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Microsoft to Buy Nokia Units and Acquire Executive

September 3, 2013 by

Late Monday, Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which is meant to turn the Finnish mobile phone pioneer into the engine for Microsoft’s mobile efforts.

Stephen Elop, the former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes, setting him up as a potential successor to Steven A. Ballmer, Microsoft’s chief executive. Mr. Ballmer has said he will retire from the company within 12 months.

“This agreement is really a bold step into the future for Microsoft,” Mr. Ballmer said in a telephone interview from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”

The deal, which was first broached between Microsoft and Nokia executives in February, is the latest transformation of the 150-year-old Finnish company. Nokia began life as a conglomerate making products like rubber boots and car tires before reinventing itself in the 1980s as the world’s largest manufacturers of cellphones.

Nokia’s once mighty position in the mobile phone business has been lost, as the industry shifted to the era of the smartphone. Samsung and Apple divide nearly all of the profits in the global smartphone business now.

Nokia’s fall has been most spectacular in Asia, a region that its phones once dominated. As recently as 2010, the company had a 64 percent share of the smartphone market in China, according to Canalys, a research firm. By the first half of this year, that had plunged to 1 percent.

While Nokia phones used to be prized in Asia and other developing economies for their durability and value, the company was late to introduce innovations like touch screens. That left the high end of the market to brands like Apple and Samsung.

In the lower price ranges, smartphone makers from China have been more responsive to consumer demands, offering phones with features resembling those of their more expensive rivals at a fraction of the cost.

Risto Siilasmaa, Nokia’s interim chief executive, said on Tuesday that the sale of the handset business was the logical step in the company’s evolution but still pulled on his heartstrings.

“Selling a business is sometimes the right cause of action, but it’s emotionally complicated,” Mr. Siilasmaa said.

Consumers may be less concerned.

At a cellphone store in central London on Tuesday, Geoffrey Widdows, a 33-year-old engineer, said he had once been a devoted Nokia fan but now preferred Android phones because of the greater choice of apps available on phones from companies like Samsung and HTC.

“Everyone had a Nokia when I was growing up,” he said. “You just don’t see them around a lot anymore.”

A megadeal between Nokia and Microsoft is something that pundits and analysts have speculated about for years, after Mr. Elop joined Nokia and signed a pact with Microsoft in February 2011 to standardize the software company’s Windows Phone operating system.

The cellphone fortunes of the two companies have become closely intertwined since that agreement, but the relationship has done little to turn either company into a leader in the mobile business. Handsets running Windows Phone accounted for only 3.7 percent of smartphone shipments in the second quarter, according to the technology research firm IDC.

Nokia remains the second-largest shipper of mobile phones in the world, after Samsung, but that is largely because of lower-end feature phones, from which consumers are moving away. Nokia is no longer among the top five makers of smartphones.

A big question is whether Microsoft and Nokia will succeed as one company where they have not as close partners. Mr. Ballmer said Microsoft and Nokia had not been as agile separately as they would be jointly, citing how development could be slowed down when intellectual property rights were held by two different companies.

“There’s friction,” he said.

Mark Scott contributed reporting from London and Eric Pfanner contributed from Tokyo.

Article source: http://www.nytimes.com/2013/09/04/technology/microsoft-acquires-nokia-units-and-leader.html?partner=rss&emc=rss

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Samsung Said to Be Preparing to Unveil Smart Watch

August 18, 2013 by

The watch, called Samsung Galaxy Gear, would be shown off “around the time” of an electronics industry trade fair in Berlin that begins Sept. 6, a person briefed on the matter said Saturday.

Samsung has scheduled a media event for Sept. 4 at which it is also expected to introduce the Note III, a new version of its “phablet,” a cross between a phone and a tablet.

“The commercial launch will definitely be this year,” said the person with knowledge of the unveiling, who spoke on the condition of anonymity because the person was not authorized to speak publicly about the company’s plans.

The Galaxy Gear would not be the first watch phone on the market. Sony recently introduced a second-generation version of its smart watch, a gadget that works in conjunction with a smartphone in the user’s pocket. Other smart devices like the Pebble Watch and the I’m Watch have also been sold for some time. Apple is said to be working on its own wrist-worn device.

