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In this paper, we have provided a critique for Nokia 2011 corporate strategy. In order to complete our strategy critique we have covered the following; the history of Nokia, its market share, the ...

In this paper, we have provided a critique for Nokia 2011 corporate strategy. In order to complete our strategy critique we have covered the following; the history of Nokia, its market share, the ecosystem and operating systems. Then stated the current strategy pillars, vision and mission, nokia and microsoft alliance and then we provided a brief about Nokia new CEO, Stephen Elop.
Then we gone through our strategy critique for the current strategy, microsoft alliance and we then concluded with our alternative suggested strategy.

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Nokia Corporate Strategy Critique Document Transcript

  • 1. Corporate Strategy Analysis Nokia Strategy Critique December 2011Prepared By:Al-Motaz Bellah Al-AgamawiBasma El BannaMohamed AlyRasha TantawySubmitted as part of the Nile University, Corporate Strategy and InternationalCompetitiveness course project.For More Details Contact:Al-Motaz Bellah Al-Agamawi, August 2010.Email: magamawi@gmail.com, Skype ID: magamawi, Linkedin Profile:http://www.linkedin.com/in/motazalagamawi, SlideShare Profile: http://www.slideshare.net/magamawi
  • 2. BSAD603- Corporate Strategy Nokia Strategy Analysis ProjectTable of Contents1. Nokia Overview ...................................................................................................................... 1 1.1 History of Nokia ............................................................................................................... 1 1.2 Nokia Market share .......................................................................................................... 1 1.3 Nokia the Ecosystem and operating system ..................................................................... 2 1.4 Operating System ............................................................................................................. 2 1.5 Online Store...................................................................................................................... 4 1.6 Nokia Stocks .................................................................................................................... 52. Nokia Current Strategy ........................................................................................................... 5 2.1 Vision and Mission........................................................................................................... 6 2.2 New Strategy .................................................................................................................... 6 2.2.1 Key Elements of the Strategy ....................................................................................... 6 2.2.2 Strategy Main Initiatives .............................................................................................. 6 2.2.2.1 Regaining leadership in the Smartphone space ........................................................ 6 2.2.2.2 Connecting the next billion ....................................................................................... 6 2.2.2.3 Driving change .......................................................................................................... 7 2.3 Nokia and Microsoft Alliance .......................................................................................... 7 2.4 NOKIA’S New CEO ........................................................................................................ 73. Nokia strategy Criticism ......................................................................................................... 8 3.1 SWOT Analysis................................................................................................................ 8 3.2 The CEO Message ............................................................................................................ 9 3.3 Nokia Primary Focus on Smartphone more than featured phones ................................... 9Nile University- Course Project 2011 Page |i
  • 3. BSAD603- Corporate Strategy Nokia Strategy Analysis Project 3.4 Nokia and Microsoft Alliance ........................................................................................ 10 3.5 Other Implications of the Strategy ................................................................................. 114. Alternative ways to handle Challenges ................................................................................. 11 4.1 Leadership, Believe and Passion .................................................................................... 11 4.2 Turning Weakness to Strength ....................................................................................... 12 4.3 Smartphone Vs Featured Phones.................................................................................... 12 4.4 The Ecosystem ............................................................................................................... 13Works Cited .................................................................................................................................. 13Nile University- Course Project 2011 P a g e | ii
