Blazing Platforms; Nokia At The Crossroads

Blazing Platforms; Nokia At The Crossroads

The Economist

February 12, 2011  
U.S. Edition

Blazing platforms;
Nokia at the crossroads

SECTION: BUSINESS

LENGTH: 1316 words

HIGHLIGHT:       Nokia at the crossroads    

It is not just the world's biggest handset-maker that has lost its edge. So has Europe's whole mobile-phone industry
APOCALYPTIC language fuels the technology industry as much as venture capital does. But Stephen Elop, Nokia's new boss, may have set a new standard. "We are standing on a burning [oil] platform," he wrote in a memo to all 132,000 employees of the world's biggest handset-maker. If Nokia did not want to be consumed by the flames, it had no choice but to plunge into the "icy waters" below. In plainer words, the company must change its ways radically.
On February 11th, at a "strategy and financial briefing" in London, Mr Elop is due to announce the change he has in mind. The main question is whether Nokia will continue with its own operating system for smartphones, team up with Microsoft or perhaps even make a bet on Android, the fast-growing system developed by Google. There has even been talk that Mr Elop, the Finnish firm's first American chief executive, will fire senior managers and move the firm's headquarters to Silicon Valley.
This would be an astonishing upheaval for what was one of Europe's hottest firms. Behind Nokia's woes lurks a dismal reversal of fortunes, not just for the Finnish company but also for much of Europe's mobile-phone industry. In the 1990s Europe appeared to have beaten even Silicon Valley in mobile technology. European telecoms firms had settled on a single standard for mobile phones. Handsets became affordable, Europe was the biggest market for them and the old continent's standard took over the world. "Europe was the cradle for innovation and scale in mobile", says Ameet Shah of PRTM, a management consultancy.
This changed with the emergence of smartphones, in particular Apple's iPhone, which appeared in 2007. Nokia still ships a...