The Decision Of Microsoft Discontinuing The Nokia Brand

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Early 2014, Microsoft came to a deal acquiring Nokia’s handset business for US$7.2 billion, aiming to extend its markets for mobile devices while rivaling Google’s Android operating system (OS), Apple and Samsung in the global smartphone business (deal, 2013). It seemed a valuable deal merging both software and hardware, beneficial to both Microsoft who determined to control the telecommunication value chain and Nokia, who required an ally of strong financial capability. Six month later, Microsoft decided to move away from the Nokia brand - switching the name of smartphones from “Nokia Lumia” to “Microsoft Lumia” while still using ‘Nokia’ for low-end basic phone (T, 2014). This report will investigate the decision of
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In fact while Nokia tried to keep up with the changes by changing operating system, most of its platform was squeezed out by Android instead of being replaced by Windows Phone (Appendix A).

Financial difficulties

Nevertheless the net sales of Nokia continued to fall (Statista, 2015) from 38.66 in 2011 to 30.18 billion euros (Appendix B) in 2012, market share overtaken by Android and ios proven these responses unsuccessful.

In 2012, Nokia experienced financial difficulties. In order to gain more revenue, it chose to implement cost-cutting strategy – lowering Device and Services operating expenses. Including layoff 10000 employees from manufacturing facilities by the end of 2013. Also Nokia closed research facilities in Ulm, Germany and Burnaby, Canada (Brian, 2012).

Nokia has always been famous for its mobile phone devices however instead of research and development it has to focus on the profitability and competitiveness of its smartphone business at that stage. Meanwhile it still conducted acquisitions of “imaging assets” and owned patents crucial for next mobile transition. But Nokia must recognize the indirect costs of layoffs that it would lose experienced researchers and engineers and this may prevent it from catching up on innovations. Direct cutting may also bring negative public associations - lowering the brand image and investors may become unfavorable toward

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