  • 4. BSAD603- Corporate Strategy Nokia Strategy Analysis Project1. NOKIA OVERVIEW 1.1 HISTORY OF NOKIA Nokia has evolved over the past 150 years from a paper mill in South Western Finland to a global telecommunications leader. Serving and connecting over 1.3billion people. Through this time, Moved from rubber boat manufacturing to generating electricity and making TVs. Nokia Research Center was founded in 1986, growing to reach a total of 500 researchers engineers, and scientists in 16 different countries, representing 27% of the group’s total workforce by 2010. In 2011 Fortune Global 500 listed Nokia as the143th world’s largest company (measured in Revenue) and ranked 8th in the same year in Fortunes World’s Most Admired Companies. That comes as no surprise, knowing that the Nokia brand is values at 25 billion and is listed as the 14th moat valuable global brand. Nokia is Finland’s largest company accounting for around a third of the market capitalization of the Helsinki Stock Exchange as of 2007. It plays a large role in the finnish economy, as an important employer and contributing 1.6% to Finland’s GDP and accounting for 16% of Finland’s exports in 2006. Nokia has helped many small companies grow through partenerships and subcontracting. Nokia entered the mobile race with its evolution in the 70s and 80s and has been leading the mobile handset industry since then. Nokia kept leading in technology innovation, distribution networks and customer perception until 2007. Nokia was starting to loose market share in the smart phone segment and was being considered follower after decades of being a leader. 1.2 NOKIA MARKET SHARE Nokia has raked sales of 88.5 million in Q2 2011 and remains the number one company in the world wide phone market when including the feature phone platform S40 compared with 16.7 million smart phones running symbian. In July 2010, Nokia reported a drop in profits by 40%, turning into an operating loss of EUR 487 million in Q2 201, but still making a profit of 227 million Euros. In the global Smartphone rivalry, Nokia held the 3rd place, trailing behind Samsung and Apple. In September 2011, Nokia announced laying off another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania (wikipediaNokia). As of the first half of 2010, smartphone shipments only made up 20% of total handset shipments. despite the large increase in smartphone sales in the last few years. According to Gartner (Report Nov.2011) total Smartphone sales doubled in one year representing 19.3% of total mobile phone sales. Compared to the year before ,Smartphone sales increased by 72.1%percent while all mobile phones only increased by 31.8 percent. According to an Olswang report ( 2011), the rate of Smartphone adoption is accelerating: as of March 2011 22% of UK consumers had a Smartphone,Nile University- Course Project 2011 Page |1
  • 5. BSAD603- Corporate Strategy Nokia Strategy Analysis Project with this percentage rising to 31% amongst 24- to 35-year-olds. In March 2011, Berg Insight reported data that showed global Smartphone shipments increased 74% from 2009 to 2010 (WikipediaSmartphones). In profit share worldwide Smartphone now far exceed the share of non-Smartphone. According to a November 2011 research note from Canaccord Genuity, Apple Inc. holds 52% of the total mobile industrys operating profits, while only holding 4.2% of the global handset market. HTC and RIM similarly only make Smartphone and their worldwide profit shares are at 9% and 7%, respectively (WikipediaSmartphones). Even in Nokia biggest market, Finland, its market share there has tumbled from 76% last year to only 31% in the third quarter of 2011. Figures recently released by IDC reveal that even the loyal Finns are now flocking to other platforms and manufacturers, cutting the company’s share by more than a half. Samsung showed growth from a virtually non-present 3% share to just behind Nokia. Apple showed a small yet steady growth capturing a 16% share. Huawei emerged from literally zero presence in Finland, to a respectable 11%. This shouldn’t be seen as a big hit to Nokia sales - after all, Finland is a small nation with a population of just 5 million. It’s more about the perception of Nokia’s products which has always been great at home where the overwhelming majority of users were proud to carry a phone made by the Finnish manufacturer (Taloussanomat, 2011). 1.3 NOKIA THE ECOSYSTEM AND OPERATING SYSTEM The entrance of Smartphone to the mobile handset industry triggered a change. Once, it was all about producing high quality, competitive and well distributed handsets, but not anymore. Today consumers are interested in ecosystems which have become one of the main issues related to consumer purchase decision. Ecosystem is the convergance of available applications, features, capabilities, music and the ease of use for the online store. 1.4 OPERATING SYSTEM The Google Android operating system rose from 4% of new deployments in 2009 to 33% at the beginning of 2011, sharing the top position with the long dominating Symbian OS. The smaller rivals include US popular Blackberry OS, iOS, Samsungs recently introduced Bada, HPs heir of Palm webOS and the Microsoft Windows Phone OS which is now supported by Nokia. In Q4 ofNile University- Course Project 2011 Page |2
