Nokia Corporate Strategy Critique

Corporate Strategy Analysis
Nokia Strategy Critique

December 2011

Prepared By:
Al-Motaz Bellah Al-Agamawi
Basma El Banna
Mohamed Aly
Rasha Tantawy
Submitted as part of the Nile University, Corporate Strategy and International
Competitiveness 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

BSAD603- Corporate Strategy Nokia Strategy Analysis Project

Table of Contents

1. 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 .................................................................................................................... 5

2. 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 ........................................................................................................ 7

3. 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 ................................... 9

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3.4 Nokia and Microsoft Alliance ........................................................................................ 10

3.5 Other Implications of the Strategy ................................................................................. 11

4. 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 ............................................................................................................... 13

Works Cited .................................................................................................................................. 13

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1. 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,

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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
industry's 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, Samsung's recently introduced Bada, HP's heir
of Palm webOS and the Microsoft Windows Phone OS which is now supported by Nokia. In Q4 of


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, Google's 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 Google's Android market share was 35% compared to a 10%the previous year. Nokia's
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 Symbian's 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
Intel's Moblin and Nokia's 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
Microsoft's "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???



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 Apple's App Store compared to
competitor's 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.



- 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 STRATEGY
In this section, we will state Nokia’s 2011 strategy. This strategy illustrates how Nokia believes that it is the
best way to handle the challenges it faces. In this section, we will state the strategy as exactly mentioned on
Nokia Corporate website (NokiaStrategy2011, 2011).



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 today's mobile world, it feels like
anything is possible - and that's 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.



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 Microsoft's Business Division and was a member of
Microsoft's senior leadership team and responsible for the company's 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).



3. 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.



3.2 THE CEO MESSAGE

Stephen Elop was wrong to call Nokia's 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 haven't been delivering innovation fast enough. We're not collaborating
internally. Nokia, our platform is burning."

In a 1,300-word memo to the company's 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.

It's this attitude that has sent the world's 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. Nokia's house isn't 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 company's 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 company's 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 Nokia's 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).



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 Nokia's (281 million
units) in 2010, according to Gartner. Apple's sales were a mere 10 percent of Nokia's, 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. Nokia's 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 Asia's 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 Elop's ill-timed
February surprise killed Symbian's come-back. So can the Microsoft strategy generate better unit

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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 CHALLENGES
In this section we will showcase our strategy alternatives that we believe that it will sharpen Nokia’s
competitive edge.

4.1 LEADERSHIP, BELIEVE AND PASSION

Nokia needs a CEO who praises the company's 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?



What Nokia needs is leadership. Selling the company's 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 isn't 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.
Nokia's 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 competitive


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 CITED
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http://www.nokia.com/global/about-nokia/company/about-us/story/the-nokia-story/

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