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Engineers accuse CEO Stephen Elop of destroying the company so Microsoft can buy it cheap.
TAMPERE, Finland — It isn’t much past 4 p.m. at Nokia’s software development center in Tampere, Finland. The facility employs several thousand engineers. But already, the car park is deserted.
It’s been like this ever since Stephen Elop, the country’s first non-Finnish chief executive, sent out his infamous "burning platform" memo in February 2011.
In grandiose language, Elop’s memo compared Nokia to a man perched on the edge of an oil rig engulfed in flames, wondering whether to jump into the “dark, cold, foreboding Atlantic waters.” Or to be more blunt: the company was in shambles.
In particular, the memo rubbished the mobile phone operating systems that programmers here in Tampere had dedicated their lives to. “We have multiple points of scorching heat that are fueling a blazing fire around us,” Elop wrote, referring to Apple’s iPhone and Google’s Android. “While competitors poured flames on our market share…[Nokia] fell behind, we missed big trends and we lost time.”
Elop’s goal was to inspire radical change.
It didn’t work.
“If you look at the parking lot at this time, six months ago it was full,” says one 15-year Nokia veteran, as he trudges through the rain to catch an early bus home on a recent October day. “Its very hard to work. People still do the hours that they are required to do by contract, but they don’t do any extra."
"When the company’s doing well, there’s a positive spirit overall. Now we don’t have much of that spirit.”
Nokia needed a savior. Its stock price had sunk sharply since those happy days before the iPhone was launched. Its market share was shrinking.
Days later, Elop revealed his plan. He would bet the company’s future on Windows Phone, signing a partnership deal with Microsoft.
Since then, workers here have begun to wonder quite seriously whose side he’s really on.
“It’s very suspicious to me,” says another disgruntled programmer. “If he wants good for the company, why is he trying to destroy it, and make the share price go down? There are a lot of conspiracy theories here.”
Elop’s background adds to the mistrust.
Before taking the reins at Nokia, the Canadian spent two and a half years running Microsoft’s Office business. The last time he was chief executive of a company, Macromedia, he waited only three months before selling it.
“Sometimes it’s hard to know where his loyalties lie,” says David Weinehall, a programmer who left the company in April rather than work on the hated Windows system. (Microsoft didn't respond to requests for comment.)
The burning platform memo, and the way it leaked out to the wider world, irks many at Nokia.
“Making that announcement to all the world in the way that he did was a huge mistake,” says the first programmer. “You can look at the result in the second and third quarter — phone shipments dropped significantly after the announcement.”
The city of Tampere has a valid claim as the birthplace of the European mobile phone industry. The Tampere University of Technology, opposite Nokia’s campus, did much of the research in signal processing that Nokia used when developing the GSM networks that later became the world standard.
It was here that the company worked on the first GSM phone, the Nokia 1011 and the Nokia 1100, still the best-selling phone of all time.
These critics are perplexed over why Elop would destroy the market for Nokia’s existing phones more than six months before he had a Windows Phone that could replace them. The CEO has reportedly been pushing hard to release the first Windows phone in the fourth quarter, in time for holiday sales.
Tomi T Ahonen, a former Nokia manager, argued in an August blog that the burning platform memo was, “The most damaging CEO statement conceivable, and proof of ultimate management incompetence.”
Telling consumers that the company’s operating systems were toast was similar to the mistake British jeweler Gerald Ratner made when he joked in a public speech that his goods were cheap because they were "total crap," nearly bankrupting his company.
Other’s see something more sinister.
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“I think Microsoft will wait for Nokia’s share price to fall a bit more, and then it will buy them out,” suspects one programmer.
In August, when Google announced that it was buying Motorola, Nokia’s stock price jumped 10 percent. The Wall Street Journal’s tech blog explained that, with Nokia poised to be the biggest customer for its mobile software, Microsoft couldn’t afford to let the company fall to the competition.
Nokia spokesman Doug Dawson told GlobalPost that any questions over Elop’s loyalty, or speculation about Microsoft’s intentions, were “completely baseless.” The company argues it had no choice but to be transparent about abandoning its operating system, adding that it will continue supporting its Symbian smartphone operating system until 2016.
"We established that we absolutely needed a change in strategic direction and it was critical to communicate our new strategy to all our stakeholders," says Nokia spokesman James Etheridge. He argues the alternative would have been to “pull some nasty surprises later on.” He accepts that staff may have taken a short-term hit.
"In Tampere, many of our employees have moved to Accenture as of the start of this month as part of an outsourcing deal. It has been a large Symbian site and it is natural that people may feel frustrated," he said.
Nokia programmers contend it has been agonizing to see its new MeeGo-powered N9 smartphone — which they regard as the company’s first credible iPhone-killer — crushed. When Nokia launches the smartphone this month, consumers already know it’s a dead end. And Elop recently revealed he won’t even launch the phone in key markets like the United States, United Kingdom, Japan and Sweden because he doesn’t want it to compete with the Windows Phone.
In the second quarter of 2011, Nokia lost nearly 500 million euros after the number of smartphones it sold worldwide dropped by more than a third, and total phone sales drop by a fifth.
Investors are braced for another round of bad news when the company releases its third quarter results this Thursday.
Nokia spokesman Dawson said that in the run up to the results and Nokia World annual conference, employee morale was improving by leaps and bounds. “The vast majority of employees are motivated and energized like never before,” he said. “There is a fresh challenger spirit within Nokia.”
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Nokia may in fact have a hard time winning back the dedication of the engineers here. Embracing Windows is particularly unpopular in Finland, the birthplace of Linux, the rebel open-source operating system dedicated to unseating Windows’ dominance.
MeeGo, the Nokia operating system Elop has scrapped, was a flagship project of the Linux movement.
Linus Torvalds, Linux’s Finnish founder, says that “Microsoft-hatred is a disease” among open source programmers, but in Tampere it’s more of an epidemic.
"I've worked with Linux and open software my entire career as a software developer. I have no intention, or desire, to shift to a proprietary, closed platform such as the ones from Microsoft,” Weinehall said. “I know a lot of others in the MeeGo-team felt the same way. A lot of really talented people left or began looking for new jobs, shortly after the announcement."
Nokia has this month revealed that it now planned to develop a new Linux-based operating system, Meltemi, but development will be based in Germany, not Finland.
Kari Kankaala, the head of Tampere city’s economic development department, is lobbying hard to get Microsoft to invest more, looking for any new employers now that Nokia is starting to shed staff. But he concedes that for many of Tampere’s programmers, the U.S. giant may not be welcome. "It’s ideological," he said.