Looking back at the “burning-platform” memo

Microsoft will be acquiring the devices business of Nokia early next year. There won’t be any Nokia smartphones anymore. (Though legally, Nokia can use the Nokia brand on their own mobile phones, if they make any, in 2016.) Microsoft will most likely sell the S40 phones as “Nokia Asha”s, but the high-end devices will probably become “Microsoft Lumia”s.

This acquisition, at this price, does imply that Nokia’s strategy to put all their eggs in the Windows Phone basket has not worked. I say that with the advantage of hindsight, but to be fair, let’s look back at the time when Nokia made that decision.

The burning-platform memo of Feb 08, 2011 said:

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.

and then, at the end of the memo:

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.

And sure enough, the strategy unveiled on Feb 11, 2011 was that Nokia would adopt Windows Phone as its principal smartphone OS. In the long term, Symbian and MeeGo devices would get ramped-down.

I fully agree with Stephen Elop’s assessment of the situation in the memo. Incremental advancements were not going to cut it. Nokia needed to do something completely different, something that was capable of being disruptive. Nokia had to pull off a purple cow.

At that time, my pal Girish speculated that Nokia had chosen to run with Windows Phone probably because of the state at which MeeGo appeared to be at that time. It seemed then that MeeGo was far from being ready, and the user experience it offered was severely lacking in several areas.

Fast-forward eight months. The N9 shipped in Sep 2011, to fantastic reviews. It was heralded as a bold step, in both hardware and software, that set it apart both from not just the Nokia smartphones of that time, but from any smartphone shipped till then. Every review of the N9 I’ve seen is over-the-top, and points out that MeeGo being a dead-end platform was pretty much the only major downside of the device. And lack of apps, which was the result of it being a dead-end.

It’s notable that Nokia shipped its first MeeGo device before its first Windows Phone device. Here is a timeline of how things panned out:

So, despite MeeGo being pretty good, why did Nokia pick Windows Phone as its purple cow? Apart from jokes about moles and Trojan horses, the following hypotheses are possibile answers to that question:

  • Hypothesis #1: Nokia underestimated MeeGo’s quality and/or time-to-market. By the time they realized that it was an underestimation, Nokia had already entered into an agreement with Microsoft that involved receiving “billions of dollars”, so it was obliged to keep the Microsoft engagement going.

  • Hypothesis #2: Nokia didn’t doubt that they could ship a quality MeeGo device in time, but valued the ecosystem of apps and services more than owning the full hardware-software stack of their smartphones.

  • Hypothesis #3: Nokia didn’t think they could follow up the N9 with more MeeGo devices quickly. (Why that would be, I have no idea. So this hypothesis is probably an unlikely one.)

What the burning-platform memo says on the topic of ecosystems makes me incline towards hypothesis #2:

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.

At the time of the memo, Nokia did have its strength in some parts of the ecosystem (a great developer community around Qt and a good map service), but was quite behind in others (third-party apps, social apps, searching). Frankly, Windows Phone wasn’t exactly enjoying a great app ecosystem back then, but it had a better chance of garnering one.

I think Nokia considered it so important to have an ecosystem, and was not confident of being able to build one all by itself (like Apple did) that it was prepared to throw away its in-house OS.

Is an ecosystem that important? Probably yes, I think, for the big guys who need to sell millions of devices per year to even stay in business. And if the ecosystem is that important, it means that BlackBerry doesn’t really have a chance either.

Full-disclosure: Nokia has been both a key customer and a software vendor in my company’s Qt consulting business, when Qt was with Nokia. More recently, my apps were being distributed through the Nokia Store.

If you liked this post, you might also like: The Symbian Experience

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