Nokia rumored to shift toward Silicon Valley, Windows Phone 7

in iPhone edited January 2014
The world's top mobile vendor is reportedly considering plans to move its executive decision making from headquarters in Espoo, Finland to Silicon Valley in California, and is potentially eyeing an alliance with Microsoft in a bid to compete against Apple and Google in smartphones.

Once the only significant smartphone platform worldwide outside of North America's bubble of Windows Mobile, BlackBerry and Palm OS, Nokia's Symbian has been pummeled by the launch of Apple' high end iPhone, then by mass market Android models, and thirdly by low end sales of Chinese phones, according to a report by TechCrunch detailing the company's fears as expressed in an internal memo.

Standing on a burning platform

The note, titled "standing on a burning platform" and written by Stephen Elop, the former head of Microsoft's Office division who was recruited by Nokia to turn the company around as its new chief executive last fall, reportedly depicts Symbian and MeeGo as competitive failures.

Update:Engadget reports the 1300 word internal memo compares Nokia's position to the story of a man on a burning oil platform and faced with the decision to die in a fire or plunge into the icy sea.

"After he was rescued, he noted that a 'burning platform' caused a radical change in his behavior," the memo reportedly says. "We too, are standing on a 'burning platform,' and we must decide how we are going to change our behavior."

It adds, "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."

The memo also notes, "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."

The memo concludes saying, "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."

Symbian is Nokia's mainstream smartphone OS, recently converted into an open source platform. It has been unable to recapture the attention of users and developers distracted by Apple's iOS in recent years.

MeeGo is Nokia's parallel, Linux-based project aimed at delivering netbooks, tablets, smart TVs and smartphones, similar to Android. It is the merger of Nokia's own Maemo project (which powered its iPod touch-like Internet Tablet and N900 handheld computer) with Intel's Moblin effort (intended to to create a netbook OS capable of running on Atom chips independent of Microsoft's Windows 7), a partnership that was revealed just a year ago.

Last week in Nokia's last earnings conference call, Elop told analysts "we must build, catalyze and or join a competitive ecosystem" in order to adapt in the fast moving mobile space.

That prompted speculation that Nokia may either license Microsoft's Windows Phone 7 or Google's Android. Berenberg Bank analyst Adnaan Ahmad subsequently wrote that "Nokia is no longer in denial," while recommending that the company scrap MeeGo, saying "it?s the biggest joke in the tech industry right now, and will put you even further behind Apple and Google."

Out of the frying pan

In recent years, Nokia has become a staunch proponent of open source development, launching Maemo Linux on its Internet Tablet in 2005, and then buying out its Symbian partners in late 2008 to convert the platform into a open source project known as the Symbian Foundation, in a model similar to Netscape's conversion into the open source Mozilla Foundation. Last year, Nokia announced Maemo's merger with Moblin.

At the same time, in late 2009 Nokia began selling a new netbook powered by Microsoft Windows, named the Nokia Booklet 3G. The replacement of its chief executive last fall with a former division head of Microsoft has only added fuel to the flames of rumors surrounding a series of partnerships between Nokia and Microsoft.

In late 2008, bloggers began anticipating that Nokia would install Zune Marketplace software on its phones, boosting the prospects for Microsoft's Zune music player. A year later, Microsoft actually announced plans to bring mobile editions of its Office mobile apps to Symbian. That project does not appear to have materialized, although Microsoft has brought its Office OneNote app to Apple's iOS.

Despite its open source efforts, Nokia's Scandinavian home has historically been heavily tilted toward Microsoft, even as Apple's iOS devices began to invade, followed by rapid uptake of Android smartphones. Were Nokia to shift into an alliance with Microsoft, and in particular one that moved its center of gravity to California, its base audience of open source advocates and European and especially Scandinavian loyalists might lose some of their enthusiasm for the brand.

Apple faced similar issues when Steve Jobs attempted to quickly transition the company's Macintosh platform to his own Unix-based NeXTSTEP after becoming the company's new chief executive in 1997. Resistance from Mac users and development partners derailed those high speed plans and replaced them with a milk run strategy that slowly evolved in a glacial transition to Mac OS X that didn't fully materialize for another half decade.

A fresh injection of boring, Android on the side

Microsoft has admitted that its Windows Phone 7 strategy similarly expects to take years to achieve the sales of iOS or Android. Initial demand for WP7 phones has proven disappointing to Microsoft's partners, including flagship partner LG, which referred to the new platform as being "a bit boring" but potentially attractive to low end smartphone buyers with simple needs.

While LG continues to support WP7, it is also promoting new Android phones, holding out the prospect that Nokia could have its WP7 and eat Android, too. Samsung is similarly pursuing dual strategies with its own Bada and Android, and HTC already sells both WP7 and Android devices, with plans to deliver its own BREW-based low end smartphones as well.

By aligning WP7 with Nokia, which still makes most of the world's mobiles and, according to IDC, sold 28 percent of global smartphones in Q4 2010, Microsoft could finally find traction for WP7, if Nokia buyers and the market in general responded positively to new Nokia WP7 phones.

