This is Kristen O'Brien, Managing Editor at NFX, and this is the founder list. Audible versions of essays from technology's most important leaders selected by the founder community. Leaked from their internal staff blog in 2011, Nokia's chief executive Steven Elop warned the company that they were standing on a burning platform. And was planning radical action to revive the company's fortunes.
Nokia had seen falling profits for the past three quarters and was also passed for worldwide share by Android in that 4 quarter of 2011, read by NFX. Hello there. There's a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by James. Through the smoke and heat, he barely managed to make his way out of the chaos on the platform's edge.
When he looked down over the edge, all he could see were the dark cold for boating Atlantic waters. As the fire approached him, the man had mere seconds to react. Morgan inevitably be consumed by the burning James, or he could plunge thirty meters into the freezing waters. The man was standing upon a burning platform, and he needed to make a choice. He decided to jump.
It was unexpected In ordinary circumstances, the man would never consider plunging into icy waters, but these were not ordinary times. His platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a burning platform caused a radical change in his behavior. We too are standing on a burning platform and we must decide how we're going to change our behavior.
Over the past few months, I've shared with you what I've heard from our shareholders, operators, developers, suppliers, and from you. Today, I'm going to share what I've learned and what I've come to believe. I've learned that we're standing on a burning platform, and we have more than one explosion. We have multiple points of scorching heat that are fueling a blazing fire around us. For example, there is intense heat coming from our competitors Morgan rapidly than we ever expected.
Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem. In 2008, Apple's market share in the $300 plus range was 25%. By 2010, it escalated to 61%. They are enjoying a tremendous growth trajectory with a 78% earnings growth year over year in q420 10. Apple demonstrated that it designed well consumers would buy a high priced phone with a great experience and developers would build applications.
They changed the James, and today, Apple owns the high end range. And then there's Android. In about 2 years, Android created a platform that attracts application developers, service providers, and hardware manufacturers. Android came in at the high end. They're now winning the mid range and quickly they're going downstream to phones under €100. Google has become a gravitational force drawing much of the industry's innovation to its core. Let's not forget about the low end price range.
In 2008, MediaTech supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than 1 third of the phones sold globally, taking share from us in emerging markets. While competitors poured flames on our market share, what happened at Nokia? We fell behind. We missed big trends, and we lost time.
At that time, we thought we were making the right decisions, but with the benefit of hindsight, we now find ourselves years behind. 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. We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough.
We thought MIGO would be a platform for winning high end smartphones. However, at this rate, by the end of 2011, we might have only one Migo product in the market. At mid range, we have symbion. It has proven to be non competitive in leading markets like North America, Additionally, Cymbion is proving to be an increasingly difficult environment in which to develop Pete meet the continuously expanding consumer requirements.
Leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, will get further and further behind, while our competitors advance further and further ahead. At the lower end price range, China OEMs are cranking out a device much faster than as 1 Nokia employee said only partially ingest the time that it takes to polish a PowerPoint presentation.
They are fast, they are cheap, and they're challenging us. And the truly perplexing aspect is that we're not even fighting with the right weapons. We are still too often trying to approach each price range on a device to device basis. The Battle of Devices has now become a war of ecosystems.
Where ecosystems include not only the hardware and software of the device, but developers, applications, e commerce, advertising, search, social applications, location based services, unified communications, and many other things. Our competitors aren't taking our market share with devices, they're taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyze, 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. On Tuesday, Standard And Poor's informed me that they will put our a long term and a 1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody's took last week. Basically, it means that during the next few weeks, they will make an analysis of Nokia and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes?
Because they're concerned about our competitiveness. Consumer preference for Nokia declined worldwide. In the UK, our brand references slipped to 20%, which is 8% lower than last year, That means only one out of five people in the UK prefer Nokia to other brands. It's also down in other markets, which are traditionally are strongholds, Russia, Germany, Indonesia, UAE, and on and on and on. How did we get to this point? Why did we fall behind when the world around us evolved?
This is what I've been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. 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, and we're not collaborating internally. Nokia, our platform is burning.
We're working on a path forward, a path to rebuild our market leadership. When we share the new strategy on February 11th, it will be a huge effort to transform our company. But I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future. The burning platform upon which the man found himself caused the man to shift his behavior and take a bold and brave step into an uncertain future. He was able to tell his story.
Now we have a great opportunity to do the same. Steven. For more audio essays from the people who've built companies like Instacart, Facebook, Trello, HubSpot, and Dropbox, visit the founder list atnfx.com, or subscribe to the NFX podcast at podcast dotnfx.com Omri wherever you get your podcasts. I'm Kristin O'Brien, and this is the founder list.