Nokia is a remarkable company. It has walked the long, long road from being a single pulp mill in 1865, to a telecommunications giant in the early 21st century. Named after the small Finnish town of Nokia, the company has gone through a number of tough moments in its history, but it has always found a way to go on and swing its way back to the top.
After nearly 150 years of non-stop entrepreneurship, Nokia is once again facing some tough challenges in its way. It has gone from the world's biggest cell phone maker to an underdog, desperately struggling to turn things around. Its cash piles are being rapidly burned through, as the company's products are no longer as attractive for consumers as they have once been. But how did it come to this, and could this be the end of a legendary company?
MATTERS OF THE HEART
This is how it is in the modern cell phone business. One day you're on top, the other you realize you're standing on a burning platform, and you have to act quickly, otherwise you too will turn into ashes. This isn't some false theory put forth by Stephen Elop, Nokia CEO, it's the way things are, and the way things have been for Nokia for quite a while.
The problem should be that it's hard to be on the top. Not only because it's quite lonely there, but because you have to exert an extraordinary amount of effort, trying to keep your distance from the competition, while continuing to innovate and refine your products or performance. But for how long? No one can do it forever. Eventually, you start to lose your motivation, become tired, and little by little, the feeling that you're being surrounded by a hungry pack of hyenas begins to grow inside you, provoking other unhelpful feelings like fear and shame. These things can easily cloud your judgement and mess with your head, preventing you from being rational and productive, which is what you need to be in order to find your way out of a tough situation.
We guess something similar must have happened with Nokia about 5 years ago, when it was on top, but did not react accordingly to the changes that were taking place inside customers' heads. Did Nokia simply refuse to change itself, firmly convinced in the rightness of its plan, or did it experience those feelings of clouded judgement and fear that prevented it from embracing reality? We'll probably never know, but the fact is that Nokia waited and hesitated when it should have acted.
Finally, Stephen Elop came along in late 2010, announcing that the company was sitting on the burning platform that Symbian was. Indeed, the once innovative and powerful Symbian operating system has now become stale and unattractive for customers, most of whom had already switched their Symbian handsets for iPhones or Androids. Symbian was going the way of the dodo, and Elop had to act. There were four options ahead of him:
1. To continue developing MeeGo and phase Symbian out;
2. To go Android and phase Symbian out;
3. To go Windows Phone and phase Symbian out;
4. To start rebuilding Symbian from the ground up.
Love it or hate it, the man decided to go with what he felt closest to his heart, and that was Microsoft. It was what he knew, and what he felt could be taken most advantage of, due to his previous position. The problem with this was that at the time, Windows Phone was even smaller than Symbian itself. Sure, this is Microsoft we're talking about, so there were reasons to believe this will eventually change, but still, the move had "risk" written all over it. More than a year and a half later, Nokia is still waiting for the fruits of this partnership to grow.
THE BURNING PLATFORM
One clear and unusually calm night, Nokia packed its stuff, walked to the edge of its burning platform, took a last look back, and then there it was, the next moment, falling towards the freezing waters of the Baltic Sea. With an audible thump that almost pierced the night, it fell right onto the Microsoft life-boat - a large, slow-moving vessel that was sure to reach its destination much later than the other boats. However, one of the things that attracted Nokia's attention was the unusually small crew of the boat. What an opportunity for Nokia this was! With so few people on board, it could easily stand out and earn itself a prominent position. The position that has been taken away from it... Surely this was a great opportunity to make use of its many talents. Soon, people were once again going to be talking about it, about Nokia, and this night would remain nothing but a distant memory, an event from its past that simply pushed it towards greatness once again.
Well, we presume it might not have been anything like that, and has been more like Stephen Elop just sitting on his desk, going through a bunch of boring papers and making a few phone calls, but anyways, this should be pretty close to explaining what Nokia saw in the Windows Phone OS. A fresh system with a solid base, and a strong partner in Microsoft, which was going to take care of the nasty stuff like building a developer community and creating an ecosystem of content. This way, it could just focus on what it did best - wonderful devices, and be the brightest star in the sky, for there were neither that many other starts, nor such that could shine as brightly.
Although we wouldn't completely reject the "Trojan horse" theory of Elop entering the system only to convert Nokia into Microsoft's manufacturing arm, we do believe that the state of MeeGo back then wasn't very promising. Yes, it was an almost complete platform which could run just fine, but at the end of the day, what more could it provide than the basic experience one could already get from a Symbian handset. And as it was already evident, that wasn't nearly enough for the new mobile user - the mobile user who wanted a fast, sleek device with a modern UI, loads of applications, service integration, regular software support, rich content ecosystem... The game had changed, and apparently Elop discovered that Nokia cannot learn the new rules quickly enough, so he decided to seek help from his previous employer.
Sure, Nokia could have jumped in the Google life-boat instead, but for some reason the management reached the conclusion that this wouldn't be a better decision in the long run. When you think about it, the Android manufacturers that are profitable and really successful aren't that many. Even HTC, which is a company that has this rare ability to just come up with lovely stuff, is having great difficulties. Android would have allowed Nokia to produce cheap handsets for the developing markets, one of Nokia's last strongholds, but history has shown that there's not much money in this, not enough for a giant company like Nokia, who wants to be up there with the best.
But there's usually loads of money where Microsoft is. Windows Phone is a long-term game. A game that is expected to pick up once Windows 8 is out. Using its substantial presence in the computer market, Microsoft will quickly introduce Windows 8, and so a certain extent Windows Phone 8 as well, since they have so much in common, which will suddenly change Windows Phone's status from a peculiar and young platform to a well-known, integrated experience. Coupled with Nokia's wonderful devices, this might just do it. Windows Phone should become the third biggest mobile platform with a relative ease. Whether or not there will be enough momentum in order to surpass what's going to be waiting ahead, though, is a tough question that only time can answer. We can be sure about one thing - what has a beginning, has an end. And just like Apple (iOS) and Google (Android) have once fought their way to the top, a time will come when they will have to make way for the new leader, just like Nokia had to step aside. Could this be Nokia again, riding on the wings of Windows Phone? We can go on and on with these questions, but there will be no answers.
The burning platform has now fallen, and where Nokia's business was once flourishing, other companies have found new ways of being successful. But as history has shown many times, Nokia will transform, rebuild its platform, better and stronger than before, and rise again. For to reach the top, you must start from the bottom.