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Two words: burning platform. http://communities-dominate.blogs.com/brands/2012/06/the-final-reckoning-of-burning-platforms-memo-damaged-nokia-by-wiping-out-13b

Two words: burning platform. http://communities-dominate.blogs.com/brands/2012/06/the-final-reckoning-of-burning-platforms-memo-damaged-nokia-by-wiping-out-13b-in-revenues-and-destro.html http://communities-dominate.blogs.com/brands/2012/06/the-fin... There was just no reason to write a memo like that. It destroyed their business, almost singlehandedly, and no, I'm not exaggerating. The consequences of that memo were insane: Nokia's handset sales died all over the world all at once.

pavlov 12y ago
We don't have more than quarter-level visibility. All we know is that Q1 2011 sales crashed and Elop wrote his memo. Which is the cause and which the consequence? In Q4 2010, Nokia stuffed the channel with outdated products. In a market that was growing accustomed to iPhone and Android, Nokia tried to sell consumers products based on the first touch edition of Symbian S60 -- the same software that was considered outdated when it first shipped in Nokia 5800 years earlier. (Because of the way Nokia's product development pipeline worked, the mid-range phones they released in late 2010 contained software that was several years old.) Isn't it possible that Nokia's Q1 2011 sales crashed simply because the channel was full of Symbian phones that just were not selling? As CEO, Elop would have visibility into that when he wrote his infamous memo. A point against the "evil memo destroyed sales" theory is that purchasers at large operators don't turn on a dime. When they stopped buying Nokia's phones in Q1 2011, the decision was already made earlier.
- josh2600 12y ago
  The fallout from that memo was instantaneous and widespread. I worked in wireless at the time and everyone I knew at all of the carriers began to pull Nokia inventory. This was not true in many markets. Even if the burning platform concept was correct, releasing it in a companywide email instead of strategically shifting the company and then announcing the change in a measured, considered fashion would've been much better for their cash flows. Purchasers at large operators don't turn on a dime, usually, but I would argue that the CEO of a handset manufacturer declaring their entire existing lineup of products is going to be discontinued in viscerally graphic terms is one of the things that might spur such quick change.
zokier 12y ago
> There was just no reason to write a memo like that There was a very good reason to write it. Internally Nokia was delusional and confused, and desperately needed a wake-up call. Nothing less would have sufficed.
- josh2600 12y ago
  Nokia was delusional internally, but can you really make an argument that what they did was reasonable? Is there any world where it was better for them to choose Windows over Android? That only happened because of Elop's previous Microsoft connections and it was clearly the wrong decision for the shareholders of the company.
cwyers 12y ago
"By every measure that the industry uses, Nokia Symbian smartphone sales grew from Q3 of 2010 to Q4 of 2010, literally the last full quarter before Elop released his Burning Platforms memo." Q4 sales were higher than Q3 sales? I'm, uh... how about year-over-year comparisons? A seasonally-adjusted smoothed trendline? Anything OTHER than comparing sales figures in one quarter where there's Christmas and one quarter where there isn't?

pavlov 12y ago

We don't have more than quarter-level visibility. All we know is that Q1 2011 sales crashed and Elop wrote his memo. Which is the cause and which the consequence? In Q4 2010, Nokia stuffed the channel with outdated products. In a market that was growing accustomed to iPhone and Android, Nokia tried to sell consumers products based on the first touch edition of Symbian S60 -- the same software that was considered outdated when it first shipped in Nokia 5800 years earlier. (Because of the way Nokia's product development pipeline worked, the mid-range phones they released in late 2010 contained software that was several years old.) Isn't it possible that Nokia's Q1 2011 sales crashed simply because the channel was full of Symbian phones that just were not selling? As CEO, Elop would have visibility into that when he wrote his infamous memo. A point against the "evil memo destroyed sales" theory is that purchasers at large operators don't turn on a dime. When they stopped buying Nokia's phones in Q1 2011, the decision was already made earlier.

josh2600 12y ago
The fallout from that memo was instantaneous and widespread. I worked in wireless at the time and everyone I knew at all of the carriers began to pull Nokia inventory. This was not true in many markets. Even if the burning platform concept was correct, releasing it in a companywide email instead of strategically shifting the company and then announcing the change in a measured, considered fashion would've been much better for their cash flows. Purchasers at large operators don't turn on a dime, usually, but I would argue that the CEO of a handset manufacturer declaring their entire existing lineup of products is going to be discontinued in viscerally graphic terms is one of the things that might spur such quick change.

zokier 12y ago

> There was just no reason to write a memo like that There was a very good reason to write it. Internally Nokia was delusional and confused, and desperately needed a wake-up call. Nothing less would have sufficed.

josh2600 12y ago
Nokia was delusional internally, but can you really make an argument that what they did was reasonable? Is there any world where it was better for them to choose Windows over Android? That only happened because of Elop's previous Microsoft connections and it was clearly the wrong decision for the shareholders of the company.

cwyers 12y ago

"By every measure that the industry uses, Nokia Symbian smartphone sales grew from Q3 of 2010 to Q4 of 2010, literally the last full quarter before Elop released his Burning Platforms memo." Q4 sales were higher than Q3 sales? I'm, uh... how about year-over-year comparisons? A seasonally-adjusted smoothed trendline? Anything OTHER than comparing sales figures in one quarter where there's Christmas and one quarter where there isn't?