Dvir Reznik | The (old) Blog

As suspected, and rumored, in the past few weeks, Nokia and Microsoft officially announced their partnership today (Friday) in London, by both CEOs – Stephen Elop of Nokia and Steve Ballmer of Microsoft. “Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward,” said Stephen Elop, Nokia President and CEO. “Today, we are accelerating that change through a new path, aimed at regaining our smartphone leadership, reinforcing our mobile device platform and realizing our investments in the future.”

Nokia CEO, Stephen Elop (left), alongside Microsoft CEO, Steve Ballmar, on stage, in London, Feb. 11 2011

In a nutshell, Nokia will adopt Windows Phone 7 as its official smartphone operating system, in an effort to regain its market lead in selected countries and fight off Apple and Google. Nokia will also realign its company structure, a move that will probably send thousands of Nokia employees packing. According to Nokia, “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”. Despite the rumors, Nokia HQ will remain in Finland.

What’s next?

As I posted just 2 days ago, I really hope Nokia’s strategy will pay off, for Stephen’s sake. Going with Microsoft is perceived by some as the easy choice, and Microsoft gains much more from this partnership than Nokia. The latter’s choice of WP7 is a huge vote of confidence in Microsoft’s mobile OS, and Microsoft is teaming up with the world’s largest device maker, with over 1B devices sold worldwide, and plans to reach a billion more.

Symbian?

Great question. As I see it, the OS which was acquired by Nokia will still be used as a platform for the Mobile Phones division (see press release at the bottom), but won’t be included in any future Smart Phone the company will release. Nokia is basically saying that Symbian cannot compete in the smartphones market, and is betting hard on WP7 as the OS of choice for the device to beat the competition.

MeeGo?

Even bigger question. Nokia is keeping MeeGo alive, but it’s not clear why. Symbian will be used as the OS for Mobile Phones, WP7 is the Smart Phones’ OS, which leaves MeeGo in the dark. 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.

WP7 devices?

In his memo to Nokia employees this week, Stephen emphasized the importance of releasing devices fast to the market, and shortening development cycles. However, a Nokia WP7 device can only be expected in 2012, and it’s still un-clear what devices Nokia will showcase in 2011, if any at all. The Nokia N9 might be introduced during Mobile World Congress, the 1st (and maybe last) MeeGo device.

Bottom-line

There are many advantages to this partnership, most for Microsoft, but Nokia still has much to gain. With over 1 billion devices, it’s still the #1 mobile maker in the world. Microsoft bring excellent marketing tactics, and budget, that will help both makers push Nokia-WP7 devices to the market. Apple is probably taking a breather now, as a Nokia-WP7 alliance is better than a Nokia-Android one. Google remains the only Top 5 OS maker without its own hardware, unless they decide to revive their Nexus line. Interesting times ahead.

Official Nokia Press Release:

Nokia outlines new strategy, introduces new leadership, operational structure

London, Feb. 11, 2011 – Nokia today outlined its new strategic direction, including changes in leadership and operational structure to accelerate the company’s speed of execution in a dynamic competitive environment.

Major elements of the new strategy include:

• Plans for a broad strategic partnership with Microsoft to build a new global mobile ecosystem; Windows Phone would serve as Nokia’s primary smartphone platform.
• A renewed approach to capture volume and value growth to connect ”the next billion” to the Internet  in developing growth markets
• Focused investments in next-generation disruptive technologies
• A new leadership team and organizational structure with a clear focus on speed, results and accountability

“Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward,” said Stephen Elop, Nokia President and CEO. “Today, we are accelerating that change through a new path, aimed at regaining our smartphone leadership, reinforcing our mobile device platform and realizing our investments in the future.”

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.

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.

New leadership team, operational structure

This new strategy is supported by significant changes in Nokia’s leadership, operational structure and approach. Effective today, Nokia has a new leadership team with the commitment, competencies and innovative thinking needed in today’s dynamic environment.

The Nokia Leadership Team, previously the Group Executive Board, will consist of the following members: Stephen Elop, Esko Aho, Juha Akras, Jerri DeVard, Colin Giles, Rich Green, Jo Harlow, Timo Ihamuotila, Mary McDowell, Kai Oistamo, Tero Ojanpera, Louise Pentland and Niklas Savander.

Alberto Torres has stepped down from the management team, effective February 10 to pursue other interests outside the company.

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. The new strategy and operational structure are expected to have significant impact to Nokia operations and personnel.

New company structure

As of April 1, Nokia will have a new company structure, which features two distinct business units: Smart Devices and Mobile Phones. They will focus on Nokia’s key business areas: high-end smartphones and mass-market mobile phones.  Each unit will have profit-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing.

Smart Devices will be responsible for building Nokia’s leadership in smartphones and will be led by Jo Harlow. The following sub-units now in Mobile Solutions will move under Smart Devices:

• Symbian Smartphones
• MeeGo Computers
• Strategic Business Operations

To support the planned new partnership with Microsoft, Smart Devices will be responsible for creating a winning Windows Phone portfolio.

Mobile Phones will drive Nokia’s ”web for the next billion” strategy. Mobile Phones will leverage its innovation and strength in growth markets to connect the next billion people and bring them affordable access to the Internet and applications. The Mobile Phones unit will be led by Mary McDowell.

Markets will be responsible for selling products, executing compelling marketing and communications, creating a competitive local ecosystem, sourcing, customer care, manufacturing, IT and logistics across all Nokia products. It will be headed by Niklas Savander.

Services and Developer Experience will be responsible for Nokia’s global services portfolio, developer offering, developer relations and integration of partner service offerings. Tero Ojanpera will lead the Services and Developer Experience unit in an acting capacity.

NAVTEQ, an integral part of Nokia’s location and advertising business, will be headed by Larry Kaplan, and continue as a separate reporting entity.

The CTO Office will be responsible for Nokia’s technology strategy and forward-looking technology activities, including Nokia Research Center. It will be headed by Rich Green.

Design, responsible for Nokia product and user experience design, will be led by Marko Ahtisaari.

The CFO Office, responsible for all financial activity, will be headed by Timo Ihamuotila.

Corporate Development, responsible for driving implementation of Nokia’s ecosystem strategy and strategic partnerships, will be headed by Kai Oistamo.

Corporate Relations & Responsibility, responsible for Nokia’s government and public affairs, sustainable development and social responsibility, will be led by Esko Aho.

Human Resources will be led by Juha Akras.

Legal and Intellectual Property will be led by Louise Pentland.

Nokia Siemens Networks continues in the Nokia Group as a separate reporting entity.