  • 6. BSAD603- Corporate Strategy Nokia Strategy Analysis Project 2010, Android surpassed Symbian as the most common operating system in smart phones, with 32.9 million units sold versus 31.0 million. Android-equipped phones sold seven times more than in the prior year. According to Canalys, Googles Android operating system, which is offered to phone makers for free, has raced to the top past operating systems by Nokia, Apple, RIM, and Microsoft. In Q1 2011 Googles Android market share was 35% compared to a 10%the previous year. Nokias Symbian, on the other hand, dropped to 26% from 46 % over the same time period (wikipediaMobileOs). As of today Nokia is supporting, three operating system. The three operating system includes Symbian, MeeGo and Microsoft Windows 7. The history and rational behind each of them can be summarized as follows: - Symbian: The Symbian platform was created by merging and integrating software assets contributed by Nokia, NTT DoCoMo, Sony Ericsson and Symbian Ltd., including Symbian OS assets at its core, the S60 platform, and parts of the UIQ and MOAP(S) user interfaces. In December 2008, Nokia bought Symbian Ltd., the company behind Symbian OS; consequently, Nokia became the major contributor to Symbians code, since it then possessed the development resources for both the Symbian OS core and the user interface. Since then Nokia has been maintaining its own code repository for the platform development, regularly releasing its development to the public repository. Symbian was intended to be developed by a community led by the Symbian Foundation, which was first announced in June 2008 and which officially launched in April 2009. In November 2010, the Symbian Foundation announced that due to a lack of support from funding members, it would transition to a licensing-only organisation; Nokia announced it would take over the stewardship of the Symbian platform. Symbian Foundation will remain the trademark holder and licensing entity and will only have non- executive directors involved (NokiaSymbian) (SymbianFoundation) (wikipdiaSymbian). - MeeGo: It was first announced at Mobile World Congress in February 2010 by Intel and Nokia in a joint press conference. The stated aim is to merge the efforts of Intels Moblin and Nokias Maemo former projects into one new common project. According to Intel, MeeGo was developed because Microsoft did not offer comprehensive Windows 7 support for the Atom processor. Aminocom and Novell also play a large part in the MeeGo effort, working with the Linux Foundation on their build infrastructure and official MeeGo products. Amino was responsible for extending MeeGo to TV devices, while Novell is increasingly introducing technology that was originally developed for openSUSE. In November 2010, AMD also joined the alliance of companies that are actively developing MeeGo. MeeGo is used in Nokia N9, N900 and N950 (MeeGo) (wikipedaiMeeGo). - Microsoft Mobile OS: On February 15th, 2010, Microsoft unveiled its next-generation mobile OS, Windows Phone. The new mobile OS includes a completely new over-hauled UI inspired by Microsofts "Metro Design Language". It includes full integration of Microsoft services such as Windows Live, Zune, Xbox Live and Bing, but also integrates with many other non-Microsoft services such as Facebook and Google accounts. The new software platform has received some positive reception from the technology press. On February 11, 2011, Nokia announced a partnership with Microsoft which would see it adopt Windows Phone 7 for Smartphone, reducing the number of devices running Symbian over the coming two years. Is this really needed???Nile University- Course Project 2011 Page |3
  • 7. BSAD603- Corporate Strategy Nokia Strategy Analysis Project To overcome the problem of having more than one operating system and even having more than one version of the same operating system supported by Nokia devices (each series of the Nokia mobile phones for example is supporting different version of Symbian OS), Nokia is supporting Qt platform. - Qt: Qt is a cross-platform application and UI framework. It includes a cross-platform class library, integrated development tools and a cross-platform IDE. By using Qt, developers can write web- enabled applications once and deploy them across many desktop and embedded operating systems without rewriting the source code. Nokia encourage its developer partners to use Qt to solve the problem of compatibility between different Nokia devices supporting different OS (specially Sybian and MeeGo). The main problem that Qt do not support old versions of Symbian OS, thus developers loose a big portion of the market of Nokia devices supporting old Symbian versions. Also Qt is not supporting the Windows 7 platform which is now adapted by Nokia Smartphone devices (NokiaQt). 