Nokia’s new CEO Stephen Elop has made his presence felt – by giving his troops a good bawling out. According to a leaked memo, he told them what was wrong with them in no uncertain terms. And well he might. While there is a hell of a lot I admire about the Finnish company, they have lost their sense of direction so comprehensively in the last few years that I’m scared to use Ovi maps.

This of course dates back precisely to the launch of the iPhone. With an effort of imagination, you can kinda see why Nokia failed to spot the threat. Apple had never made a phone before¹, they were launching just a single model, it was crazy expensive, the operating system was a drastically cut-down version of a desktop one and couldn’t multitask or even cut-and-paste, the camera was well below par, it was restricted to one network, and it wasn’t even 3G for God’s sake! Nokia had a vast range of phones, some of them running the mature, multitasking Symbian OS with a pedigree stretching back to the very first handheld computers. Nobody knew as much about phone hardware or phone software as they did. Apple’s gimmicky thing almost seemed like a joke.

A joke that changed the game. Most obviously, because the phone’s interface was simply an evolutionary leap. More subtly, because Apple were not even selling a phone. They were selling music, applications, video, computers, content. The phone was just a part – albeit a pivotal one – of a new marketplace, or as Elop calls it in the memo, an ecosystem. Suddenly, just selling phones seemed like a dumb thing to do. Nokia were really good at a dumb thing.

And to make them look all the dumber, they didn’t seem to realise this. Their attempts to draw back market share looked clumsy and half-assed. A touch interface kludged onto the Symbian OS, some special music-playing models (because iPhones are a sort of iPod, right?), their attempt to create an ecosystem with the lacklustre Ovi – Finnish for door, betraying the fact that they’re still thinking in the restricting terms of a portal rather than the openness of a marketplace. They were really not getting it.

So Elop gave it to them:

Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

He uses a metaphor of a “burning platform” – as in, you don’t jump into the cold ocean until you realise your oil rig is on fire. But the choice of word is interesting. “Platform” in computing terms means the combination of hardware and software that programs are written for. Thus a PC with Windows is one platform, a Mac with OS X another. What it all strongly hints at is that he’s preparing Nokia to ditch Symbian.

A shame, some say. Symbian was the first real smartphone OS, descended from Psion’s PDAs, and is loved for many reasons. It was designed from the very beginning as a mobile system, which may explain why Nokia devices can use more modest processors than their competitors and thus have very good battery life.

About time, others say; it’s dated and it’s been holding Nokia back.

I personally do not know if there’s anything fundamentally wrong with the Symbian OS, or if it’s just the interface that lets it down, whether it’s hard to develop for or it’s just that there isn’t enough incentive. It’s an argument that rages among specialists. But much like the old Windows Mobile for phones, Symbian has accumulated “legacy” which makes its once-advanced features seem clunky hangovers. Things have become quirky and confusing. If I install a new app on my Nokia and want to have a shortcut to it on the home screen I have to dig down through menus within menus looking for one called, of all things, “Standby Mode”. That just isn’t good enough anymore. At the very least, they need to revamp it as utterly as Microsoft did theirs.

Or… Simply adopt Microsoft’s solution? Rumours abound that there is a partnership deal brewing. Stephen Elop came to Nokia from Microsoft, so naturally people suspect that he wants to move some of his old furniture in. And in a lot of ways this would make sense. The OS is, by most accounts, looking good. A partnership of the companies that are still the leading desktop and mobile players would be terrifically strong.

But I don’t like it. Certainly, make Nokias that run Windows Phone 7. Why not do that? But don’t get married. Nokia is a lot of eggs, and Windows Phone 7 is a rather small and untried basket. It looks good now, but Microsoft often change their minds about – or simply forget to concentrate on – what seem like promising ideas. Microsoft is enormous.

And it’s… too neat. Both were the absolute master of their respective niche, both are now threatened by innovative incursions. It would be the heavyweight incumbents ganging up against the upstarts. The danger is that they would use their inertia to resist innovation from Apple and Google, and that would benefit nobody.

And what about Google anyway? Some saw a round of name-calling between them and Nokia as burning bridges, but in the business school yard that could equally mean they secretly fancy each other. And there’s a lot to be said for the Android solution. For one it’s open source, so Nokia can adopt it – and adapt it – without making any deals with Google. Nokia have the resources and experience to advance Android perhaps even as much as Google itself does, and could certainly set new standards in its implementation.

Which brings us to HTC, the brilliant Taiwanese company currently leading that field. They have no problem producing both Windows and Android models. Why can’t Nokia? Potentially, they could beat HTC at their own game. They can make hardware that is as good and better, they make a far wider range of models at both higher and lower price points, they could bring a range of Ovi services to the party as well, available exclusively on Nokia phones of either flavour.

Or perhaps they could simply leave that to the competing ecologies of Windows and Android, and go back to concentrating on what they do best – making phones that work very well.

Something like this is what I hope to see. What I fear we will see is a deal where they ditch their own operating system research, spurn Android, and become strategic life-partners with Microsoft. Nokia are more than that.

1. Unless you count this monstrosity, which history has done its best to forget. But that was mostly made by Motorola.