A partnership with Microsoft could also help Nokia to enter the North American market that Symbian has never been able to penetrate. So far however, retailers in both the US and Europe report that customers have largely opted for Android over WP7, as both typically ship on identical hardware from the same vendor.

Nokia is expected to reveal more about its future plans for Symbian and MeeGo, and potentially WP7 and Android, this Friday at the company's annual Capital Markets Day event.



  • Reply 1 of 107
    dam, and I just sold all my Microsoft stock
  • Reply 2 of 107
    If there was a stronger WP7 presence I wonder whose share percentage would drop the most, iOS or Android? (I'm guessing Android)

    RIM would be in even bigger trouble than they are now, imo.
  • Reply 3 of 107
    Wow, a smartphone software failure and a smartphone hardware failure team up!!

    Nokia would be smart to just swallow its pride and license Android. They're capable of making decent phones, but they're about 5 years behind in the OS department. But I live in North America so what do I know?
  • Reply 4 of 107
    eulereuler Posts: 81member
    I am actually surprised that they are not going with android.

    I suppose the competition will help Apple stay on it's toes and remain innovative.
  • Reply 5 of 107
    Said it before -- WP7 is a very smooth, elegant and modern OS. No bs skins and fragmentation like Android and doesn't suffer quite the same closed atmosphere as iOS. Very wise move by Nokia and Microsoft.
  • Reply 6 of 107
    How many of you techies like me remember drooling over them awesome yet expensive Nokia phones in the early 2000s? But guess what... The iPhone and the Android stuff have pawned any high end Nokia from back in the day. Nokia's business model has met it's end.

    And let them pimp the Windows 7 OS, with it's offing licensing fee. That ain't going to help them. It boils down to hardware sells and the market is as competitive as ever.

    IMHO, there is no way Nokia is going to be able to bring back the good old days with iPhone and Android tearing sh** up.
  • Reply 7 of 107
    richlrichl Posts: 2,213member
    Originally Posted by euler View Post

    I am actually surprised that they are not going with android.

    It doesn't sound like the European carriers would allow Nokia to go with Android.
  • Reply 8 of 107
    quadra 610quadra 610 Posts: 6,756member
    So . . . the blind leading the blind.
  • Reply 9 of 107
    Originally Posted by acslater017 View Post

    Wow, a smartphone software failure and a smartphone hardware failure team up!!

    That's my first impression too. But which software failure will they pick WP7 or Android?
  • Reply 10 of 107
    penchantedpenchanted Posts: 1,070member
    Originally Posted by euler View Post

    I am actually surprised that they are not going with android.

    I figured they'd move to WP& when it was announced that Elop was going to be CEO.
  • Reply 11 of 107
    quinneyquinney Posts: 2,528member
    Why aren't they moving their offices to Redmond, WA, then?
  • Reply 12 of 107
    iliveriliver Posts: 299member
    Sounds more like Nokia wants in on the tablet market using Windows 7 not cellphones.
  • Reply 13 of 107
    Originally Posted by iLiver View Post

    Sounds more like Nokia wants in on the tablet market using Windows 7 not cellphones.

  • Reply 14 of 107
    MacProMacPro Posts: 19,379member
    The assumption seems to be if they do exactly what Apple and Google did then they are bound to succeed. There may just be a flaw in that logic.
  • Reply 15 of 107
    MacProMacPro Posts: 19,379member
    Originally Posted by quinney View Post

    Why aren't they moving their offices to Redmond, WA, then?

    Too far for the spies to travel from Cupertino?
  • Reply 16 of 107
    MacProMacPro Posts: 19,379member
    Originally Posted by iLiver View Post

    Sounds more like Nokia wants in on the tablet market using Windows 7 not cellphones.

    Or perhaps we are looking at this backwards, maybe MS has made them an offer they can't refuse?

    BTW You put solipism on your ignore list? Oh I am lysdexic it's 'slopsism'.
  • Reply 17 of 107
    i really dont like Windows 7 tablets, they need to make a version of WP7 for tablets similar to what android is doing with honeycomb. Maybe Nokia wants that?
  • Reply 18 of 107
    Wow, it really seems Nokia, RIM and MS are floundering about. Sounds like they are going thru a very tough period.
  • Reply 19 of 107
    nofeernofeer Posts: 2,422member
    Nokia is a take over target, palm taken by HP, who wants them RIM is also a take over target

    now if you are MS and want to sell more w7's you could by the company or just pay them to use your OS, cheaper, MS wins because they get the huge numbers that nokia has. customer's lose because is MS, and well w7 and not great.

    BUT ms gets more penetration and left less behind, and balmer looks like he is growing his brand

    remember is also about balmer saving his own arse
  • Reply 20 of 107
    No faster way to die than join the ranks of the cloners. And Nokia could die even faster by using the horribly failed Windows Phone OS. Not only would they have to send boat loads of money to Microsoft for the pleasure, they would have nothing to set them apart from the pack of clones. A sure way to fail.

    It would be great for Apple, they could snatch up Nokia and all its patents to sue all the cloners into oblivion.
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