Nokia 2011 Annual Report Download - page 90

First, in smartphones, we announced our partnership with Microsoft, discussed below, to bring together
our respective complementary assets and expertise to build a new global mobile ecosystem for
smartphones. Under the partnership, formalized in April 2011, we are adopting and licensing Windows
Phone from Microsoft as our primary smartphone platform. We launched our first Nokia products with
Windows Phone under the Lumia brand in October 2011.
Second, in feature phones, our strategy continues to be to leverage our innovation and strength in
growth markets to connect the next billion people to the Internet and information. Through our
investments in developing assets designed to bring a modern mobile experience – software, services
and applications – we believe we have the opportunity to connect the “next billion” aspirational
consumers around the world to the Internet and information, especially in key emerging markets.
Third, we believe we must also invest to take advantage of future technology disruptions and trends.
Through ongoing research and development, we plan to explore and lead next-generation
opportunities in devices, platforms and user experiences to support our industry position and longer-
term financial performance.
In the following sections, we describe the factors and trends that we believe are currently driving our
Devices & Services net sales and profitability.
Transition
Year 2011 was a year of transition for Nokia. Prior to the announcement of our partnership with
Microsoft in February 2011 and the adoption of Windows Phone as our primary smartphone platform,
the Symbian and MeeGo operating systems were our primary smartphone platforms. Following our
announcement of the Microsoft partnership, we expected to sell approximately 150 million more
Symbian devices in the years to come and to ship one MeeGo device. However, the demand for our
Symbian devices began to deteriorate. The consequent decline in our Smart Devices net sales and
profitability was a result of both a decline in our Symbian smartphone volume market share and
pressure on pricing as competitors aggressively capitalized on our platform and product transition.
Towards the end of 2011, the competitiveness of our Symbian devices continued to deteriorate as
changing market conditions created increased pressure on Symbian, which further adversely affected
our Smart Devices net sales, profitability, market share and brand perception. In certain markets, there
has been an acceleration of the trend towards lower-priced smartphones with specifications that are
different from Symbian’s traditional strengths, which has contributed to a faster decline in our Symbian
volumes than we anticipated. We expect this trend to continue in 2012.
To endeavor to maximize the value of our Symbian asset going forward, we expect to continue to ship
Symbian devices to specific regions and distribution channels, as well as to continue to provide
software support to our Symbian customers, through 2016. The software support for our Symbian
customers was outsourced to Accenture commencing from September 2011. As a result of the
changing market conditions, combined with our increased focus on Nokia products with Windows
Phone, we believe we will sell fewer Symbian devices than previously anticipated.
Towards the end of 2011, we launched the Nokia Lumia 800 and Nokia Lumia 710, our first
smartphones based on the Windows Phone platform. During 2011, we also launched the Nokia N9,
which was the outcome of efforts in our MeeGo program. Since the start of 2012, we have continued to
bring the Lumia experience to several more geographies, including the United States, where we have
launched the Nokia Lumia 900, the first LTE device designed specifically for the North American
market, which is available exclusively through AT&T. In late February 2012, we announced our
intention to bring the Lumia 900 to markets outside the United States and introduced the Lumia 610,
our lowest cost Lumia smartphone to date.
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