Nokia partners with Microsoft to retake mobile market?

Any list of the handsets that created the mobile phone industry will undoubtedly be filled with mobiles from Finnish mobile phone company, Nokia. However, for a long time now, Nokia’s power and desirability has been on a slow but steady decline.

This was all famously noted in the leaked memo by Nokia’s newly appointed CEO, Stephen Elop earlier this year. At that same time, Nokia tentatively announced a much-anticipated deal with Microsoft. On Thursday, a bit earlier than expected, the details of the deal have been released.

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Nokia since the outset of the smartphone age had been running the then most popular mobile operating system (OS), Symbian, but in recent years with the emergence of Google’s Android OS, and Apple’s iOS, which runs iPhones, Symbian fell from favour. As such after Samsung ceased producing Symbian phones last year, Nokia was left as the last major mobile phone retailers still running the OS.

The tentative February announcement of a proposed partnership deal for Nokia to adopt Windows Phone — Microsoft’s OS 7 in particular — as its principal smartphone strategy effectively killed Symbian.

The announcement stated that “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”. However, Thursday’s release took the next step and announced the signing of a “definitive agreement” on a partnership.

This latest statement gives some details regarding what the companies expect of the deal.

The new relationship is based on four broad areas:

  • A combination of complementary assets
  • Microsoft receiving royalty from Nokia for the Windows OS
  • Nokia receiving payments “measured in the billions of dollars”
  • An agreement that recognizes the value of intellectual property and puts in place mechanisms for exchanging rights to intellectual property

With the deal now in place Microsoft and Windows have now set their sights on wooing the other important party of any smart-phone strategy, the ecosystem. This ecosystem is comprised of third party developers who will develop the applications, eCommerce, advertising, search, social applications, location-based services, unified communications and many other products that are integral to any success of this partnership.

Elop wrote in a memo stating, “while competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.”

This announcement comes on the heels of Apple being branded the world’s largest handset vendor, it is clear that those who predicted that Nokia may return to being an industry leader may not be wrong — the fight is clearly still strong in the company.

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