1.5 ONLINE STORE The introduction of Apple’s App store for the iPod Touch and iPhone in 2008 revolutionized single platform third party applications hosted by the manufacturer, which led other manufacturers to quickly adopt this trend and launch similar application stores for their platforms. In 2008, Google launched the Android market following it, in 2009, RIM launched the Blackberry App world, Nokia launched its Ovi store and Microsoft launched an application store for Windows Mobile called Windows Marketplace for Mobile and then a separate Windows Phone Marketplace for Windows Phone in 2010. The relatively high revenue of U.S. $1782 million in 2010 for Apples App Store compared to competitors stores can be attributed to having the largest number of apps available and the highest download volume of any mobile app store in 2010. In 2010, the total sales of Apple App Store was $1782 million, BlackBerry App Store $165 million, Nokia Ovi Store $105 millions and Google Android App Store $102 millions. Nokia online services can be summarized as follows: - Nokia was the first adopter of the TOP-level Domain (TLD) customized for mobile webs specifically accordingly was a major factor in the launch of the “.mobi” domain name extension in 2006. Since then, it launched the Nokia.mobi, the largest mobile portal with a monthly visit rate of 100 million. Following that, was the launch of the mobile Ad service. - In 2009, was the launch of the Ovi application store. The services offered included the application store, Nokia Maps, Ovi Mail, Gaming Platform (N-Gage), Ovi share, Ovi Files, Contacts and Calendars. Finally launching its Online Magazine in 2010. - Located at my.nokia.com, Nokia offers free personalized services to its subscribers where registered Nokia users can Tip & trick alerts through web, email and also mobile text message. It offers as well a Backup Service for mobile contacts, calendar logs and various other files.Nile University- Course Project 2011 Page |4
  • 8. BSAD603- Corporate Strategy Nokia Strategy Analysis Project - In 2007, was Nokia’s “Comes With Music” initiative, a partnership with the universal Music Group International, Sony BMG, Warner Music Group and EMI with hundred other music aggregators and independent labels to bundle 12, 18 or 24 months worth of unlimited free music downloads with the purchase of Nokia Music Edition phones. - In 2008, Nokia launched the “Nokia Email Service”, a new push email service. A centralized hosted service acting as a proxy between the user’s email server and the Nokia Messaging client. 1.6 NOKIA STOCKS In April 2000, Nokia reached the highest stock prices of 56 $, since then, Nokia stock price is falling till it reached about 4$ as of December 2011. The first dramatic fall was in July 2004 reaching 11.6$, and then started rising again reaching 39$ in October 2007. Then, followed by a continues drop until reaching 9$ in Feb 2009 and from that time it happened once in March 2010 to rise reaching 15% and then another continuous drop reaching 5$ in July 2011. It is very clear that Nokia stock price is facing serious problems especially during the past 6 years (YahooFinance, 2011). Nokia Stock Price Graph from 1996 to 2011 (YahooFinance, 2011).2. NOKIA CURRENT STRATEGYIn this section, we will state Nokia’s 2011 strategy. This strategy illustrates how Nokia believes that it is thebest way to handle the challenges it faces. In this section, we will state the strategy as exactly mentioned onNokia Corporate website (NokiaStrategy2011, 2011).Nile University- Course Project 2011 Page |5
  • 9. BSAD603- Corporate Strategy Nokia Strategy Analysis Project 2.1 VISION AND MISSION Nokia’s mission is Connecting People. Nokia goal is to build great mobile products that enable billions of people worldwide to enjoy more of what life has to offer. Nokia’s challenge is to achieve this in an increasingly dynamic and competitive environment. Nokia states that “Ideas. Energy. Excitement. Opportunities. In todays mobile world, it feels like anything is possible - and thats what inspires us to get out of bed every day.” 2.2 NEW STRATEGY 2.2.1 KEY ELEMENTS OF THE STRATEGY - Build a new winning mobile ecosystem in partnership with Microsoft - Bring the next billion online in developing growth markets - Invest in next-generation disruptive technologies - Increase our focus on speed, results and accountability 2.2.2 STRATEGY MAIN INITIATIVES 2.2.2.1 REGAINING LEADERSHIP IN THE SMARTPHONE SPACE Nokia has formed a strategic partnership with Microsoft that will, Nokia hopes, to see a regain in the lost ground in the Smartphone market. Together, we intend to build a global ecosystem that surpasses anything currently in existence. The Nokia-Microsoft ecosystem will deliver differentiated and innovative products with unrivalled scale in terms of product breadth, geographical reach and brand identity. 2.2.2.2 CONNECTING THE NEXT BILLION In feature phones, Nokia’s strategy is to leverage its innovation and strength in growth markets to connect even more people to their first internet and application experience. By providing compelling, affordable and localized mobile experiences, particularly to emerging markets, Nokia’s ambition is to bring the next billion online. Nokia will continue the renewal of Series 40 platform in QWERTY, touch & type, dual SIM, Nokia services, including Maps, Browser, Life Tools, Web apps and Money. Nokia is also investing in the future; developing assets (platform, software, apps), which will bring a modern mobile experience to consumers and enable business opportunities for developers.Nile University- Course Project 2011 Page |6
