Nokia - Microsoft Partnership. Building the new Mobile EcoSystem.

What do you think about this concept? Is it going to be successful or not? Why?

In recent years it became obvious that the world leader in producing mobile phones Nokia need urgent change. For example, in 2009 the supply of Nokia cell phones in the world decreased by 7.8% and revenue of department of mobile devices and services declined by as much as 20.6%. The share of Symbian was decreasing in the market under pressure of competitors. In connection with this Nokia has started to negotiate with Google but recently announced the beginning of close collaboration with Microsoft.

Our opinion is that this collaboration is the right decision for both sides. Nokia will use Windows 7, a new smartphone operating system that has gained good reviews from critics. This will allow it to cut costs to maintain the agonizing Symbian. For Microsoft it is good because even though experts welcomed Windows 7 it still has a tiny share of the market and Nokia’s huge dealings with suppliers, resellers etc. all over the world will help to larger sales volume of operating system many times.

The problem is that Nokia's upcoming MeeGo operating system, which was expected to debut at the end of 2011, will also be sidelined. It turns out that Nokia will lose money invested in both its operating systems. Though Nokia said that Symbian will be simply turned to "franchise platform" and the company expects to sell over 100 million devices based on it in future.

Cooperation in the field of search engines looks a little bit dubious. Microsoft has repeatedly recognized the failure of Bing for PCs, which has even caused a conflict with Google recently. It is hoped that the new generation search engine and its adoption for smartphones will be much more successful.

It seems to us that a major disadvantage of partnership is the fact that it will be followed by layoffs. Nokia's chief executive Stephen Elop said that job losses all around the world will be inevitable. Of course, it will affect particularly Finland, where this giant company is based.
But in general we think that huge technical and scientific bases of both companies and potential large infusion of funds by Microsoft to Nokia will give a Finnish company a huge possibility to return lost world position.

Nokia - Microsoft Competitors

Market of mobile phones is very difficult market with very high level of competition. There are several numbers of big players; well known companies who are competing with each other. It is very hard competition and Nokia is in very center of it. From our point of view company is in very difficult situation. By several reasons Nokia starts losing competition, and if we try to think, who are these companies in the “other side”, how big and powerful are they, we can really imagine the real size of the Nokia’s troubles.

Two biggest competitors of Nokia are unbelievably huge, unbelievably strong, and unbelievably successful Google and Apple. If we were on the Nokia place we definitely will be afraid. They are biggest leading companies in the world and they are “one head” higher then Nokia. We think if Nokia deal somehow with this competition it will be a real miracle. From one hand, we really hope that Microsoft could try to become this miracle, but from the other hand, looking at facts, we can say that probably Nokia have already lost this competition, lose it couple years ago.

How does the new strategy change Nokia's position on the market?

First of all, we want to take a look at the mobile phones market. Phone producers go with certain mobile OS systems like Symbian, Android, Microsoft Mobile, Mircosoft Phone and iPhone. We want say anything about iPhone OS, since it is the different case when the phone as a piece of technical device goes with the OS built by the same company. Symbian is the same, goes just with Nokia phones. Android and Microsoft systems are implemented by several companies, like Samsung, HTC and some others. And it is clearly stated that Microsoft mobile systems selling lesser every year. On the other hand, Nokia loses its positions as well.

Working together, Microsoft and Nokia can bring the Microsoft Phone OS to different markets and price categories. Nokia can be the one and only "carrier" of the Microsoft Phone OS. And what is good, Nokia can make the system more popular, since the Nokia phones are still have that image of a good phone. So, by mixing a "good phone" and "a system with potential" there is a chance that both will have win-win situation. And for Nokia it can be a huge step towards getting its large market share back. At the same time, competitors are ready to pounce back with new phones, new system updates, etc. And it is possible to happen, that Nokia will lose even more of a market, than it did during last years.

Overall, the situation is explained in the following words:

"Nokia’s smartphone market share could fall from about 30% to 15% in the next year alone! If so, that brings the Microsoft deal into question. On paper, teaming up with the software magnate seems smart…

• Nokia has a poor operating system but vast scale
• Microsoft has a good operating system but no scale"

There are two possibilities, either the tandem drags both companies down or brings them up high.

To invest or not to invest?

The question about investing is really flexible one. It is so because we can’t really predict the growth or fall of the share market. But we can try to suggest it. Here we have a picture that shows the development of Nokia share during last three months. As we see from this graph the real growth of its shares since the beginning of the year. But since the start of February the was a real fall of its shares. It was so may be because of its refuse of working with old systems equipment and starting to work with Microsoft. As I think the question of investing money in this company has both sides. We can suggest that the shares of Nokia will rise later and will be better than ever. The Microsoft systems are highly recommended all over the world. So it will be a good investment because the sales will be enormous. Also as it will be something new from Nokia, lots of people will try their new product and it will also make profit for Nokia.

(click on the image to full-size)

But on the other hand the investment could be useless. With having only this graph and nothing more, I mean no information and other, we could suggest that the shares of Nokia will continue to fall. So the investment won’t be useful.

As for opinion of our group, some of us just don’t like using Windows Mobile made by Microsoft. It’s very slow and hard to work with. Also almost in every model you need to use stylus to touch the screen. So you can’t use your finger. But two of us are real fans of this system. They claim that it’s one of the best on the market and we should invest to them. All in all we finally decided to invest there. We think that working with Nokia and changing experience will provide them with highly technology models that will be used and loved all over the world.

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References
Investment U (http://goo.gl/MUC9b)
Yahoo! Finance (http://finance.yahoo.com)
BBC News (http://bbc.com)