In 2010 pressure on Nokia increased dramatically as Android and iOS continued to make gains.[109] Other Symbian makers including Samsung and Sony Ericsson chose to make Android-powered smartphones instead of Symbian,[110] and by mid-2010 Nokia was its only OEM outside of Japan. Nokia developed Symbian^3 to replace S60, but it never became popular.[111] By Q4 2010, Symbian's market share dipped to 32%, surpassed by Android at 30%.[112] Despite losing share, the smartphone unit was profitable and smartphone unit sales increased every quarter during 2010.[113] An estimated 4 million units were sold in Q4 2010.[114]
On 11 February 2011, Nokia's CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance with Microsoft, and announced it would shift its efforts to Windows Phone from Linux-based MeeGo and Symbian.[115] except for non-smartphones. Nokia invested in the Series 40 platform and released a single MeeGo product in 2011, the Nokia N9.[116]
As part of the restructuring plan, Nokia planned to reduce research and development, instead customising and enhancing the software line for Windows Phone 7.[117] Nokia's "applications and content store" (Ovi) became integrated into the Windows Phone Store, and Nokia Maps became the heart of Microsoft's Bing and AdCenter. Microsoft provided developer tools to Nokia to replace the Qt framework, which was not supported by Windows Phone 7 devices.[118]
After this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009.[119] Nokia's smartphone sales, which had previously increased, collapsed.[120] From the beginning of 2011 until 2013, Nokia fell from #1 to #10 in smartphone sales.[121]
Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 realized a profit of 227 million euros. On September 2011, Nokia has announced it will end another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.[122]
As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,[123] it was suggested the alliance would help Windows Phone.[118] Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011.[124] [125] In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.".[126]
Nokia reported "well above 1 million" sales for its Lumia line up to 26 January 2012,[127][128] 2 million sales for the first quarter of 2012,[129] and 4 million for the second quarter of 2012.[130] In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America.[131] For comparison, Nokia sold more than 30 million Symbian devices world-wide in Q4 2010[132] and the Nokia N8 alone sold almost 4 million in its first quarter. In Q2 2012, 26 million iPhones and 105 million Android phones shipped, compared to only 6.8 million devices with Symbian and 5.4 million with Windows Phone.[133]
While announcing an alliance with Groupon, Elop declared "The competition... is not with other device manufacturers, it's with Google."[134]
In June 2012, Nokia chairman Risto Siilasmaa told journalists that Nokia had a back-up plan in the event that Windows Phone failed.[135][136]
Market share of Symbian, Windows Mobile and Windows Phone 7 among US smartphone owners from Q1 2011 to Q2 2012 according to Nielsen Company.
On 8 February 2012, Nokia Corp. announced 4,000 layoffs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component suppliers in Asia.[137]
On 14 June 2012, Nokia announced 10,000 layoffs globally by the end of 2013[138] and shut production and research sites in Finland, Germany and Canada in line with continuing losses and the stock price falling to its lowest point since 1996.[139]
In total, Nokia laid off 24,500 employees by the end of 2013.[140]
On 18 June 2012, Moody's downgraded Nokia's bond rating to junk.[141] Nokia CEO admitted that the company's inability to foresee rapid changes in mobile phone industry was one of the major reasons for the problems.[142]
On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales.[143] On 22 August 2012, it was reported that a group of Finnish Nokia investors were considering gathering signatures for the removal of Elop as CEO.[144]
In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million, and leasing it back in the long-term. This decision was taken to slash costs as the company was during a financial crisis of falling revenues.[145]
In May 2013 Nokia released the Asha platform for its low-end borderline smartphone devices. The Verge commented that this may be a recognition on the part of Nokia that they are unable to move Windows Phone into the bottom end of smartphone devices fast enough and may be "hedging their commitment" to the Windows Phone platform.[147]
In the same month, Nokia announced its partnership with the world's largest cellular operator China Mobile to offer Nokia's new Windows-based phone, the Lumia 920, as Lumia 920T, an exclusive Chinese variant. The partnership was a bid by Nokia to connect with China Mobile's 700 million-person customer base.[148]
Following the second quarter of 2013, Nokia made an operating loss of €115m (£98.8m), with revenues falling 24% to €5.7bn, despite sales figures for the Lumia exceeding those of BlackBerry's handsets during the same period. Over the nine-quarters prior to the second quarter of 2013, Nokia sustained €4.1 billion worth of operating losses. The company experienc
ed particular problems in both China and the U.S.; in the former, Nokia's handset revenues are the lowest since 2002, while in the U.S., Francisco Jeronimo, analyst for research company IDC, stated: "Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results."[149]
In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high.[150]
Despite a recovery of Nokia's smartphone shares and rising Lumia sales, it wasn't enough to stop Nokia from making losses. The company's other divisions such as NSN were actually making profits but it was the devices and services section that failed to. Nokia felt it would be a wise financial decision to sell the loss-making division and focus on their others.
