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12 February 2011

Key Points in the Nokia Microsoft Strategic Alliance

• Nokia will adopt Windows Phone as its primary smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.
• Nokia will help drive and define the future of Windows Phone. Nokia will contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.
• Nokia and Microsoft will closely collaborate on development, joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.
• Bing will power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter will provide search advertising services on Nokia’s line of devices and services.
• Nokia Maps will be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience.
• Nokia’s extensive operator billing agreements will make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.
• Microsoft development tools will be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.
• Microsoft will continue to invest in the development of Windows Phone and cloud services so customers can do more with their phone, across their work and personal lives.
• Nokia’s content and application store will be integrated with Microsoft Marketplace for a more compelling consumer experience.

Today We Wake to a New Nokia

When a company "leaks" an internal memo that describes its current position as like being stuck on a burning oil platform, you kinda know big changes are about to be announced. In the moments following the leaked memo, Nokia and Microsoft (yes, Microsoft!) held a join press conference to announce a strategic alliance between the two companies that will be worked out in the coming months.

It seems that the leaked memo was to prepare the hearts of the Nokia faithful of drastic changes to the company but few would have expected this. Nokia has long been a leader in the mobile phone wars with regard to their hardware development which has often produced superior phones. However, its been the lack of development in the software or apps over the last few years that has seen relatively novice players Android and Apple gain a growing market share in what used to be the incumbent's bread and butter. 

Microsoft has also struggled in the past few years with carving their share of the growing market for mobile devices and only recently announced a "game changer" with the WindowsPhone7 (WP7) mobile operating system which was enough to make the industry stop and take notice. Following this, a Microsoft executive was chosen as the new CEO for Nokia and the conversations that many felt were inevitable has brought the company to a very big change in direction. Symbian, which has been the heart of Nokia from the beginning has now been sidelined and the future of Nokia seems to be with Microsoft. Here is the announcement of Nokia and Microsoft entering into a strategic alliance.

Market reaction
On the day of the Microsoft and Nokia announcement, the sharemarket reacted by selling off Nokia shares causing a 14% drop in the value in one day. Microsoft hardly moved, only dropping 0.91%, possibly indicating that the alliance is better for Microsoft than for Nokia. Interestingly, Stephen Elop still holds an estimated $US7 million worth of MSFT shares

Nokia share price dips following announcement

Why we are not panicking...
This has been a big change for Nokia and the immediate gut reaction on the net is that Nokia has sold out to Microsoft. However, as many bloggers watching Nokia may have noticed, these recent events followed a prolonged period of silence from the new CEO as he worked to get an understanding of where Nokia is. It is after this careful fact-finding mission that Stephen Elop has concluded that Nokia's future is with Microsoft. 

Perhaps the decision is not based on his former ties with Microsoft but the conclusion reached after speaking to developers, engineers, marketing, middle management and consumers. Consider also that he would have predicted the backlash and cynicism that would eventuate if he decided to steer his new ship towards his previous company. Would it be worth the criticism and perceived bias? Apparently, the conclusion is yes.

U..S..A  U..S..A
Also Nokia watchers will know that the US media has never really warmed to the mobile giant and even now, Nokia phones are very rare offerings amongst US mobile networks. Maybe its the number of CEOs speaking in a non-US accent that has held down the news mentions. Microsoft, however, is one of the greatest icons in The States. I believe this alliance will also benefit Nokia in the US market (and of course, entry into the US mass media) as much as it is about Microsoft making billions of dollars on Nokia. The ocean provides endless possibilities. 

Mentions of "Nokia" spikes on Google News following announcement

09 February 2011

Nokia CEO memo likens Nokia to burning oil rig

Here is the full text of the memo leaked from Nokia sources to the media where Stephen Elop, CEO of Nokia and former Microsoft executive gives his prognosis of his new company.

“There is 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 flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to 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 behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

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 have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion - we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more 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+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are 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, MediaTek 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 one 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 MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to 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, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are 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, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. 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.

On Tuesday, Standard & Poor’s informed 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 are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our 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 have 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. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, 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 behaviour, 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.

04 February 2011

Look here, a Nokia E7!

Is your E72 due for an upgrade? The Nokia E7 is not far away from being launched by Nokia and we have an exclusive preview for you all. Check out the video below that will be sure to blow your expectations of what a phone can do. Featuring the same cpu and OS that made the Nokia N8 a big hit, it also packs a clear black display and hardware made for business. Tell us what you think