For Samsung, the idea is also not entirely new. The company introduced its first watch phone in 1999. Still, the category of smart watches remains underdeveloped, as none of the existing devices have captured the imagination of consumers.

But analysts say that could change now that the two biggest smartphone makers, Samsung and Apple, are getting into the watch business.

Canalys, a research firm, predicts that sales of smart watches will rise to five million in 2014, a tenfold increase from this year.

“Smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets,” Chris Jones, an analyst at Canalys, said in a statement.

From a design standpoint, Galaxy Gear may be less innovative than some of the speculation around the device has suggested. The person with knowledge of the device said, for example, that it would not use a flexible screen, as some analysts had expected.

News of the Galaxy Gear introduction was first reported by SamMobile, a Samsung fan site.

Samsung declined to comment.

Article source: http://www.nytimes.com/2013/08/19/technology/samsung-said-to-be-preparing-to-unveil-smart-watch.html?partner=rss&emc=rss

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Microsoft and Huawei to Unite to Sell Windows Smartphones in Africa

February 5, 2013 by Leave a Comment

The phone, called the Huawei 4Afrika Windows Phone, will cost $150 and initially be sold in seven countries. Microsoft’s Windows Phone software is fourth among smartphone operating systems, with just 2 percent of the worldwide market in September, according to Canalys, a research firm in Reading, England.

“Microsoft is a small player in smartphones and it needs as many partners as it can get,” said Pete Cunningham, an analyst at Canalys. “And Africa is one of Huawei’s strongest markets outside of China.”

Microsoft’s choice of Huawei, a leading maker of mobile networking equipment for African operators, does not detract from Microsoft’s commitment to Nokia, which is relying on Windows Phone software to lift its new line of smartphones and return the company to profitability.

Fernando de Sousa, the general manager for Microsoft Africa, said that in the next few months, Microsoft and Nokia planned to introduce two new Windows phones for the African market.

Africa is the world’s fastest-growing region for smartphones, with an average sales growth of 43 percent a year since 2000, according to the GSM Association, an industry trade group based in London.

In sub-Saharan Africa alone, 10 percent of the 445 million cellphone users have smartphones, but that is expected to increase rapidly as operators expand high-speed networks.

By 2017, most consumers in South Africa will be using smartphones, up from 20 percent last year, according to the GSM Association. In Nigeria, the continent’s most populous country, the outlook for sustained growth is even greater, with smartphone penetration projected to reach just 30 percent by 2017.

The World Bank says that roughly a quarter of the one billion people on the continent are middle-class wage earners, the target group that Microsoft will try to reach with the Huawei phone, Mr. de Sousa said.

“Africans are generally quite conscious of brand, quality and image,” he said. “We are being very clear that we are not going to be building something cheap for this market. What we want to do is deliver real quality innovation at an affordable price. Compared to some smartphones that cost $600 here, this is very affordable.”

Microsoft plans to introduce the Huawei 4Afrika phone on Tuesday at events in Lagos, Cairo, Nairobi, Johannesburg and Abidjan, Ivory Coast. It will also be sold in Morocco and Angola.

The phone, which will run the Windows Phone 8 operating system, will be sold with applications designed for African consumers. Some apps give easy access to African soccer results. Others, like in Nigeria, focus on the country’s entertainment and film industries. An application developed in Egypt allows a woman who feels she is being harassed to alert the authorities to her location with one touch of her phone.

By targeting Africa, Microsoft is trying to build on momentum it recently gained through its partnership with Nokia. The company sold 4.4 million Lumia Windows smartphones in the fourth quarter of last year, up from 2.9 million the previous quarter.

In November, the Microsoft chief executive, Steven A. Ballmer, said Microsoft had sold four times as many Windows phones at that point as it had a year earlier. A month later, Microsoft said sales of Windows phones over the holidays were five times those of a year ago.

