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Nokia's Stephen Elop Didn't Start the Fire–But His "Burning Platform" Certainly Lights One

Kara Swisher — Wed, 09 Feb 2011 14:15:21 +0000

Memo to tech CEOs everywhere: Now that’s how to write an internal memo.

That would be the 1,300-word one that Nokia CEO Stephen Elop (pictured here) apparently penned for employees at the Finnish telecom giant, which inevitably leaked to the media (in this case, kudos to Engadget for getting the whole thing, which is below).

Elop uses the harsh but cogent metaphor of a burning oil platform to take a bracing opening shot at turning around Nokia, which has lost market share–and, more importantly, mindshare–to both Apple’s iOS and Google’s Android mobile operating system.

This is not breaking news to anyone in the wider tech world, of course. But for the CEO to say it so flatly and brutally to the insular troops at Nokia makes it remarkable.

As you can read, it’s dramatic all right, and just the kind of thing a lot of leaders at troubled companies–Hello, Yahoo!–could learn a thing or two from.

That’s because it’s honest and also genuine, and with enough of a direction and glimpses into pending action–to be revealed later this week at an event to unveil a new strategy–that it’s not just a diatribe by a new manager about how bad the previous managers were.

There is clearly plenty of that, of course, which is no surprise. But with rumors of an imminent significant management overhaul–which few execs ever do enough of at the start of their tenure, when it is easiest–there seems to be teeth to the memo too.

And although the burning platform part will get all the attention, perhaps the most important observation was in one particular passage that outlines exactly the giant challenge Nokia faces to catch up:

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

Because, as it has turned out, it is all about ecosystems and using them to provide consumers with the best and most seamless experience possible.

Walt Mossberg and I will be interviewing Elop–the former Microsoft exec, who is neither a Nokia insider nor Finnish–about all this and more at the ninth D: All Thing Digital conference in late May.

Obviously, there will be a lot to talk about.

But, until then, here’s Elop’s memo below in its entirety.

I also reposted a video interview I did with Elop in April of 2009 in which he talked about making Microsoft a more open and innovative place, the changing business model of software and more.

Also below is a video Elop ordered up while running Microsoft’s Business Division as part of an “Envisioning” series.

These see-into-the-future videos were done by Microsoft Office Labs as part of a “Productivity Future Vision” series that sketched out a landscape of smartphones, touchscreens everywhere and a whole lot of cool interacting.

It would be nice if he can drag Nokia back into that world–although Elop’s memo is a good start.

[ See post to watch video ]

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times–his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, 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.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally–taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

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.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

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.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

Full D8 Video: Hollywood Director James Cameron

Kara Swisher — Mon, 14 Jun 2010 13:00:35 +0000

As promised, All Things Digital is posting the full videos from our eighth D: All Things Digital conference, held earlier this month.

Today, it’s showtime for famed Hollywood director James Cameron (pictured here).

After making “Titanic” in 1997, which was the highest-grossing film ever made, Cameron beat his own record with this year’s innovative “Avatar.”

The 3-D blockbuster set a new standard for movie-making technology, and Cameron talked about it onstage at D8, along with his thoughts on the future of the entertainment business.

He also revealed that he is prepping a 3-D version of “Titanic” and discussed his efforts to use his deep-sea exploration experience to help bring some clarity to the BP oil spill.

Here’s the full video of the interview session:

[ See post to watch video ]

Note: We’ll be posting full D8 videos on Mondays and Thursdays. Next up: NPR CEO Vivian Schiller.

Exclusive: Kakai, Stealthy No More–It's a Kindle for Students and Much More

Kara Swisher — Thu, 22 Apr 2010 11:00:35 +0000

Founded last May, Kakai is one of the start-ups in Silicon Valley in the deepest of stealth modes, despite a panoply of high-profile players involved.

But while there have been sketchy reports suggesting that the start-up may be working on some kind of e-reader, BoomTown has found out exactly what it’s up to via reports of a concept video the company has shown potential investors and interviews with several sources close to the situation.

In simplest terms, it’s essentially a Kindle for students.

But that’s just the tip of what is perhaps one of the more ambitious and innovative efforts on the part of a Silicon Valley entrepreneur who already has one hit under his belt.

That would be Osman Rashid, whose other start-up is fast-growing online textbook rental leader Chegg.

Chegg recently hired former Yahoo (YHOO) exec Dan Rosensweig as its CEO, taking over from Rashid, who wanted to focus on Kakai.

Interestingly, you can pretty much draw a straight line from Chegg to Kakai.

But rather than focusing on making an old business better via the Web, as Chegg does, Kakai is plunging right into the competitive tablet market that now includes Amazon (AMZN), Apple (AAPL), Samsung, Dell (DELL), Hewlett-Packard (HPQ) and, reportedly, Google (GOOG).

While these efforts, including Apple’s iPad, for example, are mostly aimed at broader media markets, sources said Kakai’s effort focuses solely on the educational niche, offering a Linux-based foldable double-screened device.

