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MARKETING MANAGEMENT ASSIGNMENT

MARKETING PLAN FOR NOKIA LUMIA

SUBMITTED BY: POOJA VACHPEKAR(11030141109) RAVI BHAGWAT(11030141092)

INDEX
1. Execute summary 2. Scenario/situation analysis
2.1 Market summary 2.2 List of target market 2.3 Market demographics
2.3.1 Demography 2.3.2 Geography 2.3.3 Consumer behaviour

2.4 Trend
2.4.1 What consumer buy how and why- shift

2.5 Market need 2.6 Market growth 2.7 SWOT analysis 2.8 Competitors 2.9 Product offering
2.9.1 Market mix

2.10 Key to success 2.11 Figure out potential/critical issue

3 Market summary
3.1 Mission: about customer 3.2 Marketing objective 3.3 Financial objective 3.4 Target market 3.5 Segment target market 3.6 Positioning 3.7 Strategies 3.8 Marketing mix 3.9 Market research

4 Financials
4.1 Sales forecast 4.2Expense forecast

5 Internal structure
5.1 How will you implement it 5.2 Contingencies plan

1. EXECUTIVE SUMMARY The report is on Marketing Strategy of Nokia Lumia is an overview of Nokia's entry and expansion in the smart phone segment. Nokia made its foray into the Windows Phone mobile platform, which the Finnish company is hoping will help it regain some share of the smartphone market, and today we have news of the availability of some new updates for the Nokia Lumia 610, 710, and 900.

2. SCENARIO ANALYSIS Nokia held the title of best-selling mobile vendor for well over a decade, but now their reign at the top of the charts is over as they have had to move aside for Samsungs surge to the top. Many industry experts had predicted this shift in power ever since the mobile phone went smart a few years back. Nokias dominance of the global feature phone market was only ever going to get them so far and when the world embraced smartphone technology, Nokia were ponderously slow at adapting to the market. Still, better late than never, as they say, and with the new Lumia handset (inspired by the Finns partnership with Microsoft) Nokia have finally arrived at the smartphone party. The Finnish mobile giants have released the glossy Lumia range with models; Lumia 710 and Lumia 900 being two of the more popular handsets in the series. Despite lessons being learnt and huge progress being made with the Lumia range, many Nokia loyalists still find it difficult to enthuse about their latest flagship products. Here a few reasons why Nokia is still finding life difficult in the fiercely competitive smartphone world. Apps: Nokia hasnt come out with any particularly ground- breaking apps. Android and iPhone has much larger choice of apps and still totally dominate the market. Perhaps with new backing from computer gurus, Microsoft, this may change; but for the time being, Nokia are lagging behind.

Display: Its noticeably dimmer than other high-end devices and even from Nokias own previous flagship device, the N9. Camera Quality: A particularly disappointing effort from Nokia who acknowledged within the mobile industry as manufacturers of quality photographic technology. Many Android devices are ahead of this and again even its own N9 device trumps the Lumia. Battery Life: Although battery-life is oft neglected in smartphone land, the Lumias struggles when looked at in comparison with a whole host of Android handsets. Front Camera- or lack thereof: No front camera means no video call function and puts the Lumia way down the desirability list. No memory card slot: So unfortunately the Nokia Lumia is left bereft of any external storage options. Weak Browser: This Lumia does not support Flash or Silverlight. Speakerphone and Audio: Again when comparing the Nokia with similarly priced models on the market; its clear that this Lumia would probably not be the first choice for audiophiles. Samsung I9100 Galaxy S II, HTC Titan, LG Optimus all outperform the Lumia. 2.1 MARKET SUMMARY The phone maker is hoping to broaden the reach of the Lumia series to appeal to new segments such as the lower end of the market, where Nokia has been historically strong with feature phones and Symbian handsets. It is also thought to be accelerating its Lumia marketing efforts in emerging markets, where communicating around pricing are key. Previous heavyweight marketing assaults have focused on its high-end Lumias such as the 800, which was the first model in the range to be launched last year, and the newly-launched 900 device, which it hopes will help it make up ground in the lucrative US market. 2.2 TARGET MARKET

Nokia Lumia is the product of both Nokia and Microsoft as it teams up to have a bigger share of the smartphone market that is being dominated by Apple and Google Android. There are four Nokia Lumia models out in the market right now. These are Nokia Lumia 610, Nokia Lumia 710, Nokia Lumia 800, and Nokia Lumia 900. The target market is as follows: The Nokia Lumia 610 targets specifically the students as it is priced for 12999 The other Nokia Lumia models target windows lover users and working professionals. The Nokia Lumia 800 and Nokia Lumia 900 target the high end users and techno savy people.

