This day, last year, Nokia announced its partnership with Microsoft that will see Nokia embracing Windows Phone as its platform of choice for smartphones and dumping its own Symbian and MeeGo operating systems. Nokia has never been the same ever since. The transition period has certainly taken a toll on Nokia – affecting almost 7,000 jobs and counting, erosion of its market share globally and speculations aplenty about Microsoft acquiring its smartphone business. At the helm is Stephen Elop, who penned the destiny changing "burning platform" memo and who has marshaled his troops to see them through the toughest part of the transition. Elop expects the transition phase to continue through 2012, with the most important part – execution – in front of the company. In the past one year, Nokia has not only shown tremendous resolve to change its course mid-way (the company was betting big on MeeGo as its next-gen smartphone platform) but also churned out devices running on Windows Phone platform in less than eight months of first announcing its partnership with Microsoft.
Having said that, Messrs Elop & Co have their work cut out for them. While it would be naive to think Nokia can retain its lost market share this year, it would be imperative for the handset vendor to hold its ground. It won't be easy, especially at a time when Samsung and Apple are going all guns blazing and posting some unheard-of smartphone shipment numbers quarter after quarter. Nokia will have to innovate heavily on Windows Phone, especially in multimedia features and hardware design. It has the resources, the experience and the will. Everything now depends on how well it is able to execute it and a hint of good fortune.
Read on for a detailed timeline of what transpired at Nokia from the day Elop wrote his brave memo.
February 9, 2011: Stephen Elop sends the "burning platform" memo
"Nokia, our platform is burning."
Just two days before Nokia announced its partnership with Microsoft, Nokia's first non-Finnish CEO sends out an honest but brutal memo to Nokia employees to prepare them for some radical (and painful) changes that will come their way. Elop is frank when he tells the tale of a man working on an oil platform in the North Sea, who has to decide whether he should jump in the frigid waters below or be consumed by the fire ravaging his platform. "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." He tells his troops what they know but are too scared to acknowledge – Apple and Google have eroded Nokia's smartphone market and Mediatek's reference design platform is killing their high-volume, mass market phones.
"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," Elop wrote in his memo.
The defining moment in his memo came when he wrote about "war of ecosystems," which made it clear Nokia was ready to dump Symbian and MeeGo. "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," he wrote.
The writing was on the wall.
February 11, 2011: Nokia and Microsoft announce plans for a broad strategic partnership to build a new global ecosystem
Nokia would adopt Windows Phone as its principal smartphone strategy
Everyone saw it coming but no one still believed it was happening. How could Nokia do this? Microsoft had been trying its hand at Windows Mobile for a decade and had failed to succeed. Windows Phone 7 had seen lukewarm response from OEMs, carriers and consumers. Elop was tagged a traitor, Microsoft's trojan horse and longtime Nokia loyalists decided to change loyalties.
Elop knew what was coming his way, yet he stuck to his guns. The ever-optimistic Canadian called it a three-horse race – it would be Apple, Android and Nokia-Microsoft, with no mention of RIM, which was standing on a burning platform of its own.
"Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience. Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It's now a three-horse race," Elop was quoted in a press release at a joint press conference in London.
MeeGo gets open sourced, Nokia announces changes in leadership and operational structure
Apart from announcing Windows Phone as its primary smartphone platform, Nokia also announced it will open source MeeGo – the OS that was meant to be Symbian's successor and drive Nokia's smartphone strategy. Elop, however, thought development on MeeGo was too slow.
Nokia also announced a new corporate structure, which would divide its handset business into two separate units – smart devices and mobile phones. Each unit would be have its own profit and loss responsibility and have their own product roadmap, product management and product marketing. This further fuelled speculation that Nokia would eventually sell its smart devices unit to Microsoft.
Elop, in the meanwhile, set out for a globe-trotting mission addressing analysts, shareholders, employees, carriers and developers about why this move made sense.
April 21, 2011: Nokia and Microsoft sign definitive agreement ahead of schedule
In recognition of the unique nature of Nokia's agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars.
Nokia and Microsoft announce they have signed a definitive agreement and engineers from the two companies are already working on building Nokia's smartphone portfolio running on Windows Phone OS. Nokia's Maps will be deeply integrated into the platform (Bing will use Nokia Maps), Nokia will innovate on camera front for Windows Phone while Microsoft will provide Bing search across Nokia's device portfolio as well as productivity tools (read MS Office). Nokia will pay Microsoft royalties once its Windows Phone devices go into production. However, Microsoft will pay Nokia an initial as well as recurring payment under "Platform Support" fee. Elop calls it a win-win partnership at the highest level.
April 27, 2011: Nokia plans to transfer Symbian software activities to Accenture; Accenture to provide future smartphone ecosystem services to Nokia
Nokia will transfer 3,000 jobs to Accenture, 4,000 more jobs will be axed
The collaboration calls for Accenture to provide Symbian-based software development and support services, with the expected transition of about 3,000 Nokia employees to Accenture. The companies expect completion of the final agreement during summer 2011, and expect the transition of employees by the end of the calendar year 2011. Transitioning employees, located in China, Finland, India, United Kingdom and the United States, will initially work on Symbian software activities for Nokia. Over time, Accenture and Nokia will seek opportunities to retrain and redeploy transitioned employees.
