The announcement follows Nokia Elop's frank memo sent to employees in which he admitted that the company has been beaten by Google and Apple's smarphone technology.
Here are seven things to know about the deal that many say has the potential to change mobile landscape.
1.How the deal will work
Under the plan unveiled, Nokia and Microsoft will combine assets and jointly develop and market mobile products. Nokia’s Maps product will become a core part of Microsoft’s services, while Microsoft’s development tools will create applications for Nokia Windows phones.
The two companies are hammering out the financial details of their "broad strategic partnership" to make Windows Phone 7 the primary operating system for Nokia phones. But broadly, Nokia will pay royalties for licensing the phone software and in return Microsoft will invest in marketing and developing the phones, but it isn't clear which will be the greater sum.
Analysts said the licensing agreement is complicated by the fact that some of Nokia's technology will be included in the phones, such as mapping and navigation. The Finnish phone-maker may also get a cut of the revenue Microsoft gets from putting its Bing search engine on the devices. This alone could be worth $1.25 billion a year to Microsoft, estimates Richard Williams at Cross Research.
2.Asset 'transfer'
Both the parties bring something to the deal. Nokia brings with it, its "tremendous brand," as Nokia CEO said, and also mobile devices, an application store, and maps.
Microsoft will bring the Windows Phone 7 software, and brands including Office, Xbox Live and Bing.
Also, as pointed by Stephen Shankland of CNET, Microsoft phones will be able to link up with Nokia's agreements for carrier billing--a popular option in parts of the world where credit cards are less common. And Nokia will fold its own app store into the Microsoft Marketplace.
3.Nokia gets 'divided'
Nokia said that it will have two units: Smart Devices and Mobile Phones. It named Jo Harlow to head the Smart Devices unit, while the other will be led by Mary McDowell. In North America, a weak spot for Nokia, it appointed Chris Weber, a 16- year Microsoft veteran, as president of its US unit.
4.Symbian, MeeGO not going for 'now'
Nokia will bring out a device this year on MeeGo, a high- end operating system it’s developing with Intel Corp, to gauge market reaction, Elop said. MeeGo engineers will then be shifted to work on innovations that can help Nokia leapfrog rivals.
Nokia plans to ship another 150 million phones based on its current smartphone operating system Symbian. However, Nokia CEO's announcement that "Windows Phone is our primary platform" in effect spells the end of Symbian.
5.Nokia to cut R&D budget
Nokia plans to “substantially reduce” its research and development budget. Nokia CEO Elop said that at 5.9 billion euros ($8.1 billion), Nokia’s corporate R&D spending is more than four times that of Apple’s.
6.Job cuts
Nokia CEO said that there will be “significant reductions” in Nokia jobs. "There will be substantial reductions in employment in various locations around the world and that too will affect Finland," Elop told reporters. "We don't have any specific comments about who and what level of people will be hit," he added in a webcast.
Earlier, the company announced 1,800 job cuts in the workforce of more than 120,000.
7.Nokia did talk to Google
Nokia CEO said that the company also had extensive discussions with Google, the other candidate for a deal, but that there was insufficient opportunity for Nokia to “differentiate” its products from others such as those made by Motorola, HTC or Samsung. There was also, with Google's strength in mapping, little chance for Nokia to get much out of its own strength in maps.
0 comments
Post a Comment