Two Lost Souls Nokia & Microsoft Set To Cut A Deal?

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Nokia Australia is saying nothing, but rumour has it that the company is set to cut a deal with Microsoft with several senior Nokia executives tipped to be dumped next week as the company’s new CEO who is ex-Microsoft looks to sell Windows based phones at the expense of the Symbian OS.There is also speculation that Microsoft is set to buy a chunk of Nokia who like Microsoft is struggling in the Smartphone market.

Germany weekly Wirtschaftswoche is reporting that newly appointed CEO Stephen Elop is set to give pink slips to Mary T. McDowell, from the mobile phones unit, as well as Niklas Savander, the manager of the markets unit, Kai Oistamo (Chief Development Officer) and Tero Ojanpera, the manager responsible for services and mobile solutions.

Last week, Nokia shares started to climb on speculation that Microsoft is set to cut an investment deal in an effort to buy their way back into the Smartphone business following news that their new Windows Mobile 7 OS was not a hit with consumers, and that sales had slumped from 4.7 with the old Windows Mobile OS to 2% for their all new Windows Mobile 7 OS.

Last week Adnaan Ahmad of Berenberg Bank in Hamburg published an open letter to Nokia CEO Stephen Elop and his former boss, Microsoft CEO Steve Ballmer, urging them to strike an exclusive deal to put Microsoft’s Windows Phone operating system on Nokia’s mobile handsets.

This is what the letter said:

Steve, you are probably thinking, ‘What do we gain on the back of this?’ Well, two million units shipped in the last quarter is not really much to write home about, given $500m in marketing programmes (ouch), but with Nokia on-side, you get access to a potential 20-25% global share over time – and EXCLUSIVITY. Right now, do you really think HTC, Samsung and LGE are pushing your products ahead of Google’s?

 

You need to tie yourself to a high-volume player to be relevant, which I know goes against your DNA. But do not forget that your MS-DOS software was originally only for IBM and then claimed a near-monopoly in the market. And, Steve, if you are successful, we will all forget your quotes from 2007. Do you remember this one: ‘Apple is a cute, little, tiny niche guy?’ Or this one: ‘No chance Apple iPhone is going to get any significant market share?’ (Ouch x2.) More importantly, your shareholders are going to be impressed that you have not gone after an expensive acquisition strategy in what is really (let’s face it) a consumer electronics industry.

Analysts claim that a stronger alliance between Microsoft and Nokia certainly isn’t outside the realm of possibility. The company’s already collaborate on Microsoft Office — which was how Elop, the former Microsoft Business Division president, connected with Nokia in the first place. And ever since he went to Nokia, Elop’s connection to Microsoft has been viewed as a possible prelude to a tighter relationship.

But a wholesale shift to by Nokia Windows Phone 7 from Symbian would be a huge change, similar to Apple adopting Intel chips.

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