The Nokia-Microsoft Alliance In The Global Smartphone Industry
On February 2011 Nokia, Inc., and Microsoft Corp. have announced plans for a “broad strategic partnership” under which Nokia will use Microsoft’s Windows Phone platform as a new operation system in it’s new smartphones. “Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience,” Stephen Elop, Nokia President and CEO, said at a joint news conference in London. “Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It’s now a three-horse race.”
Stephen Elop, Nokia CEO and a former Microsoft executive, said the company was at a “critical juncture” and needed to make significant changes, having seen its market share and sales drop and its Symbian operating systems lag behind Apple’s iPhone and the Android operating system launched by Google and used by a range of handset makers.
A SWOT analysis of this alliance shows the following. Starting with the Strengths, both companies are the largest in their industries, Nokia has been the largest manufacturer of mobile phones in the world with revenues of $55 billion and a market share capitalization of $19 billion. Microsoft, on the other hand, was the largest software maker and generated revenues of $69 billion. By linking their powers in this alliance their products are expected to gain a large market share. Both companies are trusted brands, Nokia is one of the most respected and well-known companies in the mobile phone market, it has been around since the beginning of mobile phones. And according to Interbrand, Microsoft’s brand is the 5th most valuable brand in the world. Forbes listed Microsoft as the 7th most reputable business in the world. Brand reputation leads to higher sales and greater market share. Microsoft experience in software development will drive this alliance into creating reliable and innovative operating systems to use in Nokia’s new phones.
Weaknesses, first, “Microsoft needs to establish a significant market share for Windows Phone in North America — the hotbed of mobile innovation. However, Nokia is traditionally weak in North America in both market share and brand awareness.” (Michael Vakulenko 2,2012). This entrance to the mobile OS market was too late for Microsoft. Apple and Google had enough time to establish strong network effects for their iOS and Android platforms. Most smartphone users and app developers are using iOS or Android; it would not be easy for windows phone to compete in this market. Another weakness is that Nokia’s technology is ageing, which make it more harder for this alliance to compete in the smart phone market.
Opportunities, one of the biggest opportunities of this alliance is the ability to put more money in research and development to make more competitive products, Microsoft can offer...