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How will the Nokia-Microsoft partnership work?

The Nokia-Microsoft partnership brings together two global businesses with highly complementary sets of assets and competencies. But what will it actually mean for Nokia smartphone products? First and foremost, Nokia is adopting Windows Phone as its primary smartphone platform. Working with Microsoft, well help to drive and define the future of the platform by leveraging our expertise in hardware optimisation, software customisation, and language support. Nokia and Microsoft are also combining services assets to drive innovation. Nokia Maps, for example, will soon be at the heart of key Microsoft assets such as Bing and AdCenter, and Nokias application and content store will be integrated into Microsoft Marketplace. Similarly, Microsoft will provide developer tools, making it easier for application developers to leverage Nokias global scale.

Our vision and strategy

Nokias mission is simple: Connecting People. Our goal is to build great mobile products that enable billions of people worldwide to enjoy more of what life has to offer. Our challenge is to achieve this in an increasingly dynamic and competitive environment. 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

Nokia Corporation[3] (Finnish: Nokia Oyj, Swedish: Nokia Abp; Finnish pronunciation: [noki], English /nki/) is a Finnish multinational communications and

information technology corporation that is headquartered in Espoo, Finland.[1] Its principal products are mobile telephones and portable IT devices. It also offers Internet services including applications, games, music, media and messaging, and free-of-charge digital map information and navigation services through its wholly owned subsidiary Navteq.[4]Nokia owns a company named Nokia Solutions and Networks, which providestelecommunications network equipment and services.[5] As of 2012, Nokia employs 101,982 people across 120 countries, conducts sales in more than 150 countries, and reports annual revenues of around 30 billion. [2] By the fourth quarter of 2012, it was the world's second-largest mobile phone maker in terms of unit sales (after Samsung), with a global market share of 18.0%.[6] Now, Nokia only has a 3% market share in smartphones.[7] They lost 40% of their revenue in mobile phones in Q2 2013. Nokia is a public limited-liability company listed on the Helsinki Stock Exchangeand New York Stock Exchange.[8] It is the world's 274th-largest company measured by 2013 revenues according to the Fortune Global 500.[9] Nokia was the world's largest vendor of mobile phones from 1998 to 2012. [6] However, over the past five years its market share declined as a result of the growing use of touchscreen smartphones from other vendorsprincipally the iPhone, by Apple, and devices running onAndroid, an operating system created by Google. The corporation's share price fell from a high of US$40 in late 2007 to under US$2 in mid-2012.[10][11] In a bid to recover, Nokia announced a strategic partnership with Microsoft in February 2011, leading to the replacement of Symbian with Microsoft's Windows Phone operating system in all Nokia smartphones.[12] Following the replacement of the Symbian system, Nokia's smartphone sales figures, which had previously increased, collapsed dramatically.[13] From the beginning of 2011 until 2013, Nokia fell from its position as the world's largest smartphone vendor to assume the status of tenth largest.[14] On 2 September 2013, Microsoft announced its intent to purchase Nokia's mobile phone business unit as part of an overall deal totaling 5.44 billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and several other executives will join Microsoft as part of the deal.[15][16]

profile As its strapline suggests, Nokia is really good at connecting people. This Finnish icon is the worlds largest manufacturer of mobile devices and has around 40% of the global device market. Nokia is very, very successful and, in 2006, generated

revenue that for the first time was in excess of Finlands state budget. Nokia has always used innovation as a key driver for growth: first, by pioneering GSM and then by reinventing the concept of product personalisation. These days Nokias challenge is to maintain its position in a world increasingly converged and dominated by the likes of Google and Microsoft. However, while these companies have strong brands and interesting plans for the future, they dont have control over the handset. Nokia is bundling great services with tailored, user-friendly hardware. With a billion customers and relationships with hundreds of operators around the world, Nokia may well manage to hold its place.

http://www.scribd.com/doc/24179371/3/BCG-Matrix-of-NOKIA

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View: Quarterly Data | Annual Data Hide charts

In Millions of EUR (except for per share items)

3 months ending 2013-06-30

3 months ending 2013-03-31

6 months ending 2012-12-31

9 months 201

In Millions of EUR (except for per share items) Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin. Expenses, Total Research & Development Depreciation/Amortization Interest Expense(Income) - Net Operating Unusual Expense (Income) Other Operating Expenses, Total Total Operating Expense Operating Income Interest Income(Expense), Net Non-Operating Gain (Loss) on Sale of Assets Other, Net Income Before Tax Income After Tax Minority Interest Equity In Affiliates

3 months ending 2013-06-30 5,695.00 5,695.00 3,788.00 1,907.00 777.00 882.00 99.00 167.00 97.00 5,810.00 -115.00 -175.00 -278.00 51.00 -

