Nokia 2011 Annual Report Download - page 91

During the first half of 2011, our mobile device market share decline was further negatively affected by
weakness in our feature phone portfolio primarily due to a lack of a dual SIM offering. During the
second half 2011, however, the competitiveness of our feature phones improved when we introduced
several dual SIM devices, as well as the new Nokia Asha range of feature phones, which offers a more
smartphone-like user experience. These new additions helped us recapture some market share in the
feature phone segment.
Year 2012 is expected to continue to be a year of transition, during which our Devices & Services
business will be subject to risks and uncertainties, as our Smart Devices business unit continues to
transition from Symbian products to Nokia products with Windows Phone and our Mobile Phones
business unit continues to bring more smartphone-like features and design to our feature phone
portfolio. Those risks and uncertainties include, among others, continued deterioration in demand for
our Symbian devices; the timing, ramp-up and demand for our new products, including our Lumia
devices; further pressure on margins as competitors endeavor to capitalize on our platform and product
transition; and uncertainty in the macroeconomic environment. Mainly due to these factors, we believe
that it is not appropriate to provide annual financial targets for 2012.
Longer-term, we target:
• Devices & Services net sales to grow faster than the market, and
• Devices & Services operating margin to be 10% or more, excluding special items and
purchase price accounting related items.
Microsoft Partnership
In February 2011, we announced our partnership with Microsoft to bring together our respective
complementary assets and expertise to build a new global mobile ecosystem for smartphones. The
partnership, under which we are adopting and licensing Windows Phone from Microsoft as our primary
smartphone platform, was formalized in April 2011.
We are contributing our expertise on hardware, design and language support to the Microsoft
partnership, and plan to bring Nokia products with Windows Phone to a broad range of price points,
market segments and geographies. We and Microsoft are closely collaborating on joint marketing
initiatives and on a shared development roadmap on the future evolution of mobile products. The goal
for both partners is that by bringing together our complementary assets in search, maps, location-
based services, e-commerce, social networking, entertainment, unified communications and
advertising, we can jointly create an entirely new consumer proposition. We are also collaborating on
our developer ecosystem activities to accelerate developer support for the Windows Phone platform on
our mobile products. Although Microsoft will continue to license Windows Phones to other mobile
manufacturers, the Microsoft partnership allows us to customize the Windows Phone platform with a
view to differentiating Nokia smartphones from those of our competitors that also use the Windows
Phone platform.
Specific initiatives include the following:
• Contribution of our mapping, navigation, and certain location-based services to the Windows
Phone ecosystem. We aim to build innovation on top of the Windows Phone platform in areas
such as imaging, while contributing our expertise on hardware design and language support,
to help drive the development of the Windows Phone platform. Microsoft will provide Bing
search services across our mobile device portfolio and will contribute its strength in
productivity tools, advertising, gaming, social media and a variety of other services. We
believe that the combination of navigation with advertising and search services will enable
better monetization of our navigation assets and create new forms of advertising revenue.
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