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Nokia Turns Itself Upside Down

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

* 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

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.