  • 10. BSAD603- Corporate Strategy Nokia Strategy Analysis Project 2.2.2.3 DRIVING CHANGE Nokia’s new strategy is supported by changes in Nokia’s leadership, operational structure and approach. The renewed governance will expedite decision-making and improve time-to-market of products and innovations, placing a heavy focus on results, speed and accountability. 2.3 NOKIA AND MICROSOFT ALLIANCE The Nokia-Microsoft partnership brings together two global businesses with highly complementary sets of assets and competencies. Nokia is adopting Windows Phone as its primary Smartphone platform. Working with Microsoft, will help to drive and define the future of the platform by leveraging Nokia expertise in hardware optimization, software customization, and language support. Nokia and Microsoft are also combining service assets to drive innovation. Nokia Maps, for example, will soon be at the heart of key Microsoft assets such as Bing and Ad Center, and Nokia’s application and content store will be integrated into Microsoft Marketplace. Similarly, Microsoft will provide developer tools, making it easier for application developers to leverage Nokia’s global scale. While Nokia transitions to the Windows Phone platform, Symbian will continue to offer considerable value to Nokia, its customers, developers and consumers. 200 million people use Symbian globally, and Nokia will modernize the platform through investments in completely new devices with new features, hardware improvements and significantly increased graphics speed, as well as software improvements. To make sure Nokia gets ahead of the game on industry innovation evolution, Nokia MeeGo efforts will transition it into an ongoing long-term market exploration of the next generation of devices, platforms and user experiences. 2.4 NOKIA’S NEW CEO Stephen Elop joined Nokia as President and Chief Executive Officer as of September 21, 2010. Most recently, Stephen served as president of Microsofts Business Division and was a member of Microsofts senior leadership team and responsible for the companys overall strategy. Previously Stephen was Chief Operating Officer of Juniper Networks, a leading provider of high-performance network infrastructure. Prior to Juniper, Stephen served as president of worldwide field operations of Adobe Systems Inc. He joined Adobe following the 2005 acquisition of Macromedia Inc., where he was president and CEO (NokiaLeadership, 2011) (NokiaConversations, 2011).Nile University- Course Project 2011 Page |7
  • 11. BSAD603- Corporate Strategy Nokia Strategy Analysis Project3. NOKIA STRATEGY CRITICISM 3.1 SWOT ANALYSIS Strengths Weaknesses  World’s largest cellular phone company  Concentration of the service centers  Expansion over 50 countries and a in the developed countries as market share of 31% compared to the developing ones.  Ongoing Research and development  The new inductions are mostly for sector high technology phones rather than  Cellular phones have a great price range promotions regarding low price making it affordable by any social class economical phones. and adding up to its popularity  Introducing phones, which aren’t  High resale prices of the Nokia Phones user friendly, so couldn’t attain the in comparison to other mobiles as a expected success. result of its renown reliability  Country codes for high profile  Owns a subsidiary (Navteq) serving its phones are difficult to decode. digital mapping and navigation Opportunities Threats  Nokia haves a high competitive  Competitors like Samsung, Sony advantage over its competitors in terms Ericsson and Motorola are introducing of brand recognition, largest market strategies, which will increase their share and penetration. promotion commendably.  Has the peak time to enter emerging  Nokia doesn’t reduce the prices of older markets like India. models when introducing a new model  Promotions are likely to increase market opposing the trend adopted by the other share along with sales companies who reduce prices.  Low price + little innovation, the  Cellular Companies are working on the company will improve its market emerging demand of wireless local loop position (WLL) and Nokia sales can likely be  Alliance with Microsoft for replacing dropped as CDMA phones production is windows 7 for mobile windows less.Nile University- Course Project 2011 Page |8
  • 12. BSAD603- Corporate Strategy Nokia Strategy Analysis Project 3.2 THE CEO MESSAGE Stephen Elop was wrong to call Nokias platform as;  "standing on a burning platform"  "...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."  "...Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements..."  "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 havent been delivering innovation fast enough. Were not collaborating internally. Nokia, our platform is burning." In a 1,300-word memo to the companys employees in February 2011 (Ziegler, 2011). Elop’s speech was focusing only on the weaknesses of Nokia and he did not mention the strengths. He attacked Symbian and MeeGo the two main Operating Systems of Nokia. Its this attitude that has sent the worlds largest handset maker on a path to ruin. The former Microsoft executive and six-month Nokia CEO expresses a misguided perspective about the company he runs. Nokias house isnt on fire. Nokia is facing problems that may be solved if they focused on the right appropriate strategy. When it comes to numbers we can see threats but Nokia is still the Mobile devices worldwide market leader, despite the huge market share lose they face. What Nokia needs is leadership. Selling the companys crown jewels to Microsoft shows no leadership at all. Elope chose the easy path, of passing off responsibility to Microsoft. Nokia has a perception problem. The company is perceived as having fallen far behind Apple and Google, when the giant has merely stumbled. In getting back up to run, the giant has longer stride than the tiny upstarts; running, Nokia can catch up fast. Nokia needs discipline more than it needs Windows Mobile. Nokia needs a CEO who praises the companys accomplishments while acknowledging change is necessary and who encourages employees to do better -- to fight harder to hold onto their market lead and to extend it. How can anyone outside Nokia believe in its future when the CEO shows by his very words and actions that he does not? If Nokias perception problems were bad before, there are thousands of times worse, in just a week after the “burning platform” memo. 3.3 NOKIA PRIMARY FOCUS ON SMARTPHONE MORE THAN FEATURED PHONES Nokia’s bleeding market share, but on rising shipments, and its share and sales still hugely eclipse competitors. During 2010, Nokia sold more handsets globally (461 million) than the next three manufacturers combined, according to Gartner. Last year, Nokia sold 30.6 million more smart phones than 2009 for a total of 111.6 million -- or nearly two-and-a-half times overhyped iPhone sales (46.6 million).Nile University- Course Project 2011 Page |9
  • 13. BSAD603- Corporate Strategy Nokia Strategy Analysis Project There is no denying that Android handsets and iPhone have made huge market strides in just a couple of years. However, for all the hype, Nokia stands head and torso above these and other competitors, based on sales and market share. There, Elope is focusing on the wrong competitor. Samsung poses the greatest immediate threat, with sales about 60 percent of Nokias (281 million units) in 2010, according to Gartner. Apples sales were a mere 10 percent of Nokias, but they were bigger for all the hype. Smartphone accounted for 19.2 percent of global handsets last year, according to Gartner -- or a little more than 300 million out of 1.6 billion handsets sold. Sure smartphone sales increased 72.1 percent year over year but the majority of sales -- 52.3 percent -- went to two markets, North America and Western Europe. By those, reckoning smartphone sales to the rest of the planet amounted to about 140 million units, or less than 10 percent of all handset sales. Most people are still buying dumb phones, feature phones, and live in markets like India, where Nokia is the overwhelming market share leader. 3.4 NOKIA AND MICROSOFT ALLIANCE The deal is akin to IBM choosing to license rather than to buy MS-DOS from Microsoft in 1980-81. The arrangement allowed Microsoft to license MS-DOS to IBM competitors. Therefore, Microsoft and not IBM came to dominate the PC -- through software licensing and not IBM personal computing hardware. Nokias deal with Microsoft is non-exclusive. Microsoft can take what it learns from the Nokia deal and improve Windows Phone for licensing to any handset manufacturers. Meanwhile, Nokia will lose its developers, who will develop for Windows Phone and/or other mobile operating systems and cloud services. To those people saying Nokia feels more like only a hardware vendor today, how much more will it be when Microsoft controls the software, services and developers? The biggest benefits from all the research and development will go to Microsoft (Wilcox, 2011). As the mobile devices did not change neither the OS nor the Ovi store. In fact, since 2010 4Q, press releases has shown great interest and has been impressed by the newly introduced Nokia phones -i.e. E7 and X7- , the latest Symbian version –commercial name: Anna- and the continued remarkable growth for the Ovi store. The change between 4Q and 2Q is February 11, when Stephen Elop announced his Microsoft strategy - and ever since, all channels reported collapsing Nokia’s sales from European main markets i.e. UK, France, and Germany ..etc. to Asias giant markets as China, India.. etc. The only thing that changed is the announcement of February 11. It is Stephen Elop and only Stephen Elop that killed Nokia’s success, smartphone growth, average sales jump, and massive leap in profits, which Symbian based Nokia smart phones has been generating for the past period. The CEO killed the success of hit products - destroyed the cash cow - killed the goose that lays the golden eggs - snatched defeat from the jaws of victory (Ahonen, 2011). Maybe the Microsoft strategy turns out to be the right strategy? But to be so, it would have to OUTPERFORM what Symbian S^3 was doing in Q4 of 2010, before Stephen Elops ill-timed February surprise killed Symbians come-back. So can the Microsoft strategy generate better unitNile University- Course Project 2011 P a g e | 10