2.3 MARKET DEMOGRAPHICS The market demographics can be segmented as follows: Age- The target age group is between 20 -34 years. Income- The product is targeted towards young working professional people .Their average income is considered to be 25 to 50 thousand. Lifestyle- The product is targeted towards students and working professionals who are techno savvy and who like to use windows operating system. It is also targeted towards young people who love gaming and are fan of Xbox. 2.3.1 GEOGRAPHICS

The immediate geographic target is the US and the Asian countries. The total targeted population is over 1million

2.3.2 CONSUMER BEHAVIOUR In the market of the smart phones consumers not only want good looks in a phone but also a good operating system. In todays competitive market of android phones people are less attracted towards windows phone as it offers better features and has a bigger applications market.

Even though gamers are willing to buy Nokia Lumia as it has the Xbox feature. People interested in windows operating system also go for the Lumia series.

2.4 TREND 2.4.1 What consumer buy and how they shift?? Nokia has been disrupted by Android and iPhone. Competition knows about weakness in Nokia Symbian and Windows portfolio, and the inability of the platform itself to compete on anything else but price. If rivals could match Symbian and Windows handsets on price, with good enough, similarly featured Android devices 9 customers out of 10 will leave the shop with new Android device in their pocket. And, as of this spring, competitors like Samsung and HTC are matching Nokia Symbian and Windows device price points aggressively.

2.5 MARKET NEED It is designed to appeal to a more youthful audience purchasing their first smartphone and motivated by the opportunity to keep in touch with friends, family and all the latest information. Running on the latest version of Windows Phone 7.5, Lumia 610 comes preloaded with Nokia's suite of experiences including Nokia Maps, NokiaDrive and Nokia Transport in addition to over 1,00,000 apps to choose from on the Windows marketplace, the built-in Microsoft Office app and Xbox Live. The smartphone comes equipped with 800 MHz processor and 8 GB of internal storage and features 3.7-inch display and a 5MP camera. 2.6 MARKET GROWTH Nokias Lumia range already includes the 610, the 710, the 800 and the 900. The 800 was the flagship Windows Phone device when Nokia announced that it would move from its original Symbian operating system to Windows Phone, and the larger 900 offers a bigger screen and faster speeds on American 4G networks. The new, lower-numbered devices suggest that Nokia sees its future

operating in the mid-market, rather than competing with the Apple iPhone and Samsung Galaxy S3 top-of-the range devices. Growth in emerging markets, such as China and India suggests that Nokias strategy will be to aim for longer term growth in areas still attractive to companies such as BlackBerry, although manufacturers of Android handsets are also hoping to do well in such new territories.

2.7 SWOT ANALYSIS Strengths : Great phone designing capability and great product quality reputation Great price point coverage(Very low to Very High) Supply chain and distribution experience Two very competitive in-house software platforms in Belle and Meego Weaknesses : Poor marketing skills (excluding few markets like India) Could not use its global presence to create a viable ecosystem. Not able to leverage production and software knowledge to create other product families(Camera and Tablets could have a natural choice) Poor competitor and market analysis (Apples iphone and USA market) Opportunities: Nokia has a great market disruption and it has a great chance of creating a unique winning product category.(Example is iphones own small but disruptive start). Windows phone platform has already got all the ingredients for a powerful ecosystem.

Threats:

Android ecosystem covers all the bases from low to high-end price points and has a booming ecosystem. Apples iphone is still a big threat in high-end market Very bad press coverage and poor image projection by tech media

2.8 COMPETITORS The iphone and android phones are the major competitors. The various models that are competitors are as follows: 1. Samsung galaxy 2. Sony xperia 3. HTC one 4. Apple iphone 2.9 PRODUCT OFFERING The Nokia Lumia series is a series running Windows Phone OS. Ph on e mo del

Screen type

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Ph on e mo del

Screen type

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Technology

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Gen erati on

Form factor

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Nokia 480x800 px Lumi 16m-color a 710 WVGA

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480x800 px Noki 16m-color a WVGA AMOL 2011 Lumi ED(16.7M) a 800 Color (Capacitive 480x800 px Noki 16m-color a WVGA AMOL 2012 Lumi EDColor a 900 (Capacitive t ouchscreen)

GSM EDGE UMT P S WLAN

GSM EDGE UMT S WLAN (4G P LTEfor certain markets only)

2.9.1 MARKETING MIX 1. PRODUCT Variety: In every series of Nokia there are large numbers of sets thus large variety Quality: Nokia gain brand personality and market shares of 35% because of its quality.

