A leaked internal memo written by Nokia CEO Stephen Elop, circulating in press reports, indicates major changes are in the works for the company; an official announcement is expected Friday.
Elop’s memo lays out Nokia’s major problems, comparing its current situation to that of a man standing on a burning oil platform.
Nokia has been taking some heavy punches from competitors Apple and Google on the smartphone battleground. Its Symbian OS has had trouble competing in North America, the memo notes, and the company has struggled to keep up with constantly evolving hardware demands.
The memo refers to current devices not only as “hardware and software,” but as an entire “ecosystem,” since smartphones are comprised of a variety of components from different companies and developers. He said that Nokia needs to “either build, catalyze or join an ecosystem.”
The memo adds fuel to widespread speculation that Noka will ditch its MeeGo OS and shift its focus to a different operating system.
“We thought MeeGo would be a platform for winning high-end smartphones,” it says. “However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.”
Nokia did not respond to the E-Commerce Times’ request for comments by press time.
At a Crossroads
“The leak certainly says some not very good things about MeeGo,” said William A. Stofega, program director for mobile device technology and trends at IDC.
“But Elop is right,” he told the E-Commerce Times. “It’s almost like he’s prepping the market. I don’t think this was leaked by mistake. He’s reciting the fact that Nokia needs to do something, and it’s time to make a decision.”
Google’s Android OS appears to be an almost invincible competitor.
“Everything that has led up to this has resulted in a loss of market,” said Stofega. “Android is one of the reasons why. Elop is saying, ‘Look, this is something where we have no choice.'”
While Nokia is still No. 1 in terms of overall number of mobile devices shipped, the company needs to develop some momentum to maintain that spot.
“They have great technology from Nokia labs,” said Stofega, “but they need to focus on getting a halo product into the market — a high-end device — to keep their margins up.”
Time for a Change
Will Nokia turn to Microsoft?
“No. Nokia used Windows 7 (not Windows Phone 7) recently to power a netbook,” Chris Hazelton, research director for mobile and wireless at the 451 Group, told the E-Commerce Times.
“The lack of traction — due in part to Nokia’s timing in entering the netbook market — makes it highly unlikely that Nokia will use a Microsoft OS going forward,” he opined.
Nokia will need an OS that can compete with Android and Apple. MeeGo, in its current state, can’t do it.
“Using Windows Phone 7 would offer less differentiation with competitors,” said Hazelton, “and if it is going to share a common OS with competitors, then that should be Android. Android is not an option for Nokia, as carriers are increasingly nervous about the control they are losing to Google with Android devices.”
Adopting the right smartphone OS will be a critical decision for the company.
“The smartphone market has the potential to take significant share from the PC market,” said Hazelton. “Powering this are light, simple, touch-based OSes. Nokia needs to push, invest and evolve MeeGo into an OS that can compete with Android, iOS and QNX.”
Though a Microsoft-Nokia tie-up had been bandied about, there’s no shortage of skepticism that the two companies will form a close relationship.
“A company just can’t jump into the phone business or into a new OS on a whim — even a giant like Nokia,” Allen Nogee, principal analyst for wireless technology at In-Stat, told the E-Commerce Times.
“Nokia and Microsoft working together could be a viable option,” he said, “but I can tell you that these two companies are very different. Maybe instead of working together, Nokia would just license Windows Phone 7. That seems very logical.”