While Microsoft licensed the Nokia brand under a 10-year agreement, Nokia agreed not to use its name on smartphones and will be subject to a non-compete clause preventing it from producing any mobile devices under the Nokia name through 31 December 2015. Microsoft acquired the Asha and Lumia brands as part of the deal, and are also licensing the Nokia brand from Nokia.[151]
In an interview with Helsingin Sanomat, former Nokia executive Anssi Vanjoki commented that the Microsoft deal was "inevitable" due to the "failed strategy" of Stephen Elop.[152]
In March 2014, it was announced that the acquisition of Nokia's mobile phone business would not be completed by the end of March as expected, but instead was delayed until April of that year due to problems with regulators in Asia.[153]
On Friday, 25 April 2014, the postponed acquisition was ultimately completed.[154]
Steven Elop unveiling the Nokia X in February 2014
Following the sale, Nokia will focus on three core business units; its Here mapping service (which Microsoft will license for four years under the deal), its infrastructure division Nokia Solutions and Networks (NSN), and on developing and licensing its "advanced technologies".
In October 2013, a month after the acquisition announcement, Nokia predicted a more profitable future for its NSN networks equipment business, which became the company's main business.[157]
Nokia announced several products after the announcement of the sale, such as the Nokia Lumia 2520 tablet, and the Nokia X family, at MWC 2014.
2011: Alliance with Microsoft, Windows Phone, and launch of Lumia
On 11 February 2011, Nokia's CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance with Microsoft, and announced it would shift its efforts to Windows Phone from Linux-based MeeGo and Symbian.[115] except for non-smartphones. Nokia invested in the Series 40 platform and released a single MeeGo product in 2011, the Nokia N9.[116]
As part of the restructuring plan, Nokia planned to reduce research and development, instead customising and enhancing the software line for Windows Phone 7.[117] Nokia's "applications and content store" (Ovi) became integrated into the Windows Phone Store, and Nokia Maps became the heart of Microsoft's Bing and AdCenter. Microsoft provided developer tools to Nokia to replace the Qt framework, which was not supported by Windows Phone 7 devices.[118]After this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009.[119] Nokia's smartphone sales, which had previously increased, collapsed.[120] From the beginning of 2011 until 2013, Nokia fell from #1 to #10 in smartphone sales.[121]
Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 realized a profit of 227 million euros. On September 2011, Nokia has announced it will end another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.[122]
As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,[123] it was suggested the alliance would help Windows Phone.[118] Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011.[124] [125] In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.".[126]
Nokia reported "well above 1 million" sales for its Lumia line up to 26 January 2012,[127][128] 2 million sales for the first quarter of 2012,[129] and 4 million for the second quarter of 2012.[130] In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America.[131] For comparison, Nokia sold more than 30 million Symbian devices world-wide in Q4 2010[132] and the Nokia N8 alone sold almost 4 million in its first quarter. In Q2 2012, 26 million iPhones and 105 million Android phones shipped, compared to only 6.8 million devices with Symbian and 5.4 million with Windows Phone.[133]
While announcing an alliance with Groupon, Elop declared "The competition... is not with other device manufacturers, it's with Google."[134]
In June 2012, Nokia chairman Risto Siilasmaa told journalists that Nokia had a back-up plan in the event that Windows Phone failed.[135][136]
2012: Rising financial difficulties
Market share of Symbian, Windows Mobile and Windows Phone 7 among US smartphone owners from Q1 2011 to Q2 2012 according to Nielsen Company.
