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Nokia And Microsoft Strategic Alliance

Paper Type: Free Essay Subject: Marketing
Wordcount: 2258 words Published: 16th May 2017

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Why some companies die while others survive? Survival has long been recognized as a basic goal for a manufacturing firm. At least in the long term, survival should be related to various measures of performance, such as market share and profitability. These have to do with the evolution of technology in an industry. Population density may only be a reflection of underlying driving forces based on technological change that determine the form and level of competition, the attractiveness of entry, and ultimately the structure of an industry.

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Nokia plans to form a strategic partnership with Microsoft to build a global mobile ecosystem based on highly complementary assets. The Nokia-Microsoft ecosystem targets to deliver differentiated and innovative products and have unrivalled scale, product breadth, geographical reach, and brand identity. With Windows Phone as its primary smartphone platform, Nokia would help drive the future of the platform by leveraging its expertise on hardware optimization, software customization, language support and scale. Nokia and Microsoft would also combine services assets to drive innovation. Nokia Maps, for example, would be at the heart of key Microsoft assets like Bing and AdCenter, and Nokia’s application and content store would be integrated into Microsoft Marketplace. Under the proposed partnership, Microsoft would provide developer tools, making it easier for application developers to leverage Nokia’s global scale.

Nokia Future Planning

With Nokia’s planned move to Windows Phone as its primary smartphone platform, Symbian becomes a franchise platform, leveraging previous investments to harvest additional value. This strategy recognizes the opportunity to retain and transition the installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come.

Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year. In feature phones, Nokia unveiled a renewed strategy to leverage its innovation and strength in growth markets to connect the next billion people to their first Internet and application experience.

Nokia & Microsoft Hoping Two Wrongs Make a Right

Nokia and Microsoft are to join forces in a bid to topple Apple and Google in the mobile phone market. The two firms today announced a “broad strategic partnership” that will see Nokia phones running Microsoft software.

At first glance, Nokia and Microsoft may seem unlikely bedfellows, but in the hugely competitive mobile phone market, it could be the only chance the two have to catch up with Apple and Google.

2011 Deal

The deal plays to both firms’ strengths – Nokia is very good at hardware, but has struggled in the smartphone world because of its terrible software which is horribly outdated. Microsoft, meanwhile, also suffered with outdated software – until recently. It is Windows Phone 7 software, which Nokia will now use, has been hailed by even the most vociferous critics as a real competitor to both Apple and Google. Whether the two can work together effectively remains to be seen, especially as Apple, Google and BlackBerry maker RIM are so entrenched in the market – but Nokia has to gamble, and this might just be the reinvention that Nokia needs to save itself.

Mobile Market for Microsoft

If we see the data of the mobile market, we will easily understand the reason for exactly why Nokia and Microsoft are banding together. These two companies want to run in the market that has shifted away from the voice communication to data and internet communication, the driving factors or both the companies. Microsoft is the market leader in the software industry, moreover Nokia in the mobile communication industry. Although Nokia’s Symbian operating system is still the dominant one amongst the entire handsets but the market is moving towards the smartphones, as a result Nokia and Microsoft are dropping market share. So, as they have threats from other mobile producers aligning with software producers giving them a competition. Therefore keeping in mind the customers’ expectations and their preferences , decided to use their competitive edge and grasp the market again on the basis of software plus hardware merged mini device ecosystem that is the name of the new mobile to be launched.

Android is the real mover in the mobile OS marketplace. And Nokia still has to contend with RIM and Apple. So Nokia’s getting together with Microsoft makes sense as software meets hardware. It gives Microsoft a guaranteed entry into the market via the largest device manufacturer and eliminates the need for Nokia to spend billions on software development. Some ask: “why the two don’t simply merge?

Risks for Nokia & Microsoft

The biggest risk to Nokia and Microsoft is the transition period. Nokia indicated a two year transition period to Windows Phone 7 devices. The smartphone market operates in dog years. Two years is an eternity and if consumers don’t play ball with Nokia and Microsoft, both companies could become irrelevant.

Microsoft is getting access to the biggest part of the mobile market with Nokia. It may be a risk of failure to Nokia that existing users of Nokia find it difficult to use Window mobile software and want Nokia to keep the software as simple and intuitive as Symbian.

Threats for Nokia

The introduction of the Apple iPhone changed the focus of handsets from device design with tightly controlled/walled applications to the choice of open applications and related services environments. Apple obviously will stay with their proprietary device OS/open developer environment, consistent with their long history of PC world developments. The problem for all other handset suppliers, including mobile industry leaders Nokia, Motorola, and Samsung, has been the challenge of paring the phone, pad or other mobile device with a competitive software environment that provides the needed benefits of rapid innovation, low barriers and cost, and an even playing field for competition.

The lead that companies once had in not-so-smart Smartphone has proven inadequate to compete with Apple. Samsung and Nokia’s efforts to compete with their own open development environments have largely fizzled. The development of software environments has moved beyond efforts that can be undertaken by Nokia-Intel (Meego), Samsung or Motorola; market momentum has been overtaken and the acceleration in developments has become a ramping juggernaut.

