On February 2011 Nokia and Microsoft, have announced plans for a strategic alliance under which Nokia will use Microsoft’s Windows Phone platform as a new operation system for its 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”. Nokia and Microsoft are both struggling to survive in the mobile industry. They weren’t able to maintain their market share because of the changing consumer trends and quickly developing technologies. This alliance is an opportunity for the two companies to join their powers into creating new smartphones that can help them compete in the smartphone industry, and gain back their lost market shares.
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 and Microsoft, on the other hand, has been the largest software maker. 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. And Nokia’s experience in making Mobil phones will provide this alliance with the handsets for the new smartphones.
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). Nokia’s weak market share in North America will effect this alliance, they need to develop a very competitive and innovative smartphone, to be able to compete there. Second, this entrance to the mobile OS market was too late. 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 harder for this alliance to compete in the smart phone market.
Opportunities, one of the biggest...