On 11 February 2011, Nokia's CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance with Microsoft, and announced it would replace Symbian and the MeeGo project with Microsoft's Windows Phone operating system[135][136] except for non-smartphones. Nokia was also to invest into the Series 40 platform and release a single MeeGo product in 2011, which shipped as the Nokia N9.[137]
As part of the restructuring plan, Nokia planned to reduce spending on research and development, instead customising and enhancing the software line for Windows Phone 7.[138] Nokia's "applications and content store" (Ovi) becomes integrated into the Windows Phone Store, and Nokia Maps is at the heart of Microsoft's Bing and AdCenter. Microsoft provides developer tools to Nokia to replace the Qt framework, which is not supported by Windows Phone 7 devices.[139]
Symbian became described by Elop as a "franchise platform" with Nokia planning to sell 150 million Symbian devices after the alliance was set up. MeeGo emphasis was on longer-term exploration, with plans to ship "a MeeGo-related product" later in 2012. Microsoft's search engine, Bing was to become the search engine for all Nokia phones. Nokia also intended to get some level of customisation on WP7.[140]
After this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009.[141] Following the replacement of the Symbian system, Nokia's smartphone sales figures, which had previously increased, collapsed dramatically.[13] From the beginning of 2011 until 2013, Nokia fell from its position as the world's largest smartphone vendor to assume the status of tenth largest.[14]
As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,[142] it was suggested the alliance would make Microsoft's Windows Phone 7 a stronger contender against Android and iOS.[139] Because previously increasing sales of Symbian smartphones began to fall rapidly in the beginning of 2011, Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011.[143] [144] In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.".[145]
Nokia reported "well above 1 million" sales for its Lumia line up to 26 January 2012,[146][147] 2 million sales for the first quarter of 2012,[148] and 4 million for the second quarter of 2012.[149] In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America.[150] For comparison, Nokia sold more than 30 million Symbian devices world-wide still in Q4 2010[151] and the Nokia N8 alone sold almost 4 million in its first quarter of sale. In Q2 2012, 26 million iPhones and 105 million Android phones have been shipped, but only 6.8 million devices with Symbian and 5.4 million with Windows Phone.[152]
While announcing an alliance with Groupon, Elop declared "The competition... is not with other device manufacturers, it's with Google."[153]
European carriers have stated that Nokia Windows phones are not good enough to compete with Apple iPhone or Samsung Galaxy phones, that "they are overpriced for what is not an innovative product" and that "No one comes into the store and asks for a Windows phone".[154]
In June 2012, Nokia chairman Risto Siilasmaa told journalists that Nokia had a back-up plan in the eventuality that Windows Phone failed to be sufficiently successful in the market.[155][156]
Financial difficulties[edit]
Market share of Symbian, Windows Mobile and Windows Phone 7 among US smartphone owners from Q1 2011 to Q2 2012 according to Nielsen Company.
Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 had still a profit of 227 million euros. On September 2011, Nokia has announced it will lose another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.[157]
On 8 February 2012, Nokia Corp. said to cut around 4,000 jobs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component supplier in Asia. It plans to cut 2,300 of the 4,400 jobs in Hungary, 700 out of 1,000 jobs in Mexico, and 1,000 out of 1,700 factory jobs in Finland.[158]
On 14 June 2012, Nokia announced to cut 10,000 jobs globally by the end of 2013[159] and shut production and research sites in Finland, Germany and Canada in line with continuing losses and the stock price falling to its lowest point since 1996. Today, Nokia's market value is below $10 billion.[160]
In total, according to actualized and planned laid-offs Nokia will have laid off 24,500 employees by the end of 2013. Nokia has already laid off 7,000 employees in the first stage: 4,000 staff and transferred also 3,000 to services firm Accenture. Nokia also closed its factory in Cluj, Romania that decreased the workforce by 2,000 employees, and restructured the Location & Commerce business unit that decreased the workforce by 1,200 employees. In February 2012, Nokia unveiled a plan to cut 4,000 more jobs at its plants in Finland, Hungary and Mexico as it moves smartphone assembly work to Asia. The most recent plan is to cut further 10,000 jobs globally by the end of 2013.[161] Nokia had 66,267 personnel in its Devices&Services, NAVTEQ and Corporate Common Functions units combined, this has been calculated by subtracting the personnel of Nokia Siemens Networks from the total personnel of Nokia Group based on the full year report of 2010.[162] Therefore, the personnel would decrease by approximately 36 percent by the end of 2013 when compared to the end of 2010 that best depicts the lay-offs that have resulted from the strategy change in February 2011 and competition in the central mobile phone business units recently.
