com/2011/02/qt-mobile-wor

    Cool stuff and shows the possibilities.

    • Sander va der Wal

      That strategy only works when your own implementation already works on your own platform. Imagine what would happen otherwise: developers would start writing for Qt on Android, giving Android an immediate advantage on Symbian and MeeGo. By the time Qt on Symbian was ready, Symbian would have lost market share.

      So Qt on Symbian and MeeGo must come first.

      Oops.

      Extending the argument to its logical conclusion: owning a cross platform library is always a loosing proposition for a leading platform vendor. It commoditizes a platform, and will therefore only be used by the losers in a platform war. At best it is a carrot for developers.

  • Hamranhansenhansen

    Windows Phone 7 is already dead. Microsoft already announced they are replacing it with NT-on-ARM. In other words, the real Windows is taking over for its long-time CE stand-in. Nokia did not take an opportunity to create a 3rd phone ecosystem, they joined the second PC ecosystem.

  • Evan

    World wide web was invented by Sir Tim Berners-Lee if I am not wrong.

    • asymco

      A NeXT Computer was used by Berners-Lee as the world's first web server and also to write the first web browser, WorldWideWeb, in 1990. By Christmas 1990, Berners-Lee had built all the tools necessary for a working Web. The NeXT computer ran an ancestor of OS X and Next Step developer tools.

  • Harvey Gartner

    Methinks Meknows.
    The big problem all of them have inre Apple is that Apple's iOS is a mobile platform based on a desktop platform OSX. Apple can offer a total solution for computing in general.
    To be competitive in business, they all need to be able sell mobile devices that seamlessly connect to all devices. Phones, tablets, laptops, desktops.
    HP is trying to stretch it's mobile downward to desktop. Probably a daunting task to offer a 64 bit desktop capable of crunching numbers. Microsoft can and will make the jump. Their problem right now is CEO. He pushes for something he can sell. They gave him Windows 7. In anybody's measure, a wildly successful product that has made them grillions of dollars. Beautiful thing really. Last generation operating system that can't be moved forward easily. Bite bullet leave yesterday and seamlessly integrate system from ground up. It's what Jobs did with NExt. When he came back to Apple he had his next gen OS. Something Apple could build on for a long time. MS was busy pushing their kernel to the limit. They are there now. Elop knows MS has the best chance of all to deliver total computing solution.
    Just do it Redmond. Get it out now without big splash. Release it small. and build iiser base fro ground up. Don't care about the past don't call it Windows. Separate it from past. Ignore the screams from legacy. Overcome huge resentment from legacy of Windows. MSnext and go.
    Good luck HP. Daunting task ahead. Hope you get there soon.
    Any else needs God on their side.
    Harvey

  • Josh Schlesser

    I’ve been looking for references to counter disruption theory, I only found disruption theories. I can’t find anything obvious via google. Can you offer some links?

  • TN_Finland

    I think that historians will definitely conclude that Elop's familiarity with Microsoft could have been the deciding factor. No need to go into these stupid conspiracy theories; in a crisis we all tend to do what worked for us before, and we prefer to work with people we know and trust.

    Having said that, what are the odds that MS has something insanely great coming up? Have they ever came up with something insanely great that actually worked and was desirable?