Combined, Google’s Android and Apple’s iOS operating systems run about seven in 10 smartphones worldwide, with BlackBerry at 15 percent. But by 2016, Canalys expects Windows to overtake BlackBerry to become the No. 3 operating system, with a 15 percent share, compared with 5 percent for BlackBerry.

Microsoft is not alone in its focus on Africa. Samsung, the largest seller of smartphones and cellphones, has recently expanded the less expensive range of Galaxy smartphones to market in Africa and other emerging markets, said Anshul Gupta, an analyst at Gartner in Mumbai.

Mr. Gupta said there was pent-up demand among African consumers for a smartphone costing $100 or less. He said several smaller Chinese phone makers, including TCL, ZTE and Lenovo, were working on developing simpler smartphones that sold for $50.

Article source: http://www.nytimes.com/2013/02/05/business/global/microsoft-looks-to-africa-for-mobile-gains.html?partner=rss&emc=rss

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Nokia and Ericsson Accelerate Cost-Cutting Plans and Revamping

July 22, 2011 by Leave a Comment

Nokia, the largest seller of mobile phones by volume, said it planned to cut more than the 1 billion euros ($1.43 billion) it had previously planned to trim from its operating expenses by 2013. The company, based in Espoo, Finland, did not specify a new target.

It announced the new plan as it reported a loss of 368 million euros in the second quarter.

Ericsson, the largest maker of telecom networking equipment, said it took a restructuring charge of 1.3 billion Swedish kronor ($202 million) in the quarter, more than some investors had been expecting, to pay for layoffs in Sweden.

The separate announcements created heavy trading in shares of both companies in Europe.

Ericsson’s shares fell nearly 10 percent, even though the company, based in Stockholm, reported a 59 percent increase in profit and a 14 percent rise in sales.

Nokia’s shares rose 2.5 percent as investors welcomed the handset maker’s intention to increase its austerity measures. Nokia said its sales fell 7 percent in the second quarter, to 9.275 billion euros from 10 billion euros a year earlier.

Pete Cunningham, an analyst at Canalys in Reading, England, said Nokia’s sales decline stemmed from its difficulty selling smartphones that use its Symbian operating system in China. Nokia said in February that it planned to progressively replace Symbian with Microsoft’s Windows phone software starting later this year.

“This is obviously not good news from Nokia,” Mr. Cunningham said. “I think the appetite for Symbian devices has fallen away very quickly since Nokia made the announcement about moving to Microsoft in February. This shows they definitely need those Windows phones as soon as possible.”

Stephen Elop, the Nokia chief executive hired from Microsoft last year, said Nokia had replaced key sales executives, reduced inventories in China, revamped its handset-pricing strategy and refocused its retail marketing programs to compensate for the downturn.

“The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011,” Mr. Elop said in a statement. “However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business.”

Mr. Elop, in a conference call with analysts, reiterated that Nokia planned to sequentially introduce the first Microsoft devices later this year in various national markets. He did not say how many devices Nokia would introduce, or in which markets.

Nokia’s sales fell in all regions of the world except the Middle East and Africa during the quarter. The greatest percentage decline was in North America, where sales fell 61 percent, to 88 million from 223 million a year earlier.

Ericsson shares fell even as the company, which faces competition from the Chinese companies Huawei and ZTE and its French rival Alcatel-Lucent, reported a 59 percent increase in second-quarter profit, to 3.2 billion kronor from 2 billion kronor a year earlier.

Sales at Ericsson rose 14 percent, to 54.8 billion kronor from 48 billion.

During an interview, Hans Vestberg, Ericsson’s chief executive, said the company’s restructuring charge in the second quarter had been greater than expected but was part of the current adjustment of its global business to meet the economic conditions.

“If you look at our numbers today, this is one of the strongest quarters of growth we’ve ever had,” Mr. Vestberg said. “We had a higher restructuring cost than expected but we did that to improve the profitability of the company going forward.”

Mr. Vestberg said demand for mobile networking equipment remained strong globally during the quarter, especially in Russia, China, Brazil and India. Sales rose by 70 percent in Russia, 96 percent in China, 17 percent in Brazil and 107 percent in India, as operators built high-speed mobile broadband networks for growing populations.

