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The Nokia-Microsoft Alliance in the Global Smartphone Industry (Circa 2011)

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The Nokia-Microsoft strategic alliance was announced in early 2011 to cooperate in the development of smartphones. The Wall Street Journal wrote: "Nokia calls Microsoft for help." 1
The Financial Times observed: "Elop jumps into the arms of former boss."2 The alliance was specifically initiated by Stephen Elop, an ex-Microsoft executive who had worked with Steve
Ballmer, CEO of Microsoft. No wonder Nokia hired Elop to become its CEO in 2010. This was a calculated move by Nokia to grow in an industry that carried good prospects for the future. In addition, Elop's expertise was in the software sector, where Nokia wanted to venture into the future. Both companies needed a partner to expand in an industry that was in a growth mode.
Besides this, Nokia was particularly vulnerable because of its losing market share and because
Apple's iPhone was growing in the U.S. and global markets. Microsoft was interested in Nokia because of its long-term interest regarding introducing Windows phone technology/software.
Since Nokia continued to be a global player in the cell phone industry, it made sense to create a corporate tie-up that aimed at global expansion for both companies. Success of Apple's iPhone was another factor in seeking a long-term alliance in a market that has grown multifold in the global mobile phone market.
In 2012, Nokia was the largest manufacturer of mobile phones and other telecom gear in the world with revenues of $55 billion and a market capitalization of $19 billion. Microsoft, on the other hand, was the largest software maker in the world and generated revenues of $69 billion.
The company carried a healthy market capitalization in 2011 that stood at $266 billion?
By being a cash-rich company, Microsoft was able to inject a sizable amount of money in the alliance. As of February 2012, a closer look at the alliance reveals that both

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