Threats for Microsoft

The software environment is highly leveraged by the multitude of hardware and software developers that compete in the space. While committed to their own efforts to develop programs and devices, they contribute to open development, market awareness and sales momentum that no single company is capable of developing.

This is a similar problem for Microsoft Windows Mobile 7: many reviews say the software has several strong points; user surveys show a 44% favorable level of satisfaction, response by MS Mobile 7 users. The integration with MS Office and server software that is still widely used pleases many in government and corporate settings. Nonetheless, the expectation of most analysts is for Microsoft to do no better than continue to hold onto a small percentage of the handset OS market share. Meanwhile, their mobile search and portal efforts fare even worse than in the wired world.

How to Choice for Handsets

The choice is often not whether handset suppliers will use Android, but if they will use it exclusively. Our studies show devices’ wide range of ability for suppliers to enhance beyond the baseline of the Google OS. Indeed, the ‘Apple factor,’ if boiled down, is to deliver a high level of finesse that goes beyond what Google delivers as the foundational applications. Supplying this requires a deep level of understanding about how to make the device supplier security features, hosted services, interworking between apps and hardware drivers, component choices and device features, innovation in size and adapters, and all other segments of design. This level of attention to finesse can achieve the difference between just having good technical specifications and the “now that’s cool!” wow factor balance between ease of use and functionality. How do suppliers know they have achieved it? Of course sales and margins determine financial success, but before that the difference between any old app or device and an app or device that will end up selling is the extra effort that results in “we know it when we see it” quality.

Major Competitor for Nokia and Microsoft

Apple was able to do what it did cause all the mobile platforms that came before it sucked at supporting third party developers. Thus Apple was able to launch a mobile device all by themselves and get some real traction. An attempt to execute the same strategy in today’s environment would never work. Now the immediate response is “What? No huge catalog of apps? Your platform sucks.” There was a window of time when that wasn’t a complete given, and the Google folks managed to release Android to market under the bar. But now that window is firmly shut. Microsoft attempted to address the issue by paying to have the popular titles on other platforms ported over to Windows Phone 7. I think all would agree that the attempt was underwhelming and something not likely to be repeated.

Successful Partnership

If nothing go wrong and the partnership is successful for both the companies, following are the benefits which they will enjoy in future

Benefits of Successful Partnership

Nokia and Microsoft today announced plans to form a broad strategic partnership that would use their complementary strengths and expertise to create a new global mobile ecosystem.

Nokia and Microsoft intend to jointly create market-leading mobile products and services designed to offer consumers, operators and developers’ unrivalled choice and opportunity. As each company would focus on its core competencies, the partnership would create the opportunity for rapid time to market execution. Additionally, Nokia and Microsoft plan to work together to integrate key assets and create completely new service offerings, while extending established products and services to new markets.

Microsoft gets distribution for its Windows Phone 7 OS. It’s unclear what the licensing arrangement is between Nokia and Microsoft, which will collect undisclosed royalties.

The software giant dents what could have been mobile domination by Google.

Microsoft will get more developers on board due to Nokia’s global distribution.

Note many of the benefits to Microsoft are intangible. Microsoft becomes a mobile player again, but as we know from the company’s Internet efforts-profits can be elusive.

Nokia and Microsoft’s future

Let’s assume that over the next three years Nokia’s Symbian operating system largely gets replaced by Windows Phone 7. If that’s the case, Microsoft garners about 30 percent market share. I think that some market share leakage. At the very least, Microsoft wind up with 20 percent market share. Add it up and Microsoft just ensured there’s a four-horse mobile OS race short term: Android, Apple’s iOS, RIM and Windows Phone 7. If you assume RIM winds up with Android somehow, then it’s a three-horse race. ” this is now a three horse race.”

If Android won over Nokia it would have been game, set, match for the mobile platform race. Google would have won.

Nokia shipped more than 461 mobile units in 2010. No one even comes close to that many devices. Microsoft will ride along with most of those devices

In a nutshell, Nokia will:

Focus on Windows Phone and Microsoft’s ecosystem-Bings, Xbox Live and Office.

MeeGo will ship, but largely be a learning experience for Nokia.

Install a new leadership team.

Structure the company to focus on smart devices and mobile phones-a move that makes a lot of sense.


A partnership with Microsoft gives Nokia Microsoft’s pockets & services like Xbox LIVE, ad Center, Zune Marketplace (I’ve hardly heard anything good about Ovi.)

Microsoft needs an exclusive vendor like Nokia since current partners have invested in Android as well.

Nokia can now worry less about the whole mobile ecosystem, continue doing good hardware and their engineers get breathing room to work on MeeGo and Symbian.

It’s an interim strategy to remain relevant.

Competing with Palm, Android & iOS with Symbian & MeeGo would’ve buried Nokia.

The partnership is a win-win for both companies despite what your anti-Microsoft or MeeGo fanboy friend might say. These are business decision; emotional choices don’t exactly help a company.


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