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Microsoft Mobile

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Microsoft Mobile Oy
Company typeOsakeyhtiö
(Limited company)
IndustryTelecommunications
Founded2014 (2014)
HeadquartersEspoo, Finland
Area served
Worldwide
Key people
Stephen Elop
Jo Harlow
ProductsSmartphones
ParentMicrosoft Corporation
Headquarters of Microsoft Mobile Oy, Keilaniemi, Espoo, Finland

Microsoft Mobile Oy is a subsidiary of Microsoft, located in Finland. It will hold the Nokia Devices and Services division, once the acquisition of the division has been completed.

Background

Main article: Nokia § 2000_to_present

With the acquisition of Nokia's devices and services division, Microsoft will re-enter the smartphone hardware market, after its' previous attempt, Microsoft Kin.

Alliance with Microsoft and Windows Phone

File:Lumia 720.jpg
The Nokia Lumia 720

On 11 February 2011, Nokia's CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance with Microsoft, and announced it would shift its efforts to Windows Phone from Linux-based MeeGo and Symbian.[1] except for non-smartphones. Nokia invested in the Series 40 platform and released a single MeeGo product in 2011, the Nokia N9.[2]

As part of the restructuring plan, Nokia planned to reduce research and development, instead customising and enhancing the software line for Windows Phone 7.[3] Nokia's "applications and content store" (Ovi) became integrated into the Windows Phone Store, and Nokia Maps became the heart of Microsoft's Bing and AdCenter. Microsoft provided developer tools to Nokia to replace the Qt framework, which was not supported by Windows Phone 7 devices.[4]

After this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009.[5] Nokia's smartphone sales, which had previously increased, collapsed.[6] From the beginning of 2011 until 2013, Nokia fell from #1 to #10 in smartphone sales.[7]

As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,[8] it was suggested the alliance would help Windows Phone.[4] Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011.[9] [10] In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.".[11]

Nokia reported "well above 1 million" sales for its Lumia line up to 26 January 2012,[12][13] 2 million sales for the first quarter of 2012,[14] and 4 million for the second quarter of 2012.[15] In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America.[16] For comparison, Nokia sold more than 30 million Symbian devices world-wide in Q4 2010[17] and the Nokia N8 alone sold almost 4 million in its first quarter. In Q2 2012, 26 million iPhones and 105 million Android phones shipped, compared to only 6.8 million devices with Symbian and 5.4 million with Windows Phone.[18]

While announcing an alliance with Groupon, Elop declared "The competition... is not with other device manufacturers, it's with Google."[19]

European carriers stated that Nokia Windows phones could not compete with Apple iPhone or Samsung Galaxy phones.[20]

In June 2012, Nokia chairman Risto Siilasmaa told journalists that Nokia had a back-up plan in the event that Windows Phone failed.[21][22]

Financial difficulties

Market share of Symbian, Windows Mobile and Windows Phone 7 among US smartphone owners from Q1 2011 to Q2 2012 according to Nielsen Company.

Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 realized a profit of 227 million euros. On September 2011, Nokia has announced it will end another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.[23]

On 8 February 2012, Nokia Corp. announced 4,000 layoffs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component suppliers in Asia.[24]

On 14 June 2012, Nokia announced 10,000 layoffs globally by the end of 2013[25] and shut production and research sites in Finland, Germany and Canada in line with continuing losses and the stock price falling to its lowest point since 1996.[26]

In total, Nokia laid off 24,500 employees by the end of 2013.[27]

On 18 June 2012, Moody's downgraded Nokia's bond rating to junk.[28] Nokia CEO admitted that the company's inability to foresee rapid changes in mobile phone industry was one of the major reasons for the problems.[29]

On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales.[30] On 22 August 2012, it was reported that a group of Finnish Nokia investors were considering gathering signatures for the removal of Elop as CEO.[31]

2013

In January 2013, Nokia reported 6.6 million smartphone sales for Q4 2012 consisting of 2.2 million Symbian and 4.4 million sales of Lumia devices (Windows Phone 7 and 8).[32] In North America, only 700,000 mobile phones have been sold including smartphones.

In May 2013 Nokia released the Asha platform for its low-end borderline smartphone devices. The Verge commented that this may be a recognition on the part of Nokia that they are unable to move Windows Phone into the bottom end of smartphone devices fast enough and may be "hedging their commitment" to the Windows Phone platform.[33]

In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million.[34] In the same month, Nokia announced its partnership with the world's largest cellular operator China Mobile to offer Nokia's new Windows-based phone, the Lumia 920, as Lumia 920T, an exclusive Chinese variant. The partnership was a bid by Nokia to connect with China Mobile's 700 million-person customer base.[35]

Following the second quarter of 2013, Nokia made an operating loss of €115m (£98.8m), with revenues falling 24% to €5.7bn, despite sales figures for the Lumia exceeding those of BlackBerry's handsets during the same period. Over the nine-quarters prior to the second quarter of 2013, Nokia sustained €4.1 billion worth of operating losses. The company experienced particular problems in both China and the U.S.; in the former, Nokia's handset revenues are the lowest since 2002, while in the U.S., Francisco Jeronimo, analyst for research company IDC, stated: "Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results."[36]

In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high.[37]

Acquisition of mobile phone business by Microsoft

On 2 September 2013, Microsoft announced that it would acquire Nokia's mobile device business in a deal worth €3.79bn, along with another €1.65bn to license Nokia's portfolio of patents for 10 years; a deal totaling at over €5.4bn. Steve Ballmer considered the purchase to be a "bold step into the future" for both companies, primarily as a result of its recent collaboration.