On 8 February 2012, Nokia Corp. announced 4,000 layoffs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component suppliers in Asia.[137]
On 14 June 2012, Nokia announced 10,000 layoffs globally by the end of 2013[138] and shut production and research sites in Finland, Germany and Canada in line with continuing losses and the stock price falling to its lowest point since 1996.[139]
In total, Nokia laid off 24,500 employees by the end of 2013.[140]
On 18 June 2012, Moody's downgraded Nokia's bond rating to junk.[141] Nokia CEO admitted that the company's inability to foresee rapid changes in mobile phone industry was one of the major reasons for the problems.[142]
On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales.[143] On 22 August 2012, it was reported that a group of Finnish Nokia investors were considering gathering signatures for the removal of Elop as CEO.[144]
In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million, and leasing it back in the long-term. This decision was taken to slash costs as the company was during a financial crisis of falling revenues.[145]
2013: New products, recovering market share, lack of profits
In January 2013, Nokia reported 6.6 million smartphone sales for Q4 2012 consisting of 2.2 million Symbian and 4.4 million sales of Lumia devices (Windows Phone 7 and 8).[146] In North America, only 700,000 mobile phones have been sold including smartphones.In May 2013 Nokia released the Asha platform for its low-end borderline smartphone devices. The Verge commented that this may be a recognition on the part of Nokia that they are unable to move Windows Phone into the bottom end of smartphone devices fast enough and may be "hedging their commitment" to the Windows Phone platform.[147]
In the same month, Nokia announced its partnership with the world's largest cellular operator China Mobile to offer Nokia's new Windows-based phone, the Lumia 920, as Lumia 920T, an exclusive Chinese variant. The partnership was a bid by Nokia to connect with China Mobile's 700 million-person customer base.[148]
Following the second quarter of 2013, Nokia made an operating loss of €115m (£98.8m), with revenues falling 24% to €5.7bn, despite sales figures for the Lumia exceeding those of BlackBerry's handsets during the same period. Over the nine-quarters prior to the second quarter of 2013, Nokia sustained €4.1 billion worth of operating losses. The company experienc
ed particular problems in both China and the U.S.; in the former, Nokia's handset revenues are the lowest since 2002, while in the U.S., Francisco Jeronimo, analyst for research company IDC, stated: "Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results."[149]
In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high.[150]
Acquisition of mobile phone business by Microsoft
On 2 September 2013, Microsoft announced that it would acquire Nokia's mobile device business in a deal worth €3.79bn, along with another €1.65bn to license Nokia's portfolio of patents for 10 years; a deal totaling at over €5.4bn. Steve Ballmer considered the purchase to be a "bold step into the future" for both companies, primarily as a result of its recent collaboration. It was also part of Ballmer's long-term vision of transforming Microsoft into a 'devices and services' company. Pending regulatory approval, the acquisition was originally expected to close in early 2014.Despite a recovery of Nokia's smartphone shares and rising Lumia sales, it wasn't enough to stop Nokia from making losses. The company's other divisions such as NSN were actually making profits but it was the devices and services section that failed to. Nokia felt it would be a wise financial decision to sell the loss-making division and focus on their others.
While Microsoft licensed the Nokia brand under a 10-year agreement, Nokia agreed not to use its name on smartphones and will be subject to a non-compete clause preventing it from producing any mobile devices under the Nokia name through 31 December 2015. Microsoft acquired the Asha and Lumia brands as part of the deal, and are also licensing the Nokia brand from Nokia.[151]
In an interview with Helsingin Sanomat, former Nokia executive Anssi Vanjoki commented that the Microsoft deal was "inevitable" due to the "failed strategy" of Stephen Elop.[152]
In March 2014, it was announced that the acquisition of Nokia's mobile phone business would not be completed by the end of March as expected, but instead was delayed until April of that year due to problems with regulators in Asia.[153]
On Friday, 25 April 2014, the postponed acquisition was ultimately completed.[154]
2014: Post-acquisition
As part of the deal, a number of Nokia executives joined Microsoft. Stephen Elop became the head of Microsoft's devices team (which include products such as Xbox and Surface); Risto Siilasmaa replaced Elop as interim CEO, before the appointment of Rajeev Suri.[8][9][155][156]Steven Elop unveiling the Nokia X in February 2014
Following the sale, Nokia will focus on three core business units; its Here mapping service (which Microsoft will license for four years under the deal), its infrastructure division Nokia Solutions and Networks (NSN), and on developing and licensing its "advanced technologies".In October 2013, a month after the acquisition announcement, Nokia predicted a more profitable future for its NSN networks equipment business, which became the company's main business.[157]
Nokia announced several products after the announcement of the sale, such as the Nokia Lumia 2520 tablet, and the Nokia X family, at MWC 2014.
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