Design: Nokia sets are of various designs such as sleek, trendy and available in unique colours. Features: Each set of Nokia Lumia has its own features. 2. Price Prices start from mere Rs.12000 to Rs.50, 000 to suit all class of people. Nokia also offer cash allowances It uses skimming price strategy 3. Promotion Advertising Through TV, Sign boards, Bill boards, Radio and Newspaper, Broachers, Posters Dummies and display stands Personal selling By product training to Distributer (what is product) Sale promotion Gift like Yamaha bike, Philips TV, Mitsubishi split AC, watches and digital diary, etc. Public relation Nokia spot light Road shows like N-gage.com for game lovers, Nokia football crazy. 4. Place Nokia products are available at Nokia gallery Established mobile phone dealership such as Carphone warehouse & Link Retailers like Dixon & other electrical products suppliers

2.10 KEY TO SUCCESS Extensive research and development Nokia consist of nearly 500 researchers and scientist over & countries. Production and Manufacturing facilities - Nokia manufactures mobile devices 123000 labour force in 12 countries Strong Distribution network - The regional customer distribution and support centre offers superior flow of information and improved support and distribution services. 2.11 POTENTIAL AND KEY ISSUES

Nokia held the title of best-selling mobile vendor for well over a decade, but now their reign at the top of the charts is over as they have had to move aside for Samsungs surge to the top. Many industry experts had predicted this shift in power ever since the mobile phone went smart a few years back. Nokias dominance of the global feature phone market was only ever going to get them so far and when the world embraced smartphone technology, Nokia were ponderously slow at adapting to the market. Still, better late than never, as they say, and with the new Lumia handset (inspired by the Finns partnership with Microsoft) Nokia have finally arrived at the smartphone party. The Finnish mobile giants have released the glossy Lumia range with models; Lumia 710 and Lumia 900 being two of the more popular handsets in the series. Despite lessons being learnt and huge progress being made with the Lumia range, many Nokia loyalists still find it difficult to enthuse about their latest flagship products. Here a few reasons why Nokia is still finding life difficult in the fiercely competitive smartphone world. Apps: Nokia hasnt come out with any particularly ground- breaking apps. Android and iPhone has much larger choice of apps and still totally dominate the market. Perhaps with new backing from computer gurus, Microsoft, this may change; but for the time being, Nokia are lagging behind. Display: Its noticeably dimmer than other high-end devices and even from Nokias own previous flagship device, the N9. Camera Quality: A particularly disappointing effort from Nokia who acknowledged within the mobile industry as manufacturers of quality photographic technology. Many Android devices are ahead of this and again even its own N9 device trumps the Lumia. Battery Life: Although battery-life is oft neglected in smartphone land, the Lumias struggles when looked at in comparison with a whole host of Android handsets. Front Camera- or lack thereof: No front camera means no video call function and puts the Lumia way down the desirability list.

No memory card slot: So unfortunately the Nokia Lumia is left bereft of any external storage options. Weak Browser: This Lumia does not support Flash or Silverlight. Speakerphone and Audio: Again when comparing the Nokia with similarly priced models on the market; its clear that this Lumia would probably not be the first choice for audiophiles. Samsung I9100 Galaxy S II, HTC Titan, LG Optimus all outperforms the Lumia.

3. MARKET SUMMARY 3.1 MISSION: ABOUT CUSTOMER Mission :- We help communications, service providers, and build more valuable customer relationships . The Nokia Lumia focuses on attracting the customers to their product by offering an operating system which is not available on any other devices in the market. 3.2 MARKETING OBJECTIVE The key objectives are to foster the device trial, gain apostles thanks to the incomparable customer experience the new family provides, attain unbeatable word of mouth and eventually reposition Nokia, as the preferred brand for smart phones.