On 18 June 2012, Moody's downgraded Nokia rating to junk.[163] Nokia CEO admitted on 28 June 2012 that company's inability to foresee rapid changes in mobile phone industry was one of the major reasons for the problems company was facing.[164]
On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales of Nokia phones running on the Windows Phone platform.[165] On 22 August 2012, it was reported that a group of Finnish Nokia investors were considering gathering signatures for the removal of Elop as CEO.[166]
On 29 October 2012, Nokia said its high-end Lumia 820 and 920 phones, which will run on Microsoft's Windows Phone 8 software, will reach first operators and retail outlets in some European markets including France and Britain and later in Russia and Germany as well as other select markets.[167]
On 5 December 2012, Nokia introduced two new smartphones, the Lumia 620 and Lumia 920T. The 620 was released in January 2013.
In January 2013, Nokia reported 6.6 million smartphone sales for Q4 2012 consisting of 2.2 million Symbian and 4.4 million sales of Lumia devices (Windows Phone 7 and 8).[168] In North America, only 700,000 mobile phones have been sold including smartphones.
In May 2013 Nokia released the Asha platform for its low-end borderline smartphone devices. The Verge commented that this may be a recognition on the part of Nokia that they are unable to move Windows Phone into the bottom end of smartphone devices fast enough and may be "hedging their commitment" to the Windows Phone platform.[169]
In December 2012, Nokia announced that it would be selling its headquarters Nokia House for ?170 million.[170] In the same month, Nokia announced its partnership with the world's largest cellular operator China Mobile to offer Nokia's new Windows-based phone, the Lumia 920, as Lumia 920T, an exclusive Chinese variant. The partnership was a bid by Nokia to connect with China Mobile's 700 million-person customer base.[171]
Following the second quarter of 2013, Nokia made an operating loss of ?115m (?98.8m), with revenues falling 24% to ?5.7bn, despite sales figures for the Lumia exceeding those of BlackBerry's handsets during the same period. Over the nine-quarters prior to the second quarter of 2013, Nokia sustained ?4.1 billion worth of operating losses. The company experienced particular problems in both China and the U.S.; in the former, Nokia's handset revenues are the lowest since 2002, while in the U.S., Francisco Jeronimo, analyst for research company IDC, stated: "Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results."[172]
In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high.[173]
Acquisition of mobile phone business by Microsoft[edit]
On 2 September 2013, Microsoft, the producer of the Windows Phone operating system that has powered all of Nokia's recent smartphone products, announced that it would acquire Nokia's mobile device business in a deal worth ?3.79bn, along with another ?1.65bn to license Nokia's portfolio of patents for 10 years; a deal totaling at over ?5.4bn. Steve Ballmer considered the purchase to be a "bold step into the future" for both companies, primarily as a result of its recent collaboration. Following the sale, Nokia will focus on three core business units; it's Here mapping service (which Microsoft will license for four years under the deal), its infrastructure division Nokia Solutions and Networks (NSN), and on developing and licensing its "advanced technologies". Pending regulatory approval, the acquisition is expected to close in early 2014. As part of the deal, a number of Nokia executives will join Microsoft, and Stephen Elop will step down as CEO of Nokia and become the head of Microsoft's devices team; Risto Siilasmaa will replace Elop as interim CEO.[15][16][174][175]
While Microsoft will license the Nokia brand under a 10-year agreement, Nokia will be unable to use its name on smartphones and will be subject to a non-compete clause preventing it from producing any mobile devices under the Nokia name through 31 December 2015. Microsoft will acquire the rights to the Asha and Lumia brands as part of the deal.[176]
In an interview with Helsingin Sanomat, former Nokia executive Anssi Vanjoki commented that the Microsoft deal was "inevitable" due to the "failed strategy" of Stephen Elop.[177]
