Nokia Turns Itself Upside Down

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London - Nokia unveiled a major reorganization plan, a new management team and a broad strategic partnership with Microsoft to rebuild market share, particularly in smartphones.

Nokia president/CEO Stephen Elop outlined the changes to investors here.

Under the Microsoft partnership, Nokia will adopt Windows Phone as its primary smartphone platform and help bring Windows Phone to a larger range of price points, market segments and geographic markets, the company said.

 The partnership also means that Nokia and Microsoft will "closely collaborate on joint marketing initiatives and a shared development roadmap," Nokia announced.

"Nokia is at a critical juncture where significant change is necessary and inevitable in our journey forward," said Elop. "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."

 The new strategies will take time to pay off, Elop admitted. "Nokia expects 2011 and 2012 to be transition years as the company invests to build the planned winning ecosystem with Microsoft," the company said. After the transition, Nokia is targeting handset and mobile services sales to grow faster than the market and targets an operating margin of 10 percent or more.

 As part of the Windows Phone focus, Nokia will relegate Symbian to a "franchise platform" and focus on transitioning the current 200 million Symbian users to other devices. Despite the Symbian deemphasis, Nokia said it nonetheless expects to sell about 150 million more Symbian devices "in the years to come."

Nokia will also turn its MeeGo platform, developed jointly with Intel, into an open-source, mobile operating system "project" that will "will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences," the company said. Nonetheless, Nokia said it still plans to ship a MeeGo-related product later this year.

  In feature phones, the company will "leverage its innovation and strength in growth markets to connect the next billion people to their first Internet and application experience," Nokia said.

  As part of the Microsoft-Nokia collaboration:

* Nokia will contribute its expertise in hardware design and language support to the Windows Phone OS.

* Nokia will adopt Microsoft's Bing search engine across its devices and services, with Microsoft's adCenter advertising platform providing search advertising services on Nokia devices and services.

* Nokia Maps will become a core part of Microsoft's mapping services, with Nokia Maps being integrated with Microsoft's Bing search engine and adCenter advertising platform for local search and advertising results.

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

  To accelerate decision making and the introduction of products and services, the company made wholesale changes to its management team and restructured its operations. The company divided itself into two business units: smart devices, which focuses on high-end smartphones, and mobile phones, which focus on mass-market mobile phones.  Each unit gets profit-and-loss responsibility and "end-to-end accountability for the full consumer experience," which includes product development, product management and product marketing, the company said.

 The smart devices unit, led by Jo Harlow, now incorporates three existing units:  Symbian smartphones, MeeGo computers and strategic business operations. The mobile phones unit, led by Mary McDowell, will focus on geographic growth markets "to connect the next billion people and bring them affordable access to the Internet and applications," the company said.

 The markets unit, headed by Niklas Savander, will be responsible for sales, marketing, communications, customer care, manufacturing, IT and logistics across all Nokia products.

 The services and developer experience unit will be responsible for Nokia's global services portfolio, developer relations and service-partner offerings.

  The Navteq map organization will continue as a separate reporting entity.

The new CTO office will be responsible for Nokia's technology strategy and Nokia Research Center. It will be headed by Rich Green.

The design group will be responsible for product and user-experience design.


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