This memo is spot on, except for the optimism at the end. I think Nokia is toast.
At the end of the day, you can't create a best-of-breed product out of nowhere. You need the core competencies to be already present in your company's DNA.
Palm came back out of nowhere and created in the Pre a phone with great usability fundamentals, and an incredibly innovative contact/data management layer. But that didn't come from nowhere.... those are exactly the things that the Palm Pilot excelled at.
Apple created a phone with incredible industrial design that pushed the boundaries of what was possible in a category of device. These things, also, have lots of precent at Apple, in the Macintosh, the iPod, OS X, and the iTunes music store.
Google, in Android, built a phone OS that has incredible integration with networked apps, and is built on a well run open source project. But before they started, they already had the best network app development teams in the world, and many world class open source developers and evangelists on staff.
What does Nokia have? I'm honestly not that familiar with their history, but they appear to have had (at one time) world class supply chain management and global distribution. And solidly built hardware? Is that it?
Honestly, I think Nokia had the right DNA to make a huge contribution to cell phones when they were a brand new, untested product with limited global reach. But now that those issues have been nailed, the distribution channels are in place, and everyone's phones, from Motorola's Android phones to LG's crappy feature phones are "good enough" for the people who buy them.
My guesses for the big future developments in phones are the web maturing as a development platform (Google seems positioned to ride that wave), powerful new software APIs (social, location, augmented reality, AI, etc), new media distribution models (Netflix, iTunes, Shopify, etc), and of course design-driven expansion of the user experience (Flipboard, FaceTime, Google Maps, etc).
I don't see product teams at Nokia who appear to be executing in any of these areas at the level that would be necessary to dominate in them. And they would need to dominate in two or three to stop hemorrhaging customers.
I think they're toast.