In October 2013, Nokia predicted a more profitable future for its NSN networks equipment business, which will become the company's main business once its former flagship phones division is sold to Microsoft for $7.4 billion in 2014.[178]
Android - The Normandy Project[edit]
Main article: Nokia Normandy
The Nokia Normandy, showing Nokia's Android UI
A media report revealed in mid-September 2013 that Nokia tested the Android operating system on both its Lumia and Asha hardware. At the time, the future of these projects was unknown.[179] However, a new report on 11 December 2013 showed the Asha-like device, codenamed 'Normandy' for the first time, stating that despite the finalisation of the acquisition, development of the device is continuing.[180] AllThingsD suggested that Microsoft may not actually axe development on the device.[181]
Operations[edit]
In 2011, Nokia had 130,000 employees in 120 countries, sales in more than 150 countries, global annual revenue of over ?38 billion, and operating loss of ?1 billion.[182] It was the world's largest manufacturer of mobile phones in 2011, with global device market share of 23% in the second quarter.[142]
The Nokia Research Center, founded in 1986, is Nokia's industrial research unit consisting of about 500 researchers, engineers and scientists;[183][184] it has sites in seven countries: Finland, China, India, Kenya, Switzerland, the United Kingdom and the United States.[185] Besides its research centers, in 2001 Nokia founded (and owns) INdT – Nokia Institute of Technology, a R&D institute located in Brazil.[186] Nokia operates a total of 7 manufacturing facilities[8] located at Manaus, Brazil; Beijing and Dongguan, China; Komárom, Hungary; Chennai, India; Reynosa, Mexico; and Changwon, South Korea.[81][187] Nokia's industrial design department is headquartered in Soho in London, UK with significant satellite offices in Helsinki, Finland and Calabasas, California in the US.
Nokia is a public limited-liability company listed on the Helsinki, Frankfurt, and New York stock exchanges.[8] Nokia plays a very large role in the economy of Finland.[188][189] It is an important employer in Finland and several small companies have grown into large ones as its partners and subcontractors.[190] In 2009 Nokia contributed 1.6% to Finland's GDP, and accounted for about 16% of Finland's exports in 2006.[191]
Divisions[edit]
Since 1 July 2010, Nokia comprises three business groups: Mobile Solutions, Mobile Phones and Markets.[192] The three units receive operational support from the Corporate Development Office, led by Kai ?ist?m?, which is also responsible for exploring corporate strategic and future growth opportunities.[192]
On 1 April 2007, Nokia's Networks business group was combined with Siemens's carrier-related operations for fixed and mobile networks to form Nokia Siemens Networks, jointly owned by Nokia and Siemens and consolidated by Nokia.[193] Nokia bought the 50% share and took full control of the group on 3 July 2013.[194]
Mobile Solutions[edit]
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This article is outdated. Please update this article to reflect recent events or newly available information. (January 2014)
The Nokia N900, a Maemo 5 Linux based mobile Internet device and touchscreen smartphone from Nokia's Nseries portfolio.
Mobile Solutions is responsible for Nokia's portfolio of smartphones and mobile computers, including the more expensive multimedia and enterprise-class devices. The team is also responsible for a suite of internet services (formerly under the Ovi brand), with a strong focus on maps and navigation, music, messaging and media.[192] This unit is led by Anssi Vanjoki, along with Tero Ojanper? (for Services) and Alberto Torres (for MeeGo Computers).[192]
Mobile Phones[edit]
The Nokia Lumia 920 using inductive charging
See also: Category:Nokia mobile phones
Mobile Phones is responsible for Nokia's portfolio of affordable mobile phones, as well as a range of services that people can access with them, headed by Mary T. McDowell.[192] This unit provides the general public with mobile voice and data products across a range of devices, including high-volume, consumer oriented mobile phones. The devices are based on GSM/EDGE, 3G/W-CDMA, HSDPA and CDMA cellular technologies. |