Gesture-based and portable, it is designed to feel like a mix of a notepad and a book.

While Kakai declined to comment, sources said a key part of the endeavor goes well beyond the tablet itself by including robust software and seamless Web site to deliver course material, allowing for note-taking and offering other audio and video capabilities.

Santa Clara, Calif.-based Kakai, which is nearing 50 employees, is now prepping the device to be ready for a demo in several months.

It’s paying for all this with almost $10 million in funding from prominent venture players like Andreessen Horowitz and First Round Capital, along with investors Mike Maples and Ron Conway.

In addition, Marc Andreessen is now on Kakai’s board.

Rashid, who founded Kakai with Babur Habib, has worked in companies related to the consumer electronics industry.

Until he reveals more specifics, though, don’t expect much from Kakai’s homepage (see below), which has a very funny trio of jokes that play with the company name, asking “Which Kakai are you looking for?”

The possibilities include Kakai Bautista, a singer-comedienne in the Philippines; Neferirkare Kakai, third Pharaoh of Egypt during the Fifth dynasty; and Kakai, an Austrian pumpkin that yields valuable oil that promotes prostate health.”

Not looking for the singer, the pharaoh or the pumpkin?,” reads the bottom of the Kakai homepage. “Well, we wish we could tell you more, but you’ll just have to cool your jets.”

Perhaps now it’s time to start heating them up.

Google: Beyond Thunderdome

John Paczkowski — Fri, 03 Oct 2008 07:00:27 +0000

Velcroed together, stacked in racks, and lined up in back-to-back rows, the servers require a half-watt in cooling for every watt they use in processing, and Google leads the field in squeezing more servers into less space. Based on projected industry standard of 500 watts per square foot in 2011, the Dalles plant can be expected to demand about 103 megawatts of electricity–enough to power 82,000 homes, or a city the size of Tacoma, Washington.”

– Keyword: Evil, Harper’s Magazine, March 2008

You can make money without doing evil. You can also make it without using so much fossil fuel. That’s the word from Google, which today unveiled a $4.4 trillion plan it says will reduce the nation’s dependence on coal and oil.

Google’s “Clean Energy 2030” plan as its described by Jeffery Greenblatt, Google.org’s climate and energy-technology manager, proposes to wean the U.S. off of coal and oil for electricity generation by 2030 by relying on power from wind, nuclear and geothermal sources instead. It also calls for raising the standard car fuel efficiency from 31 mpg to 45 mpg and increasing usage of plug-in hybrids and pure electric cars.

It’s an ambitious plan, to say the least. Expensive too–a jaw-dropping $4.4 trillion dollars. But Google (GOOG) believes it could generate net savings of $1 trillion over its 22-year span. It might even save our children’s grandchildren from a world in which they rove post-apocalyptic desert wastelands scavenging for food and gasoline, terrorized by marauding biker gangs. And who could place a monetary value on that, eh?

“We see a huge opportunity for the nation to confront our energy challenges,” Greenblatt explained. “In the process we will stimulate investment, create jobs, empower consumers and, by the way, help address climate change.”

And lest we think Google is hiding its own self interest (Read: Lower data center electric bills) behind a $4.4 trillion dollar mask of altruism, consider this remark from Google CEO Eric Schmidt, who spoke at an event in San Francisco Wednesday evening: “We’re going to likely consume more energy,” he said. “We’d like the prices to go down … We save a lot of money when prices go down. It’s good for shareholders, good for earnings.”

And in the end, what’s wrong with approaching clean energy from a capitalist position? We certainly approach dirty energy in that way.

I Heart Biofuels

Kara Swisher — Tue, 17 Jul 2007 11:13:23 +0000

While this is not exactly a “digital” story–we at AllThingsD.com like to think we have our finger on the pulse of the latest trend, including the lean, mean green one. (We had well-known Silicon Valley VC Vinod Khosla come and talk about alternative energy at D4, in fact.)

Yesterday brought news that Om Malik was going all Al Gore on us with his new Earth2Tech, a blog site “devoted to the business of clean technologies, its innovations and everything else.”

We like what we have read so far (avoid soy biodiesel IPOs, as if they were Pets.com reincarnated–DONE!) and it looks great (nice digital leaf).

Not to be outdone, we made acquaintance with writer Charles Runnette and his veggie Mercedes, whilst on a run to the most excellent Baby Blue Bar-B-Q in Venice, Calif., last night (which was deliciously oily, too).

The car, which has been converted to run on vegetable oil by Lovecraft Bio-Fuels, a popular company that converts diesel cars in the shaggy Silver Lake area of Los Angeles.

I once visited an even shaggier commune right next door to Lovecraft and can still recall the pungent Thai food smell that perpetually wafted out of the place, as its workers toiled at making the world gasoline-free. Mighty tasty, too!

Here’s my video:

[ See post to watch video ]