Nokia’s strategic focus starting to take shape

By Dave McQueen

Only two months after announcing a new smartphone strategy to phase out Symbian OS and focus on Microsoft’s Windows Phone, Nokia today announced plans for a strategic collaboration with Accenture in which Nokia would outsource its Symbian software activities and transition about 3,000 employees to Accenture. At the same time, Accenture would provide mobility software services to Nokia for future smartphones, including business and operational services around the Windows Phone platform, as well as to other ecosystem participants.

“Mobility is a key area for Accenture,” said Marty Cole, chief executive, Accenture Communications and High Tech group. “This collaboration with Nokia will enhance our ability to help clients across multiple industries leverage mobility to advance their business agendas. It is a real win-win for Accenture and Nokia”.

The deal not only sees Accenture increase its foothold in mobile services but also sees Symbian re-united with David Wood, its co-founder and now Embedded Mobile Industry Advisor at Accenture. Accenture and Nokia have been working together since 1994 and in October 2009 Accenture acquired Nokia’s professional services unit, which served as a key building block in Accenture’s Mobility Services portfolio.

For Nokia, the deal will enable the Finnish vendor to focus closely on future smartphone development, namely integrating Windows Phone with its hardware, rather than be encumbered by the outgoing Symbian platform. Nokia does, however, have an ongoing commitment to Symbian and plans to sell 150 million Symbian devices in the future, assuming it is able to maintain the platform’s viability during the transition to Windows Phone. Jo Harlow, Nokia’s executive vice president for Smart Devices, said: “As we move our primary smartphone platform to Windows Phone, this transition of skilled talent to Accenture shows our commitment to provide our Symbian employees with potential new career opportunities.”

The companies expect completion of the final agreement during summer 2011 and the transition of employees by the end of the year. The Accenture deal forms part of a wider Nokia plan to reduce operating expenses for devices and services by €1 billion (US$1.5 billion) in 2013 compared with 2010. In addition, Nokia also plans to reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK.

The desire for Nokia to outsource software activities and cut costs is a clear indication of the company’s new-found focus. “At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions,” said Stephen Elop, Nokia president and CEO. Nokia hired Elop from Microsoft in 2010 and this year he announced that Nokia is pinning its smartphone hopes on Windows Phone as its primary platform to compete more effectively against Apple iOS and Android.

Now that Nokia has outsourced Symbian and sold off the commercial licensing and services business of Qt, a cross-platform application and UI framework, it will be able to operate in a far more platform-agnostic mode in future. Ridding itself of these burdens will allow the company to be far more pragmatic in its future choice of platforms, enabling it to react faster to market demands, although at the cost of losing some element of control and internal expertise. This still leaves Nokia with the MeeGo software platform it developed with Intel in its portfolio, so is it a question of when, rather than why, will it go the same way as Symbian? If this outcome were to materialize, Nokia will have managed to outsource the majority of its software business to focus primarily on hardware, sending the Finnish company back to its roots as a very successful handset design house, which is arguably what it does best.