Nokia Unveils Major Revamp

The Finnish handset giant has unveiled a slew of strategic decisions – here's the easy-to-read digest of the main points

February 11, 2011

3 Min Read
Nokia Unveils Major Revamp

Nokia Corp. (NYSE: NOK) unveiled a broad range of strategic decisions, changes and targets at its investor and analyst briefing in London Friday. (See Nokia Revamps, Nokia Sets Near-Term Targets and Nokia, Microsoft Team Up.)

A radical revamp had been expected following the internal memo from CEO Stephen Elop (five months into the job) that made it clear just how desperate he believes the situation is for the Finnish giant. (See Nokia's 'Burning Platform' Memo and Nokia Dumps CEO, Hires Elop.)

And, as anticipated, the company announced a tie-up with Microsoft Corp. (Nasdaq: MSFT) and announced a new management team. (See No Easy Out for Nokia and Euronews: Feb. 10.)

"This is not a standard OEM agreement," Elop said of the Microsoft partnership.

The company's forecasts and outlook didn't please investors, though, as Nokia's share price sank by 9.5 percent to €7.39 in morning trading in the Helsinki exchange.

So here's the bullet-point guide to the announcements Nokia made today:

  • Nokia has a new structure that comprises two business units: Smart Devices (high-end smartphones) led by Jo Harlow, who is currently senior vice president of global marketing; and Mobile Phones (mass market devices) led by Mary McDowell, the current executive vice president of Mobile Phones.

  • Nokia will create a broad strategic partnership with Microsoft that includes the adoption of Windows Phone as Nokia's primary smartphone platform. The two companies are to integrate "key assets," collaborate on joint marketing initiatives and development roadmaps, create new services and extend existing products and services to new markets.

  • Microsoft's Bing is to become the default search tool on Nokia devices.

  • Microsoft's adCenter will provide search advertising services on Nokia devices and services.

  • Nokia Maps is to be integrated into Bing and adCenter.

  • Nokia's content and application store will be integrated with Microsoft Marketplace.

  • Symbian becomes a "franchise platform" (effectively sidelined by Windows Phone). Nokia sees an opportunity to "retain and transition" the existing 200 million Symbian users, and still expects to sell a further 150 million Symbian devices in the future.

  • MeeGo becomes "an open-source, mobile operating system project" with "increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences." Nokia intends to "ship a MeeGo-related product" in 2011.

  • The Group Executive Board has been replaced by the Nokia Leadership Team, but the "new" team includes many of the "old" executive group (such as McDowell), with Alberto Torres, the executive vice president of MeeGo Computers and Mobile Solutions, the main casualty. Click here to get the full list of names in the Leadership Team and their responsibilities.

  • The key focus for the new team is to speed up decision making and get new products to market more quickly.

  • Nokia will be making significant but unspecified job cuts around the world, including in Finland.

  • Nokia expects the global mobile-device sector to experience "attractive" growth this year and beyond, though it expects intense competition to put pressure on device gross margins.

  • No 2011 annual targets are being set for devices and services because of "significant uncertainties." The company is viewing 2011 and 2012 as "transition years."

  • Once the transition to its new strategy and partnership with Microsoft is in place (after 2012), Nokia expects its devices and services revenues to grow at a pace faster than the overall market, and for its devices and services operating margins (before one-off items) to be 10 percent or greater.

  • Nokia Networks (NSN) remains part of the Nokia group as a "separate reporting entity."

  • The global market for mobile and fixed infrastructure and associated services is expected to grow slightly year-on-year in 2011, with NSN set to grow its revenues faster than the overall market.

  • NSN's operating margin (before one-off items) for 2011 is expected to be above break-even.

  • NSN is still on target to have reduced its annual operating expenses by €500 million (US$676 million) by the end of 2011 compared with the end of 2009.

— Ray Le Maistre, International Managing Editor, Light Reading

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