Apart from the 3,000 employees "transitioned" to Accenture, Nokia also announced it will axe 4,000 more jobs by the end of 2012, with most reductions happening in the UK, Denmark and Finland. The company would also consolidate its research and product development centers, which would mean expansion of some sites while constriction or closure of others.
May 31, 2011: Nokia lowers devices and services Q2 2011 outlook and updates full year 2011 outlook
Strategy transitions are difficult
Updated outlook for Devices & Services for the second quarter 2011: - Nokia now expects Devices & Services net sales to be substantially below its previously expected range of EUR 6.1 billion to EUR 6.6 billion for the second quarter 2011. This update is primarily due to lower than previously expected average selling prices and mobile device volumes. - Nokia now expects Devices & Services non-IFRS operating margin to be substantially below its previously expected range of 6% to 9% for the second quarter 2011. This update is primarily due to lower than previously expected net sales. While visibility is very limited, Nokia's current view is that second quarter 2011 Devices & Services non-IFRS operating margin could be around breakeven. Updated outlook for Devices & Services for the full year 2011: - Given the unexpected change in our outlook for the second quarter, Nokia believes it is no longer appropriate to provide annual targets for 2011. However, Nokia expects to continue to provide short-term quarterly forecasts in its interim reports as well as annual targets when circumstances allow it to do so. - Nokia's previous targets for the third quarter, fourth quarter, and full year 2011 were: 1) Net sales in Devices & Services to be at approximately the same level in the third quarter 2011 as in the second quarter 2011, and seasonally higher in the fourth quarter 2011, compared to the third quarter 2011; 2) Devices & Services non-IFRS operating margin to be between 6% and 9% in 2011. These targets are no longer valid.
Elop is confident Nokia will deliver its first Windows Phone devices in the fourth quarter of 2011.
June 21, 2011: The Nokia N9: A unique all-screen smartphone
Nokia launches its last MeeGo smartphone
Nokia announced its first and last MeeGo smartphone, the N9. The smartphone gets raving reviews, not just for its UI but the unique polycabonate plastic casing and minimalistic design. Nokia would eventually end up using the same design for its first flagship Windows Phone device.
July 21, 2011: Nokia announces Q2 2011 results
Devices and Services net sales drop 23 percent QoQ
"The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011. However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business. Most importantly, we are making better-than-expected progress toward our strategic goals," said Elop.
September 29, 2011: Nokia continues to align its workforce and operations
Assesses its manufacturing facilities across Europe
Nokia announces it will close its feature phone manufacturing facility in Cluj, Romania and move the manufacturing to Asia. It also decides to review its manufacturing plants in Salo, Finland, Komarom, Hungary, and Reynosa, Mexico. These units will eventually cease manufacturing operations in 2012 and will become a package customization facility to take care of European and American markets.
September 30, 2011: Nokia completes transfer of Symbian to Accenture
Eventually 2,300 jobs are transitioned
The two companies finalize the agreement. About 2,300 jobs from Nokia are transitioned to Accenture.
October 26, 2011: Nokia showcases bold portfolio of devices, accessories and services at Nokia World
First Nokia smartphones running Windows Phone OS are launched
Right on cue, Nokia launched its first two Windows Phone devices – the Lumia 800 and Lumia 710. The two smartphones are first launched in just six countries, with five more countries by the end of the year.
"Eight months ago, we shared our new strategy and today we are demonstrating clear progress of this strategy in action. I'm incredibly proud of these new devices – and the people of Nokia who have made this happen," Elop said.
January 9, 2012: Nokia Lumia 900 launches on AT&T's LTE network
Marks Nokia's re-entry into the US market
Though Nokia's Lumia 710 was launched on T-Mobile in December, the Lumia 900 marks the handset vendor's real entry into the US market. Microsoft helps subsidize the phone to $99 on a two-year contract, making it the most affordable LTE smartphone in the market.
January 26, 2012: Nokia announces Q4 2011 results
Microsoft paid Nokia $250 million as platform support fee
Nokia announces it has sold over a million Lumia smartphones in less than two months of launching them in limited markets. It also emerges from the results that Microsoft paid Nokia $250 million as platform support fee for making Windows Phone devices.
"In the war of ecosystems, clearly there are some strong contenders already on the field. And with Lumia, we have demonstrated that we belong on the field. Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing. To date we have sold well over 1 million Lumia devices. From this beachhead of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful," Elop said.
February 8, 2012: Nokia announces changes to its manufacturing operations
Moving manufacturing operations to Asia is inevitable
Nokia announces it will no longer manufacture devices in its facilities at Komarom, Hungary, Reynosa, Mexico and Salo, Finland. As stated in September 2011, these facilities will be used for customization of products for European and American markets. Device assembly is shifted to Asia. About 4,000 employees are expected to be impacted by the move.