Following the sale, Nokia will focus on three core business units; its Here mapping service (which Microsoft will license for four years under the deal), its infrastructure division Nokia Solutions and Networks (NSN), and on developing and licensing its "advanced technologies". Pending regulatory approval, the acquisition is expected to close in early 2014. As part of the deal, a number of Nokia executives will join Microsoft. Stephen Elop became the head of Microsoft's devices team; Risto Siilasmaa replaced Elop as interim CEO.[38][39][40][41]

While Microsoft licensed the Nokia brand under a 10-year agreement, Nokia agreed not to use its name on smartphones and will be subject to a non-compete clause preventing it from producing any mobile devices under the Nokia name through 31 December 2015. Microsoft acquired the rights to the Asha and Lumia brands as part of the deal.[42]

In an interview with Helsingin Sanomat, former Nokia executive Anssi Vanjoki commented that the Microsoft deal was "inevitable" due to the "failed strategy" of Stephen Elop.[43]

In October 2013, Nokia predicted a more profitable future for its NSN networks equipment business, which became the company's main business.[44]

In March 2014, it was announced that the acquisition of Nokia's mobile phone business would not be completed by the end of March as expected, but instead was delayed until April of that year due to problems with regulators in Asia.[45]

Device divisions

Lumia

Main article: Nokia Lumia

Asha

Main article: Nokia Asha
Nokia Asha 501

Series 40 is a phone platform mainly used in feature phones, mainly running Java-based applications.[46]

Nokia acquired Smarterphone, a company making the Smarterphone OS for low end phones and merged it with Series 40 to form the Asha Platform, which alsoedinherits some UI characteristics from Nokia's MeeGo platform. The Asha 501 was the first phone running the new OS.[47] Microsoft has stated its' intention to use the range as an "on-ramp" for Windows Phone.[48]

Nokia X

Main articles: Nokia X, Nokia X family, and Nokia XL
Steven Elop unveiling the family of phones at MWC 2014

A media report revealed in mid-September 2013 that Nokia tested the Android operating system on both its Lumia and Asha hardware.[49] However, a new report on 11 December 2013 showed the Asha-like device, codenamed 'Normandy' for the first time, stating that despite the finalisation of the acquisition, development of the device is continuing.[50]

The phone was released at MWC 2014 as part of a wider family of Nokia Android smartphones, the Nokia X family.

