Nokia-Microsoft Alliance: Joining Forces in the Smartphone Wars

 
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Case Details:

Case Code : BSTR399
Case Length : 14 Pages
Period : 2010-2011
Pub Date : 2012
Teaching Note :Not Available
Organization : Nokia Corporation; Microsoft Corporation
Industry : Smartphone; Information Technology
Countries : Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

The Alliance

In February 2011, Nokia announced an alliance with Microsoft. Under the agreement reached with Microsoft, Symbian would be replaced by Windows Phone as the primary OS in all the high-end smartphones made by Nokia. Nokia announced that it would also sideline its new MeeGo OS in favor of Windows Phone. It announced the partnership to stop the decline in its share of the global smartphone market. Commenting on the scope of the partnership with Microsoft, Elop said, "Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It's now a three-horse race"...

Will it Work?

There were mixed reactions to the deal between Nokia and Microsoft. Google responded to the deal saying that there was no space for a third mobile platform to grow. Google also expressed doubts on the alliance between the two companies. Commenting on the deal, Vic Gundrota, Senior Vice-President of social business at Google said, "Two turkeys don't make an Eagle." The biggest criticism regarding the deal was over the choice of Microsoft's Windows Phone against some other alternatives available in the market. Some analysts said Google's Android would have been a better choice for Nokia...

Looking Ahead

Nokia reserved the right to use any other OS of its choice in devices in the future. Elop said, "We reserve the right to introduce tablets using other platforms, including ones we may be working on internally." Some technology experts said this crucial clause in Nokia's deal with Microsoft would enable Nokia to continue working on its other mobile OS like MeeGo. They opined that Nokia could always switch to Android or its own MeeGo in case Windows Phone failed in the market. But some analysts said that Nokia would face problems in juggling with nearly three platforms at the same time. Magnus Rehle, managing director of Greenwich Consulting , said, "Three platforms is a lot to work with. I'm not sure there is room for so many platforms"...

Exhibits

Exhibit I: Image and Specifications of Nokia's Lumia 800
Exhibit II: Competing Mobile Platforms to Symbian
Exhibit III: Nokia's Market Share in 2010
Exhibit IV: Market Share of Mobile OS for 2011 Q3 (in percentages)
Exhibit V: Global Share of Smart Phone Shipments for 2011 Q3 (in percentages)
Exhibit VI: Consolidated Income Statement of Nokia from 2006 to 2010
Exhibit VII: Chart of Nokia's Share Price from November 2007 to September 2011
Exhibit VIII: Key Quotes from ELOP'S Memo to Nokia's Employees

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