3 months ending 2013-03-31 5,852.00 5,852.00 4,013.00 1,839.00 741.00 923.00 152.00 179.00 -6.00 6,002.00 -150.00 -257.00 -339.00 67.00 -

6 months ending 2012-12-31 15,280.00 15,280.00 10,705.00 4,575.00 1,896.00 2,242.00 570.00 15,413.00 -133.00 -292.00 -684.00 -81.00 -

9 months 201

22

22

16

24

-2

-3

-4

In Millions of EUR (except for per share items)

3 months ending 2013-06-30 -227.00 -227.00 -227.00 -227.00 0.00 3,712.18 -0.06 0.00 -

3 months ending 2013-03-31 -272.00 -272.00 -272.00 -272.00 0.00 3,711.47 -0.07 0.00 -

6 months ending 2012-12-31 -765.00 -765.00 -765.00 -765.00 0.00 3,711.12 -0.21 0.00 -

9 months 201

Net Income Before Extra. Items Accounting Change Discontinued Operations Extraordinary Item Net Income Preferred Dividends Income Available to Common Excl. Extra Items Income Available to Common Incl. Extra Items Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding Extraordinary Items Diluted EPS Including Extraordinary Items Dividends per Share - Common Stock Primary Issue Gross Dividends - Common Stock Net Income after Stock Based Comp. Expense Basic EPS after Stock Based Comp. Expense

-3

-3

-3

-3

In Millions of EUR (except for per share items) Diluted EPS after Stock Based Comp. Expense Depreciation, Supplemental Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes Income Taxes Ex. Impact of Special Items Normalized Income After Taxes Normalized Income Avail to Common Basic Normalized EPS Diluted Normalized EPS

3 months ending 2013-06-30 -0.01

3 months ending 2013-03-31 -0.02

6 months ending 2012-12-31 -0.21

9 months 201

FINANCIAL ASPECTS OF INTELLECTUAL PROPERTY

This blog is sponsored by Innovation Asset Group.

MONDAY, APRIL 9, 2007

Nokia Pays Up
by Doug Pollack

As reported earlier this month, Nokia made a "$20MM quarterly payment to Qualcomm based on its own valuation of patents covering Nokia handsets that use the

WCDMA" (WSJ 4-06-07). The general counsel at Qualcomm stated that "they have no right to do that....what they have done is they have simply made up a number."

This tactic represents an effort by Nokia to reduce its current royalty rate paid to Qualcomm, which is estimated to be around 4.5% of the cost of the cellphone. They are arguing that they should be paying a lower royalty rate to Qualcomm for WCDMA technology than on early generations of technology.

Nokia contends that the $20 million figure that they paid as estimated quarterly royalties as a "good faith" estimate of the value of Qualcomm patents it expects to be using after their current agreement expires. It would be instructive to see the methodology that was used by Nokia to determine the value of these patents.

Labels: patent royalties nokia

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Introduction
Nokia was founded over 140 years ago in Finland, and since then has become a global organisation that operates in over 120 countries worldwide. Nokia has also become a market leader in the mobile telecommunications industry and is most known for their mobile phones and Smartphones. Although recent competition has affected the market share that Nokia has in the telecommunication industry they still hold a strong 29%(2011) of the market share in a forever changing industry The micro environment is the internal factors that are affected by the customers, staff, shareholders and competitors. The best model for evaluating the micro environment of Nokia is Porters 5 forces as this takes into consideration the competitors, customers, suppliers and new entrants.

Threat of new entrants:

The mobile phone industry is already a well established market and the threat of a new entrant is quite low, as the technology needed to rival the devices already available is quite advance if they want to differentiate from them

The barriers to entry in the mobile phone industry is high because any new entrants will need high investments in R&D, technology and marketing in order to compete with the established organisations.

New entrants want to take market share from the larger organisations but Nokia hold 29% of the market share in the industry, the highest market share in the industry. (BBC News, 2011)

The threat of new entrants into the mobile phone industry is very unlikely as the start up cost of entering into the market at a high level needs a lot of investments and time to be considered a respectable competitor of the already established organisations. Nokia currently hold a 29% of the entire mobile phone market worldwide and for a new competitor to obtain some of their market will take either a very long term plan or something that is truly innovative and unseen before. This is because realistically the new entrant will need very high investment for R&D and marketing, and would not be able to publish positive result for a long time as they try to build a customer base and a name for itself in an established market. In conclusion the threat of new entrants is very low and not a factor which Nokia will have to worry about in the near future.

Power of suppliers:

Although Nokia rely on its suppliers to supply equipment for their advanced mobile phones there are actually a number of large equipment makers, which Nokia could switch to.