References

  1. ^ "Nokia announces strategic partnership with Microsoft, will use WP7 as primary OS". TechIt.in.
    "Missed the historic Nokia+Microsoft event today? See it here!". TechIt.in.
  2. ^ "Nokia and Microsoft form partnership". BBC. 11 February 2011. Retrieved 12 February 2011.
  3. ^ "RIP: Symbian". Engadget.
  4. ^ a b "Capitulation: Nokia adopts Windows Phone 7". ArsTechnica. 11 February 2011. Retrieved 12 February 2011.
  5. ^ ben-Aaron, Diana (11 February 2011). "Nokia Falls Most Since July 2009 After Microsoft Deal". Bloomberg.
  6. ^ "Lumia: Is the light visible?". Asymco. Horace Dediu. 18 April 2013. Retrieved 21 July 2013.
  7. ^ "Gartner Says Asia/Pacific Led Worldwide Mobile Phone Sales to Growth in First Quarter of 2013" (Press release). Gartner. Gartner, Inc. 14 May 2013. Retrieved 21 July 2013.
  8. ^ "Gartner Says Sales of Mobile Devices in Second Quarter of 2011 Grew 16.5 Percent Year-on-Year; Smartphone Sales Grew 74 Percent" (Press release). Gartner. 11 August 2011. Retrieved 29 September 2011.
  9. ^ Ward, Andrew (21 July 2011). "Apple overtakes Nokia in smartphone stakes". Financial Times. Retrieved 21 July 2011.
  10. ^ "Recent Smartphone Shipments show Gainers & Losers". Retrieved 22 August 2012.
  11. ^ Fried, Ina (9 August 2011). "Nokia to Exit Symbian, Low-End Phone Businesses in North America". All Things Digital. Retrieved 9 August 2011.
  12. ^ "Nokia Q4 2011 net sales EUR 10.0 billion, non-IFRS EPS EUR 0.06 (reported EPS EUR −0.29) Nokia 2011 net sales EUR 38.7 billion, non-IFRS EPS EUR 0.29 (reported EPS EUR −0.31)". Nokia. 26 January 2012. Retrieved 22 June 2013.
  13. ^ Constantinescu, Stefan (26 January 2012). "Nokia Q4 2011 financial results: Over 1 million Lumia Windows Phones sold to date". IntoMobile. Retrieved 22 June 2013.
  14. ^ Cooper, Daniel (11 April 2012). "Nokia: Two million Lumia phones sold in Q1 but profits still falling". Engadget. AOL. Retrieved 2 June 2012.
  15. ^ "Nokia ships 4 million Lumias in Q2 2012, over 7 million to date".
  16. ^ "Nokia's Fight for AT&T Shelf Space Shows Hurdle for Lumia".
  17. ^ [1][dead link‍]
  18. ^ "Android smartphone share quadruples iOS in Q2".
  19. ^ "Nokia's Lumia phones to show Groupon offers on maps". BBC.
  20. ^ Abboud, Leila (2012-04-17). "Mobile operators unconvinced by Nokia's revival bid | Reuters". Uk.reuters.com. Retrieved 2013-09-08.
  21. ^ Chris Smith (30 June 2012). "Nokia promises back-up plan if Windows Phone fails". Techradar. Retrieved 6 July 2012.
  22. ^ "Nokia's Siilasmaa: Goal to regain competitiveness". YLS Uutiset. 28 June 2012. Retrieved 6 July 2012.
  23. ^ "Nokia to cut 3500 jobs worldwide; to shut Romania factory". 29 September 2011.
  24. ^ Moen, Arild (8 February 2012). "Nokia to Cut 4,000 Jobs". The Wall Street Journal.
  25. ^ "Nokia to cut 10,000 jobs; shut units". The Hindu. 14 June 2012.
  26. ^ ben-Aaron, Diana (14 June 2012). "Nokia to Cut 10,000 Jobs as Elop Tries to Stanch Losses". Bloomberg.
  27. ^ "7 milestones in Nokia's year of woes". The Times of India. 15 June 2012. Retrieved 22 June 2013.
  28. ^ "Nokia Downgraded to Junk". Zacks.com. 2012-06-18. Retrieved 2013-09-08.
  29. ^ "Nokia CEO Stephen Elop admits failure to foresee fast-changing industry". 28 June 2012.[dead link‍]
  30. ^ Reisinger, Don (2012-05-04). "Nokia, execs hit with class-action suit over disappointing Lumia sales | Mobile – CNET News". News.cnet.com. Retrieved 2013-09-08.
  31. ^ "Nokia Finnish investors considering gathering signatures to get CEO Elop sacked". Phonearena.com. Retrieved 2013-09-08.
  32. ^ "Nokia Corporation Q4 and full year 2012 Interim Report".
  33. ^ Savov, Vlad (9 May 2013). "Nokia hedges its commitment to Windows Phone with new Asha platform and $99 phone". The Verge. Retrieved 22 June 2013.
  34. ^ "Struggling Nokia sells HQ". 3 News NZ. 5 December 2012.
  35. ^ Einhorn, Bruce (7 December 2012). "Nokia Deal Is Just the Beginning for China Mobile". Businessweek. Retrieved 22 June 2013.
  36. ^ Charles Arthur (18 July 2013). "Nokia revenues slide 24% but Lumia sales rise offers hope". The Guardian. Retrieved 19 July 2013.
  37. ^ Tom Warren (2013-07-18). "Nokia Lumia sales Q2 2013". Theverge.com. Retrieved 2013-09-08.
  38. ^ "Microsoft buys Nokia's Devices and Services Unit, unites Windows Phone 8 and its hardware maker". The Verge. Vox Media. Retrieved 3 September 2013.
  39. ^ Ovide, Shira. "Microsoft in $7.17 Billion Deal for Nokia Cellphone Business". Wall Street Journal. Retrieved 3 September 2013.
  40. ^ "The Next Chapter: An open letter from Steve Ballmer and Stephen Elop". The Official Microsoft Blog. Retrieved 3 September 2013.
  41. ^ Jones, Chuck. "The Market Essentially Forced Microsoft To Buy Nokia". Forbes. Retrieved 3 September 2013.
  42. ^ "There will never be another Nokia smartphone". The Verge. Retrieved 3 September 2013.
  43. ^ "Nokian ex-pomo Anssi Vanjoki: Häpeällistä mutta väistämätöntä". Helsingin Sanomat (in Finnish). Retrieved 4 September 2013.
  44. ^ Ando, Ritsuko. (2013-11-19) Nokia shareholders approve sale of mobile business to Microsoft. Reuters. Retrieved on 2013-12-08.
  45. ^ DELAYED: Microsoft Won't Close Its $7.2 Billion Buy Of Nokia Until April, Business Insider, March 24, 2014
  46. ^ [2]
  47. ^ [3]
  48. ^ http://mashable.com/2013/09/03/microsoft-nokia-analysis/
  49. ^ Tom Warren (13 September 2013). "Nuclear options: Microsoft was testing Surface Phone while Nokia experimented with Android". The Verge. Vox Media. Retrieved 23 September 2013.
  50. ^ [4]
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