The “Burning Platform” Memo

The situation

For more than a decade Nokia was the largest phone maker in the world. Its Symbian operating system ran most of the smartphones sold before the iPhone, and its feature phones dominated emerging markets. By 2010 the position was collapsing. The iPhone had redefined what a smartphone was, Android was being adopted by manufacturers across the industry, and Nokia’s own next-generation platform, MeeGo, was late.

In September 2010 Nokia appointed Stephen Elop, previously head of Microsoft’s business division, as its first chief executive from outside Finland. Within five months he had to decide how Nokia would compete.

What the memo argues

The memo opens with a story. A man working on an oil platform in the North Sea wakes to find it on fire. Surrounded by flames, with the sea far below, he has seconds to choose. “He decided to jump.” The point is that the man jumped because staying meant certain death, and he survived. Elop draws the comparison directly: “We too, are standing on a ‘burning platform,’ and we must decide how we are going to change our behaviour.”

He then describes the fire with unusual candour for a chief executive. On Apple: “The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience.” On Google: “Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes.” On Nokia’s own platforms, he writes that Symbian “is proving to be an increasingly difficult environment” for developers, and that “we thought MeeGo would be a platform for winning high-end smartphones,” a hope that had not been realised. He adds pressure from low-cost Chinese manufacturers at the other end of the market: “we have more than one explosion.”

Then comes the strategic claim that frames everything: “The battle of devices has now become a war of ecosystems.” Competitors were winning by building or joining ecosystems of apps, services and developers, and Nokia was not.

He does not spare the company: “We fell behind, we missed big trends, and we lost time,” and, most memorably, “We poured gasoline on our own burning platform.” The memo ends with a call to action: “Together, we can choose to define our future.”

The decision it carried

The memo does not name the decision, but it prepared employees for it. On 11 February 2011, three days later, Nokia announced a partnership with Microsoft: Windows Phone would become Nokia’s primary smartphone platform, Symbian would be phased out, and MeeGo would be reduced to a research effort.

The alternatives were the subject of intense debate at the time. Nokia could have pushed MeeGo to market and tried to build a third ecosystem of its own. It could have adopted Android, as Samsung, HTC and others had, using its manufacturing scale and brand to compete within the largest ecosystem. Or it could choose Windows Phone, where Microsoft offered support and Nokia would be the leading partner rather than one of many.

What happened

Nokia’s smartphone sales fell sharply as customers and retailers, told that Symbian was finished, stopped buying Symbian phones before the Windows Phone models were ready. The Lumia phones that followed were well reviewed but struggled to attract the apps that iPhone and Android users expected, because developers prioritised the two larger platforms. Windows Phone never gained a large share of the market.

In September 2013 Microsoft announced it would buy Nokia’s devices and services business; the deal closed in April 2014, and Elop returned to Microsoft. In July 2015 Microsoft announced an impairment charge of about $7.6 billion related to the acquisition, along with thousands of job cuts, effectively writing off the purchase. Nokia itself survived as a telecommunications networks company.

How to read it as a product manager

The memo is studied for good reasons and for bad ones.

Its candour is valuable. Many companies in decline describe their position in euphemisms. Elop named competitors, admitted specific failures and said plainly that the existing strategy was not working. That honesty is a precondition for change.

Its central insight was correct. Smartphones were becoming ecosystems, and a phone maker without strong apps and developer support could not win on hardware alone.

Its weaknesses are just as instructive. First, it was written as if its only audience were employees. Any memo to tens of thousands of people will leak, and this one told customers and retailers that Nokia’s current phones had no future. Second, the conclusion that Nokia had to “jump” did not determine where to jump. The insight about ecosystems arguably pointed toward the largest ecosystem, Android, or toward building one’s own; joining the smallest of the three made Nokia dependent on a partner that faced the same developer problem. Third, by declaring the old platform dead before the new one shipped, the strategy removed revenue during the transition, a classic mistake known in the industry as the Osborne effect.

What is contested

Supporters of the Windows Phone decision argue that adopting Android would have turned Nokia into one manufacturer among many competing on price against Samsung, and that Microsoft offered differentiation and money Google would not. Critics argue that Android would have preserved Nokia’s volume while it found its place. Some in Finland at the time suspected Elop’s Microsoft background influenced the choice; Elop and Nokia’s board said the decision followed a full evaluation. What happened is clear; what would have happened under the alternatives is not.

The decision, examined closely

What triggered it

By early 2011 every measure of Nokia’s smartphone business was moving the wrong way. Android had just passed Nokia in smartphone volumes, as the memo itself notes, and Apple dominated the high end. Nokia had a scheduled strategy briefing on 11 February. The memo was written to prepare employees for a radical announcement three days later.

The constraints

Nokia had enormous manufacturing scale and distribution, but its software was behind, and software had become the basis of competition. Any choice would take years to deliver products, during which Nokia would have to keep selling the phones it already had. That made the timing and communication of the decision as important as the decision itself.

What the author was optimising for

The memo optimises for urgency. Its story, its candour and its striking language are designed to make employees accept that the status quo was not an option. What it does not do is explain why the particular destination was the right one. The “war of ecosystems” framing tells readers that Nokia needed an ecosystem; it does not establish that Windows Phone was the best one to join.

Second-order effects

The memo leaked within hours, and its message reached customers, retailers and operators: Nokia’s current phones had no future. Sales of Symbian devices fell faster than planned, reducing revenue before the replacement arrived. Developers, seeing a small and uncertain Windows Phone market, did not rush to build apps for it, which weakened the very ecosystem Nokia had bet on.

The counterfactual

The most discussed alternative is Android. Supporters argue Nokia’s scale and brand would have made it a leading Android manufacturer; critics argue it would have been squeezed by Samsung and low-cost rivals and become a commodity supplier. Either way, the case shows that a strategic insight (devices had become ecosystems) can be correct while the specific bet that follows from it fails.

Sources and limitations

Quotations were verified against Engadget’s publication of the leaked memo, which Engadget later confirmed with multiple sources; Nokia declined to comment on it at the time. The account of later events relies on news reporting of company announcements, including Microsoft’s 2015 write-down. Reported purchase prices for the Nokia devices business differ between sources and are not given here. The analysis of what the strategy got wrong is the author’s interpretation, based on outcomes and on arguments made at the time.