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Nokia in crisis, says new boss

Nokia is failing to compete with Apple's iPhone reveals CEO of Nokia in a candid leaked memo.

Stephen Elop, the new chief executive of Nokia has sent an astonishingly damning memo to the Finnish company's staff that paints a grim picture of the phone giant as a company in crisis.

In the leaked memo, first published by technology website Endgadget, Elop describes the company as standing on a "burning platform" surrounded by innovative competitors who are grabbing its market share:

We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally. Nokia, our platform is burning.

The firm is in difficulty because it has not produced anything that has come close to matching the success of Apple's iPhone and Google's Android operating system:

There is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

Nokia's overall share in global smartphone handset sales has been gradually declining, from 38 per cent in 2009 to 28 per cent by the end of 2010, according to research firm IDC.

Whilst Nokia's share in handset sales has gone down, the shares of rival companies including Apple and HTC have increased or remained constant.

Mr Elop is also concerned that Nokia is being threatened by Chinese manufacturers at the lower, non-smartphone end of the market:

They are fast, they are cheap, and they are challenging us, he wrote.

Our competitors aren't taking our market share with devices; they are taking our market share with an entire ecosystem.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

Ben Wood, an analyst at research firm CCS insight, said the memo showed that Mr Elop, who worked at Microsoft before taking over Nokia in September 2010, has a "deep understanding of the severe structural problems Nokia is facing".

The memo ends on a positive note, Nokia will publicly address its future strategy at a media event on Friday 11th and Elop believes that the company can "face the challenges ahead of us".

We have a great opportunity" to "take a bold and brave step into an uncertain future.