  • 14. BSAD603- Corporate Strategy Nokia Strategy Analysis Project sales than 28.3 million smart phones per quarter (a market share of 29% so by 2012 would be about 46 million smartphone sales per quarter, and by 2013 produce about 58 million smartphone sales per quarter), with better than 155 Euro/200 US dollar Average Sales Price, to produce better than 4.4 Billion Euros (5.7 Billion US dollars) of revenues (plus the growth rate as per above) - and better than 12.5% profitability, where the smartphone unit would generate more than 548 million Euros (712 million US dollars) of profits per quarter (again, doubling to more than 1 Billion Euros of profits per quarter by 2013) (Ahonen, 2011). 3.5 OTHER IMPLICATIONS OF THE STRATEGY - There will be a multiple OS strategy. This means more issues that are problematic for the application developers. If Nokia compared to Apple, on one hand you will find that Apple partners base their applications development once its applicability over iPhone, iPad and even iPod with minimum customizations. On the other hand Nokia’s operating systems varies and even when it comes to Symbian not all versions are similar, backward and forward compatibility is a huge problem to developers. As a result developers won’t benefit from the remarkable customer base of Nokia. Now such problems increased dramatically. - Low-end devices will continue using Symbian due to price considerations for the chipsets and components. - MeeGo will be phased out in Mobile products but application development for the tablets remains. - Depending on Microsoft to build, the ecosystem through Microsoft Mobile marketplace will lead to loosing ecosystem competitive edge. Since all apps on the Microsoft store will be available also to other Nokia competitors as HTC, Samsung and others. - Such announcements about phasing out Symbian within the coming couple of years, will lead that developers will hesitate to develop apps for Symbian and in return will lead that Nokia featured phones ecosystem will be in a bad situation from both quantity and quality of available app. - Licensing core competitive technologies and applications owned by Nokia to Microsoft as Nokia maps, integration of Nokia content and application store in Microsoft marketplace, licensing Nokia multimedia technologies to Microsoft and many others, all this will lead to increasing Windows Mobile competitiveness and in return Nokia will lose competitive advantage as all those will be licensed to other competitors using Windows Mobile operating system.4. ALTERNATIVE WAYS TO HANDLE CHALLENGESIn this section we will showcase our strategy alternatives that we believe that it will sharpen Nokia’scompetitive edge. 4.1 LEADERSHIP, BELIEVE AND PASSION Nokia needs a CEO who praises the companys accomplishments while acknowledging that change is crucial and who encourages/motivates employees to perform better. How can anyone outside Nokia believe in its vision when the CEO speak by his very own words and actions that he does not?Nile University- Course Project 2011 P a g e | 11
  • 15. BSAD603- Corporate Strategy Nokia Strategy Analysis Project What Nokia needs is leadership. Selling the companys crown jewels to Microsoft shows neither leadership nor any strategic visions at all. Elop chose the easy path, of handing off responsibility to Microsoft while compromising Nokia’s 120,000 plus employees 4.2 TURNING WEAKNESS TO STRENGTH Surely, Nokia’s software, services and synchronization need lots of work, they’re struggling behind Apple and Google. But the platform isnt only a software, rather than a combination of hardware, software and services. Nokia hold a strategic platform position, like Apple, by offering all three. Symbian is not considered as a poor operating system, however it lacks complete a makeover. Definitely, the user interface is up to date, however performance issues is there. The core is solid. Nokias software and Ovi services are in desperate need for a complete makeover to modernize user interfaces and reduce operating system fragmentation. Several problems rely with Nokia’s software and services development, and others within the company’s cultural. Working on such problems should be Nokia’s approach. Nokia cannot afford losing its customer base and its developers, especially in marketplaces where its market share should be an advantage rather than a risk. More importantly, Nokia has a perception problem. The company’s perception as struggling behind Apple and Google, Nokia needs to catch up on a rapid pace. Nokia urgently needs discipline more than it needs Windows Mobile. Focusing on Nokia’s main competitive components such as Nokia maps, mobile operating system optimization knowledge, operators billing integration, mobile optimized and high performance internet browser and other technologies. Utilizing and positioning those technologies and applications as distinctive technologies for Nokia devices and platforms will elevate Nokia’s consumers satisfaction and introduce a new user experience, which will add to its unique value proposition. 