Phone major Nokia facing crisis, warns new boss

Nokia Boss Stephen Elop - has Reasons to be Worried

Nokia Boss Stephen Elop – has Reasons to be Worried

The new boss of Nokia has sent out a memo to this staff suggesting that the company is in crisis. To drive down the gravity of the situation, Stephen Elop said that the company is standing on a “burning platform” and its competitors are eating into its marketshare.

The company has been caught off-guard by the strong market acceptance of Apple’s iPhone and Google’s Android operating system.

“The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience”, wrote Mr. Elop to the company’s staff.

“Android came on the scene just over two years ago, and this week they took our leadership position in smartphone volumes. Unbelievable”, added the chief executive of the Finland headquartered phone maker.

Nokia has been losing its marketshare to its competitors although it still leads the global smartphone market.

By the end of 2010, Nokia’s marketshare had dropped to 28% from 38% recorded in 2009, estimates research firm IDC.

Its competitors like Apple or HTC have either maintained their marketshare or grabbed more of it, the survey shows.

The memo shows that Mr. Elop has a “deep understanding of the severe structural problems Nokia is facing”, said analyst Ben Wood of research firm CCS Insight.

To make matters worse, Nokia’s low end market share is being gobbled up cheap Chinese substitutes, the note suggests. “They are fast, they are cheap, and they are challenging us”, he wrote.

The phone giant is expected to address a media event to outline its future strategy. Analysts believe Mr. Elop may use this opportunity to announce some drastic measures to revive the company’s fortunes. This may well mean courting Google’s Android or Windows Phone 7 operating systems, they say.

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