The software suppliers for their Smartphones are now Microsoft, who will have a very high bargaining power. As the leading mobile phone company in the industry they are in a very strong position when bargaining with their suppliers.

Nokia are in the position where they can bargain and negotiate with any mobile phone hardware maker because there is a high number of equipment suppliers that are readily available to them should their current suppliers attempt to bargain for more money with them. Nokias main argument would be the fact that they are a global organisation that has the highest market share in the industry, so the suppliers would not want to lose such an illustrious organisation. On the other hand, Nokia have recently created an alliance with

Microsoft for their software which would be considered a major coup for Nokia more than Microsoft. As a result, Microsoft will have a lot of power when negotiating a price and share because the deal is more beneficial to Nokia than Microsoft. In conclusion, there is a moderate threat from the powers of suppliers because although the hardware suppliers have a very low power, Microsofts power over the software is very high because theyre very few other organisations who have the expertise and skills to rival Microsoft.

Powers of buyers:

The power that customers have is rising because of the increasing number of choices in the mobile telecommunication industry.

With a lot of the Nokia competitors all offering similar packages (e.g. unlimited texts and calls) the industry is very price sensitive with customers seeking out the best value for money. Many of the consumers will also be tied into long term contracts so switching from one handset to another will be difficult and expensive for the consumer, as a result they may not want to change until the contract is finished.

The mobile phone industry is a competitive market where the number of choices is very wide, resulting in the consumer having a lot of power because they can choose to go to one of Nokias many rivals if they feel Nokia are not good enough. As Nokia do not have a direct store to sell to their consumers, intermediaries such as Carphone warehouse or network stores such as Orange also have other handsets readily available for the consumers, which makes it difficult for Nokia to have a direct impact on the selling of their handsets. As a result this has created a very price sensitive market because consumers will always be on the lookout for the best deals. In conclusion, the buyers have a high amount of power because of the other handsets they can purchase instead of Nokia.

Threats of substitutes products

Mobile phones are an everyday essential in peoples lives today and people would find it hard to replace, as customers would not be able to be in constant contact when away from the house. On the other hand, it could be said that customers would be able to contact people through others types of media such as social networking websites, email and home

telephones. Although staying in constant contact would be hard in customers day to day life.

However, smart phones are capable of a lot of functions so there are many substitutes if the substitute focuses on one of the functions, e.g. digital camera can take better photos then smart phones, notebooks can surf the web just as effectively and PDAs can plan a day the same way a smart phone can.

Mobile phones have become an everyday necessity in peoples lives because of the important functions that they can do and are all available in just one handset. No other product has the ability to make phone calls, send messages, surf the web and many more in one device. The idea of being in constant communication with someone at anytime and anywhere makes the mobile phone a very important device to people. On the other hand, a mobile phone can be dissected into the key function where there are substitutes for the functions, such as the camera function on a mobile phone can be substituted for a digital camera which can do a better job than the camera in a mobile phone. In conclusion, the threat of a substitute product is very low due to the fact a mobile phone is no longer just for making calls but for all the other function as well are expected on all mobile phones. So, the only real substitute is to buy all the functions of a mobile phone in the individual products which would not be plausible to carry all around on a person at the same time. Without mobile phones consumers would find it very difficult to replace, as it can offer so much to the consumers all in one device, no matter what the needs of the consumer are. Consumers rely on mobile phones a lot and would not be able to find a substitute that has all the function of a mobile phone.

Competitive rivalry:

Nokia rivals have moved to smart phones and androids while Nokia have only just recently released their first smart phones leaving them trailing their rivals such as Apple and HTC. There is also very little differentiation between the competitors which means any new smart phones in the market, like Nokia Lumia, will find it difficult to tempt existing iphone and HTC customers to switch. Intense competition from large companies such as; Apple, HTC, Blackberry, Sony Ericcson and LG, ect.

Nokia operate in an industry where the competition is extremely fierce with high investment in R&B and marketing to compete with some of the biggest organisations in the world. This

year Nokias market share has dropped to 29% and it is forecast to continue to fall because of the rising popularity of the Apple Iphone. After Nokias slow move into the Smartphone market it has left them trailing their rivals, and has just released their Lumia range which will find it difficult to compete and win over consumers from their Iphones. In conclusion, competitive rivalry is very high and Nokia must be aware of the threat that competitors have on their business especially with the growing popularity of the Apple iphone and RIM blackberry. The competitive rivalry is the biggest threat to Nokia because in the Smartphone market they are considerably behind and to increase their market share will take a lot of work in an market where some of the biggest names in business operate in such as Apple and Sony.