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Nokia And Microsoft Sign On The Dotted Line

David Gilbert


Nokia And Microsoft Sign On The Dotted Line

Nokia and Microsoft have finally put pen to paper signing an agreement that will see the creation of Nokia’s first Windows Phone.

The deal, first announced back in February, comes as Nokia announced its first quarter earnings showing a further decline in market share, down four percent to 26 percent. Nokia’s results were ahead of what financial experts expected but pale in comparison to the huge rise in profits announced by Apple earlier this week. Profits in its mobile division were down 17 percent compared to the same period last year to €690 million (£607 million) though revenues rose by six percent to €7.1 billion (£6.25 billion). Overall profits were down 10 percent though again total revenues were up by nine percent.

While Nokia is still the world’s largest handset seller, with a total of 108.5 million units sold in the first three months of this year, if you look at the average selling price, it’s clear Nokia is losing out on the lucrative smartphone market. The Finnish groups average selling price is £130 while Apple’s is £400, though Apple only sells one model compared to dozens on offer from Nokia. The total number of phones sold by Nokia is the same as 12 months ago, showing it has stalled on expansion in areas such as China, India and Latin America where it previously had seen rapid growth of its budget handsets. Calling Q1 “solid” and predicting Q2 as “more challenging” due to the fallout from the Japanese tsumani, Nokia CEO Stephen Elop will be happy to see sales just about remaining stable as he faces a tough couple of months.

Elop added: “However, we are encouraged by our roadmap of mobile phones and Symbian smartphones, which we will ship through the balance of the year.” While Symbian did recently get an update, it is on its last legs and you have to wonder how many people will be willing to purchase a Symbian phone in the coming months. With the deal with Microsoft now signed and sealed, Nokia will have to start making savings which means there will be large redundancies among its 130,000 workforce in Finland – especially in its software R&D department we suspect.

We remain hopeful that the combination of Windows Phone software and Nokia hardware will make for fantastic phones, but by the time we get to see them In late 2011/early 2012 could it be too late?

Source: Microsoft and Nokia

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