Sales of networking equipment in North America fell 6 percent in the quarter, which Mr. Vestberg attributed to the appreciation of the Swedish currency against the dollar. Mr. Vestberg said Ericsson planned to report about $300 million in restructuring charges this year.

With the announcement on Thursday, the company was two-thirds of the way to its goal, he said.

Article source: http://feeds.nytimes.com/click.phdo?i=4f7a38abaef36e6db4c71d85f85ee7fe

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Intel, on the Outside, Takes Aim at Smartphones

April 11, 2011 by Leave a Comment

As long as PCs were dominant, Intel was dominant. But it’s now a new world in which tiny hand-held computers, more commonly known as smartphones, are outselling personal computers.

And usually, there is no Intel inside.

Instead, the processors in smartphones and tablets these days are more likely to be made by companies that few consumers would recognize, like Qualcomm, Nvidia and Marvell. And those companies are fighting to gain market dominance in much the same way Intel did with chips for personal computers: by making what’s inside the phone matter to consumers.

“It’s become an arms race, like the early days of the PC industry,” said Chris Jones, vice president and principal analyst at Canalys, a market research company. These chip companies are racing to improve the speed and performance of their processors so they can boast of having the fastest application processor on the market. With smartphones and tablets increasingly performing the tasks of full-size computers, they have an additional obsession: making energy-efficient chips that will prolong the battery life of a mobile device.

So far, the obsession with speed and energy efficiency has paid off for everybody but Intel. The PC chip giant has been conspicuously late to the mobile market, having canceled plans to ship a smartphone version of its Atom processor after a demonstration of it running in an LG phone over a year ago.

The difficulty for Intel, say analysts, has been to get its chips’ power consumption down to a level reasonable for a phone. Still, Paul Otellini, Intel’s chief executive, vowed recently that Intel-powered smartphones would be on the market before the year is out. With those phones, Intel hopes to rebuild credibility in a business some customers had thought it would never get right.

But meanwhile, the company has just recently lost its mobile champion, Anand Chandrasekher, the 24-year Intel stalwart who has long headed up the company’s mobile processor development, including the wildly successful Centrino product that made Wi-Fi a household name.

While industry analysts were divided on whether Mr. Chandrasekher had resigned or had been pushed out, they were in agreement on one thing: The company has a lot of catching up to do in the mobile market. “It’s clear that Intel’s mobile business is not going as well has they had hoped,” said Linley Gwennap, an industry analyst and head of the Linley Group in Mountain View, Calif. “But this is not an indication of a change of strategy, just of leadership.”

Intel executives quickly assured the industry that the company remained committed to smartphones, despite the sudden departure of Mr. Chandrasekher.

Competitors say they will be ready for Intel when it arrives. “I always assume they’ll show up,” said Michael Rayfield, general manager of Nvidia’s mobile group. “All I can do is innovate rapidly to stay ahead.”

Intel’s competitors are also hoping that a recent decision by Nokia, the largest phone maker, to use Windows Phone 7 rather than the Symbian operating system, will help them fend off Intel, given that the Microsoft program is currently optimized for ARM-based cellphones. “Nokia used to be a nonopportunity for us,” said Jen-Hsun Huang, chief executive of Nvidia. “Our market opportunity just got 33 percent bigger.”

Qualcomm has the same idea. Anything that expands the “Microsoft phone ecosystem,” said Steven M. Mollenkopf, executive vice president and group president at Qualcomm, based in San Diego, is a “positive thing for Qualcomm.”

In contrast to the PC market, in which Intel and Advanced Micro Devices slugged it out through the 1980s and 1990s, the list of companies supplying chips for smartphones is long. Qualcomm, Texas Instruments and Samsung lead the market with a combined market share of 87 percent — with the biggest share of that belonging to Qualcomm. Nvidia, Broadcom, Samsung, Marvell and others are vying for the remainder, according to the market researcher Strategy Analytics.

Damon Darlin contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=ad81836ffc664be73850832b72bb2b23

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