Nokia explains the dangers of their deal with Microsoft

Nokia explains the dangers of their deal with Microsoft
In a filing with the Securities and Exchange Commission, Nokia explained the potential risks associated with their Windows Phone 7 deal with Microsoft. Nokia, as you probably know, is switching from Symbian to WP7 over the course of two years.

Nokia's filing says that Windows Phone 7 is an immature operating system, which "is a very recent, largely unproven addition to the market focused solely on high-end smartphones with currently very low adoption and consumer awareness relative to the Android and Apple platforms, and the proposed Microsoft partnership may not succeed in developing into a sufficiently broad competitive smartphone platform."

And if you thought that was pessimistic: Nokia also points out that they only have a "non-binding term sheet" agreement with Microsoft, but the final contract has yet to be negotiated. Even if the agreement is ironed out, Nokia still warns shareholders that the timeline to transition to WP7 might leave Nokia behind the competition.

And here's one concern that we share: Nokia acknowledges that their relationship with Microsoft could erode their brand identity in their stronger markets, like China, while failing to increase their presence in less Nokia-saturated markets like the U.S.

Nokia even addressed the motivation of their employees, of whom many will be laid off. The remaining employees, they say, may lose their motivation and focus, thereby limiting their productivity.

Please don't take this filing to meant that Nokia isn't confident in their Windows Phone 7 endeavors. Such filings are standard fare with the SEC, as a type of disclaimer with your shareholders. And wouldn't you rather hear these concerns directly from Nokia?

source: U.S. SEC via InfoWorld

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18 Comments

1. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

If there is any doubt that Nokia is betting the farm on WP7, the SEC filing should remove it. If the WP7 'relationship' does not produce for Nokia, there is going to be a cellphone vendor looking to be acquired.

2. wf ewfiq unregistered

qwszer rio ek erl e rf ierf dfv sdfaf afa ferifaz

3. achilles

Posts: 54; Member since: May 27, 2010

I have 1 question. Why didnt Nokia just go with Android?

4. gregory unregistered

answer is simple- no because no :)

10. protozeloz

Posts: 5396; Member since: Sep 16, 2010

don't know... don't answer!

5. kweezy

Posts: 4; Member since: Aug 11, 2010

They didn't go with Android because A: Microsoft is paying them handsomely, and B: The Android landscape is too competitive for Nokia to enter it so late

8. fsjon

Posts: 120; Member since: Sep 03, 2009

Not entirely...MSFT is paying Nokia, but in turn Nokia has to pay MSFT back for WP7 licensing per device. So yes, MSFT is paying Nokia, but Nokia does not actually see this money in hand (I guess kinda of a loop hole/back door to give Nokia WP7 for free without breaking any existing setup at MSFT).

16. DIYguy

Posts: 190; Member since: Feb 27, 2011

Because microsoft let's them have ovi maps and more of a say in other things aswell. With android it would have been goodbye for free and better navigation...

6. rafael.roque

Posts: 78; Member since: Jul 03, 2010

Maybe they should of explained this risk ahead of announcing the partnership intentions... What good does it now? It only raised more questions about the decision making abilities of the top management. We need a leader in Nokia that will turn their valuable assets into market solutions, not dump the investment made and bank on an unproven partnership!

7. ps unregistered

Wait! When did Nokia said that they will be using WP7? Thay have deal with microsoft but im pretty sure no1 said anything about WP7. First Nokia+Microsoft product bay be WP8

17. DIYguy

Posts: 190; Member since: Feb 27, 2011

Nokia hasn't even signed the agreement to take wp7 as their primary smartphone OS (at least yet)

9. SID unregistered

Nokia Should concentrate on designing and configuring the interface for symbian OS so that people will feel more comfortable and enjoyable with the UI on symbian.Plus they should also boost up the hardware that way better performance such as ram and GHZ processors.They shouldent have even make a contract deal with WP7 OS.If they were looking for more opportunities they should really take android despite of the competition of handsets in android and etc.

11. jbash

Posts: 345; Member since: Feb 07, 2011

I think it is a great move. I think Nokia's are one of the most well built phones. Unfortunately they never got a foothold with the market here in the states. With Micro$oft's platform and Nokia's camera/ovimaps/great designs I think it is a win win. Only time will tell.

13. iHateCrapple

Posts: 734; Member since: Feb 12, 2010

Micro$oft......? Is that really even valid anymore? There not the the best, biggest, or worth the most anymore.

18. ijuanp03

Posts: 488; Member since: Dec 30, 2014

So after 7 years, Nokia lost and is now using Android. Win-win you say?

12. ObiWanSymbian unregistered

Symbian, being absolutely resources (CPU and RAM) friendly, allowed Nokia to manufacture low-spec spartphones. How would you, after all, name a smartphone with a 680 MHz single core processor. And such processors were used on board of N8, C7 and many other Nokia's top products. Still, the prices of the latest Nokia devices were... well... not that affordable. I would even say, they were at the same level as the devices provided by competitors. Now, with the MS's requirement for an at least 1GHz processor, I'm expecting the top Nokias' prices to go high. Not as high as the unreasonable prices of the fruit tagged company's products, but definitely higher that the prices of HTC and Samsung alikes. Who's gonna buy that? By switching to touch-screen oriented ecosystem, they are already loosing the old E-Series' fans (E51, 52, 71, 72). What is going to fill the mid-range offer of the Finns? Will they still be the company that connects people? I'm affraid, they will have difficulties trying to connect the two ends;-). Looking for an evlolution of my E52, I remain Nokingly yours

15. Lucas777

Posts: 2137; Member since: Jan 06, 2011

First, wp7 is business oriented and who said it cant have a keyboard... Second, I beleive nokia is going to produce low cost phones with wp7, which, as long as apple doesnt make one, will give them a way to give the people something other than android. People will be able to buy cheap phones but see the brand name of windows and the nice interface and will be impressed. Also, wp7 is much more popular in other countries as is nokia so i dont expect the us to grab on immediately

14. IOS5 unregistered

Nokia didn't go with Android cuz if updates for there devices so difficult. Don't believe it just google it.

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