March 1, 2011
Dear Mr Elop,
"Two turkeys do not make an eagle". Good news for the rabbits. Americans, give thanks! The worth of a strategy is a matter of perspective.
Yet, as Andrew Parker and Andrew Ward report, "to [your] clear frustration, [your] strategy has gone down badly. Nokia's stock market value has fallen about 20 per cent since [your] February announcement" (*). As the same authors write in another article (**), your "burning platform memo" may have delivered "the shock factor [you] intended", but could knocking your own stock down really be the shock you had in mind?
You were "recruited because of [your] software background: as a trained computer engineer". So you well know why "analysts say [your] partnership [with Microsoft] is a good deal for Microsoft but a bad one for Nokia". It's only logical. "Nokia's long standing strength had been in hardware" but, in your own words quoted by Jenna Wortham (***), "the world is shifting from a battle of devices to a war of ecosystems".
Correct, this assessment also reveals why Nokia's future remains under threat. Information Age ecosystems tend to disproportionately benefit one player above all others. And all facts suggest that any success for your partnership will mainly benefit your partner. Indeed wasn't Microsoft king of the personal computer ecosystem and didn't it gain its crown with the help of another hapless hardware manufacturer called IBM?
Did you have a choice? "In the touch-screen era, how do you stand out from the crowd when most phones are near-identical glassy rectangles"?
At least you were not fooled by Google's blandishments into cementing its victory over Apple. "Just focus on innovating a better design" says "Andy Rubin, one of the chief architects and engineers behind Android". But put too clever a software on top of Android, and the latter will absorb your innovation into its next release. Invent a better box to run under Android and lower costs Chinese manufacturers will copy away your advantage.
So, short of Microsoft, where else would have you found the strength to fight the seductive ecosystem built by Steve Jobs, the Pied Piper of Cupertino, whose enchanted iTunes store fatally attracts all kinds of content providers and application developers?
Still, you did not leave your family "on the other side of the Atlantic" and fly so close to Russia to preside over a retreat, however orderly. Partnering with Steve Ballmer is a shrewd defensive move and Nokia has escaped from the fire. But nobody survives for long in icy waters, even with a life jacket. You now must act quickly and decisively to lead Nokia to shore.
Being a CEO, you expect nothing from your correspondents short of a solution to adopt and a resolution to take.
Users carry Nokia's handsets in their pockets next to the keys. Turn these phones into the key to a new ecosystem built around user eprivacy.
You easily grasp how this strategy would rebalance your partnership. There is no confidentiality without security and security is always better when the hardware is designed to support it. Besides Microsoft has zero credibility on eprivacy while one can expect Nokia, as a European company, to be well tuned to the issue. Can you think of another angle to wrong foot both Chinese hardware manufacturers and American software companies?
Becoming the lead partner is one thing. Making the partnership succeed is another. The principal obstacle faced by eprivacy is the burden it normally puts on the user. But remember most of this problem is self-inflicted. In a plunder economy, what supplier would squander its resources on making hardware and software support privacy? Reverse the perspective. What user would turn down better eprivacy designed to be unobtrusive?
ePrivacy may be a nice feature to have but can it bind a whole ecosystem? Only financial interests do that. Fortunately the unbounded arrogance of Google and the unlimited greed of Apple are giving you lots of potential allies. Aren't "European [mobile phone] operators, fearing a duopoly involving Apple and Google, [...] keen for a popular alternative to emerge"? Would content providers forced by Apple to let subscribers free to opt-in object to a similar feature from Nokia in the name of confidentiality, especially if you take less than 30% of their revenue stream?
Besides, you have strong arguments to put forward to phone operators. True confidentiality requires peer to peer communication and is bound to maximize bandwidth usage. You should be able to prove Nokia will not squeeze phone operators as other smart device designers are wont to do.
Success however needs energy. Targeted advertising is what fuels Facebook, what Google and Apple invest into. Targeted advertising is the peg on which hangs the hope of content providers. Location-based advertising, not personal sharing, is the force behind GPS-based personal devices.
Without targeted advertising no ecosystem will thrive. But isn't confidentiality against it? Despite what blackmailers want us to believe, not at all! ePrivacy merely put users on an equal footing with advertisers with whom they are bound by a mutual desire for better deals. If Nokia truly empowers users' privacy, they will love it. If users adopt this new ecosystem, advertisers will accept it. Manage it fairly, your ecosystem will thrive.
Could such an ecosystem be undermined by the trend towards putting data in the cloud? On the contrary. As long as users keep their confidential data strongly encrypted without giving their key away, they can safely and conveniently save it in the cloud. And who would be fool enough to send it away for processing when one's very own phone has all the power needed? Make Nokia the source of the smart phone for the smart user.
Naturally there is a catch. Even if the basic bricks are available now, as I personally ensure you (1), turning eprivacy into an ecosystem will require a burst of application development and the ability to drive a large scale deployment. That, I do not know how to do. But aren't Nokia and Microsoft masters of large scale deployments? And will not Nokia's redundant software engineers be eager to be retrained into writing eprivacy apps?
With the right perspective, being compared to IBM today may not be a bad thing. Show analysts and investors alike myopia is theirs, not Nokia's.
They will tell you ePrivacy is another wild turkey but, see, this one is a tom turkey, an opportunity to introduce a superior breed in your ecosystem.
- (*) ..... Downwardly mobile, by Andrew Parker and Andrew Ward (Financial Times) - February 25, 2011
- (**) ... Nokia's emergency call, by Andrew Ward and Andrew Parker (Financial Times) - February 20, 2011
- (***) . Phones Try To Stand Out In a Crowd, by Jenna Wortham (New York Times) - February 17, 2011
- (1) Ask your experts to examine my US patent portfolio, US Patent Number 6,092,197 and US Patent Applications 2006/0053279 and 2009/0076914.