4.3 SMARTPHONE VS FEATURED PHONES On one side, Nokia has the largest customer base utilizing its various device versions since mid-90s until today. Building on the brand and consumer loyalty, will lead to huge potential. Introducing Smartphones to the market as an affordable features phones. Those are existing Nokia’s customers, which could switch to better handsets. On the other side, bringing the next one billion users. Nokia won the race of mobile industry back in the 90s by introducing a wide range of devices covering different market segments with an ease of use, affordable and competitive approach, simply they succeeded to showcase the mobile device as a commodity. Therefore, Nokia must focus on how to serve the pyramid’s base, introducing its products to different market places, through approaching new low-end segments. Nokia has to consider the following strategy as Chinese products and low priced devices competition has started. Finally Nokia must focus mainly on its strength and main competitive market which is the Featured Phone market with especial focus on developing and emerging economies. Then comes Smartphone segment in which Nokia must compete and try to disrupt by focusing on its core competitiveNile University- Course Project 2011 P a g e | 12
  • 16. BSAD603- Corporate Strategy Nokia Strategy Analysis Project advantage and leveraging disadvantage and not destroying itself from inside for a hype. Then comes the low cost mobile segment. 4.4 THE ECOSYSTEM Nokia must work on the different operating system installed on its different devices. Through offering a certain platform to the developer’s community in which they can develop once and application can be used within all devices range. Such approach can be met through investing in Qt platform or other technologies to solve both backward and forward integration. As much platform version will be supported, as many developers will be interested to develop for Nokia, especially that Nokia has the largest consumer based over the world. Further then, Nokia must consider monetization of such application, through innovative business models, also must focus on newly business models in which the base of the pyramid segment can benefit from using application in a productive manner, micro transaction concepts can be of great alternative to Nokia to focus on. If Nokia succeeded in this then its barging power will increase not only with the developers community but also will mobile operators because such approach will increase the data bandwidth usage which is the main profitable service offered by operators today.WORKS CITEDAhonen, T. (2011, 7 25). Microsoft Nokia Best Case Scenario: 8% Market Share in 2013. Retrieved 12 19,2011, from brightsideofnews.com: http://www.brightsideofnews.com/news/2011/7/25/microsoft-nokia-best-case-scenario-825-market-share-in-2013.aspx?pageid=2MeeGo. (n.d.). MeeGo. Retrieved 12 18, 2011, from MeeGo.com: https://meego.com/Nokia, C. (n.d.). The Nokia Story. Retrieved 12 18, 2011, from www.nokia.com:http://www.nokia.com/global/about-nokia/company/about-us/story/the-nokia-story/NokiaConversations. (2011). Nokia Strategy 2011. Retrieved 12 20, 2011, from nokia.com:http://conversations.nokia.com/nokia-strategy-2011/NokiaLeadership. (2011). Nokia Leadership Team. Retrieved 12 20, 2011, from nokia.com:http://www.nokia.com/global/about-nokia/company/governance/leadership/nokia-leadership-team/NokiaQt. (n.d.). Qt. Retrieved 12 20, 2011, from nokia.com: http://qt.nokia.com/NokiaStrategy2011. (2011). Nokia Strategy. Retrieved 12 20, 2011, from nokia.com:http://www.nokia.com/global/about-nokia/company/about-us/about-us/NokiaSymbian. (n.d.). Nokia Symbian. Retrieved 12 19, 2011, from Nokia.com:http://symbian.nokia.com/about/Nile University- Course Project 2011 P a g e | 13
  • 17. BSAD603- Corporate Strategy Nokia Strategy Analysis ProjectSymbianFoundation. (n.d.). SymbianFoundation. Retrieved 12 20, 2011, from symbian.org:http://licensing.symbian.org/Taloussanomat. (2011, 12 2). Nokias market share tumbles at home, company loses more than half of itspresence in a year. Retrieved 12 18, 2011, from phonearena: http://www.phonearena.com/news/Nokias-market-share-tumbles-at-home-company-loses-more-than-half-of-its-presence-in-a-year_id24284wikipdiaSymbian. (n.d.). Symbian. Retrieved 12 20, 2011, from wikipedia:http://en.wikipedia.org/wiki/Symbian_OS#HistorywikipedaiMeeGo. (n.d.). MeeGo. Retrieved 12 18, 2011, from wikipedia:http://en.wikipedia.org/wiki/MeeGo_(operating_system)wikipediaMobileOs. (n.d.). Mobile Operating System. Retrieved 12 16, 2011, from wikipedia:http://en.wikipedia.org/wiki/Mobile_operating_systemwikipediaMobileOS. (n.d.). Mobile Operating System. Retrieved 12 19, 2011, from wikipedia:http://en.wikipedia.org/wiki/Mobile_operating_systemwikipediaNokia. (n.d.). Nokia. Retrieved 12 18, 2011, from www.wikipedia.com:http://en.wikipedia.org/wiki/NokiaWikipediaSmartphones. (n.d.). Smartphones. Retrieved 12 19, 2011, from www.wikipedia.com:http://en.wikipedia.org/wiki/Smartphone#cite_note-178Wilcox, J. (2011, 2 1). Nokia needs plastic surgery not a brain transplant. Retrieved 12 20, 2011, frombetanews.co: http://betanews.com/2011/02/14/nokia-needs-plastic-surgery-not-a-brain-transplant/YahooFinance. (2011, 12 20). Nokia Corporation (NOK). Retrieved 12 20, 2011, from finance.yahoo.com:http://finance.yahoo.com/q/bc?s=NOK&t=5y&l=on&z=l&q=l&c=appleZiegler, C. (2011, 2 8). Nokia CEO Stephen Elop rallies troops in brutally honest burning platform memo?(update: its real!). Retrieved 12 20, 2011, from engadget.com: http://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troops-in-brutally-honest-burnin/Nile University- Course Project 2011 P a g e | 14