Nokia-Microsoft Alliance: Joining Forces in the Smartphone Wars

Nokia-Microsoft Alliance: Joining Forces in the Smartphone Wars
Case Code: BSTR399
Case Length: 14 Pages
Period: 2010-2011
Pub Date: 2012
Teaching Note: Not Available
Price: Rs.500
Organization: Nokia Corporation, Microsoft Corporation
Industry: Smartphone, Information Technology
Countries: Global
Themes: Joint Developments, Strategic Alliances, Competition
Nokia-Microsoft Alliance: Joining Forces in the Smartphone Wars
Abstract Case Intro 1 Case Intro 2 Excerpts


Problems at Nokia

Nokia, considered to be the pioneer in smartphones and a global leader in the mobile phones market, started to face severe challenges to its dominance in the smartphone market in 2007. The problems came mainly in the form of competition from the new mobile operating systems that entered the market like iOS and Android. Nokia had started the smartphone business and had been the leader since the release of its smartphone OS Symbian in 1997. But the release of Apple's revolutionary mobile OS, iOS for mobile phones in 2007 led to a decline in the sales of Nokia...

Shake up at Nokia

Nokia had another mobile OS called Maemo for its high-end smartphones. But in February 2010, it announced that Maemo would be merged with another mobile OS called Moblin to create a new mobile OS called MeeGo. Moblin was another mobile OS developed by Intel Corporation (Intel) to be used in smartphones. The MeeGo OS was still under development with the first phone running on it due to be released into the market only by the end of 2011. Nokia was running out of time as the rival mobile OSs like iOS and Android were growing stronger...

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"...

Looking Ahead

As PRIL drew inspiration from Walmart, it offered consumers discounts on a continuing basis. However, the store formats of PRIL were designed to suit the tastes and preferences of Indian consumers. For instance, the Big Bazaar store formats were designed in such a way to make them appear crowded because Indians liked shopping in places where there were crowds. On the other hand, Walmart stores had wider aisles which made the stores look big...


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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