A renewed approach to capture volume and value growth to connect the next billion to the Internet in developing growth markets. Focused investments in next-generation disruptive technologies. A new leadership team and organizational structure with a clear focus on speed, results and accountability

3.3 FINANCIAL OBJECTIVE

1.Grow earning per share by 15 % annually. 2. Boost annual return on investment from 15 % to 20 %. 3. Increase annual dividends to stockholders by 5% each year. 3.4 TARGET MARKET The target market are both male and females. The age group is between 20 to 35 years. It focuses mainly on the population living in urban areas and working young professionals. The product mainly focuses on young generation which is techno savvy , gaming lover and wants different experience from a phone . 3.5 SEGMENT TARGET MARKET Betting big on its 'Lumia' series, Finnish handset maker Nokia is targeting sectors like manufacturing, pharmaceuticals, banking and insurance to capture a major share of India's enterprise smartphone market. Many companies are now allowing employees to use their personally owned devices for official use and that Nokia feels is a major opportunity. "Earlier companies used to buy handsets in bulk, but now they are now looking at allowing workforce to use their own devices at work. This shows that there is a clear need for alternatives and we see that as a big opportunity," Nokia India Director (Enterprise Sales) Suresh Vedula said. Nokia already has its E-series of business devices and now, with Lumia 800 and Lumia 610, the portfolio ensures that needs of these entities are taken care of, he added. The Finnish giant is focusing on verticals like consulting, manufacturing, pharmaceuticals, banking and insurance for strengthening its position in the segment he said. Traditionally, BlackBerry was considered to be an enterprise device. But in recent times, as IT policies become more flexible and workforce becomes

mobile, companies are opening up to the idea of allowing their employees to use their own devices. This has thrown up many opportunities for handset makers like Apple, Nokia and Samsung among others. Nokia had collaborated with Microsoft last year for making Windows Phone as its main smartphone platform and Lumia is the first series of device from the partnership. It is estimated that about 8-10% of the smartphone sales comes from the enterprise segment. According to a study by CyberMedia, smartphone shipments in India touched 11.2 million units in calendar year 2011, recording a year-on-year growth of 87%. The year saw launch of 150 models by over 30 vendors in the smartphone category in India. Nokia emerged as the leader in the smartphones segment with a 38% share, followed by Samsung with 28% share in CY 2011. Research in Motion (BlackBerry maker) dropped to third place with a 15% share. "With number of mobile workforce on the rise, businesses are going in for smartphones as they allow productivity to the professionals as they are on the move, without work being hampered," Vedula said. With solutions from partners like Microsoft (Exchange ActiveSync) and IBM (Lotus Notes Traveler), professionals can get secure and real-time access to their data, he added.

3.6 POSTIONING Nokia is aiming to emerge as the new smartphone leader with Lumia as they have positioned lumia more than just a smartphone. Nokia India Director and

Head (Smart devices) Vipul Mehrotra said: "We are positioning it (Lumia) as more than a smartphone. This will help us to achieve leadership position" Nokia has introduced 2 devices namely the Lumia 800 and Lumia 710 that have been made in association with software major Microsoft. Both these will cost around Rs. 29,999 and Rs. 19,999 respectively. When quizzed about the devices performance so far, Mehrotra said, "I cannot give you specific numbers, but (the figure) is significant." He also added that there are a significant number of users (especially the youth) who were attracted to the products and preferred to purchase such mobiles. With the launch of the Lumia series, the Finnish company is aiming to achieve the top slot in the smartphone segment. Both the handsets will be shipped from Europe to India and will be available to Indian buyers in a few days. In fact, the company has already opened the pre-booking order for its Lumia 800. The post on the Facebook page of Nokia India reads: "Cant wait to get your hands on the new Nokia Lumia 800? Be amongst the first to own one", with a link that directs users to the pre-booking page of the Nokia Lumia 800. 3.7 STRATEGIES Windows Nokia Lumia 900 Marketing Strategy: Base it on Abundance, Not Scarcity What is the value proposition for the Windows Nokia Lumia mobile phone launch? Dissecting the advertisements, its hard to tell. What exactly is the premium value we have all been waiting for? Microsoft and Nokia please tell us what your new OS and Lumia hardware platform combination is going to do different and better for us, and motivate us to buy? Can Microsoft and Nokia use last-century software project vernacular to position in the smartphone market? Is it credible? Nokia brand new ad campaign where the entire smartphone business is repositioned as being in beta and only now is real, with the launch of Microsoft Windows Mobile. No one is buying that when we measure the Lumia 900 delivery in years, while HTC, Samsung, and even Apple release revisions to their phones and OS in cycles measured in months.

The other radio advertisement, where a guy tells his friend that a girl is interested in him because she envies the Nokia Lumia 900 in his hand is equally weak. Lumia advertising is trite and misses a focus on value in terms of speed, performance, elegance simplicity and design is missing, when compared to Apple, Samsung, and even Motorola. Today is a day of the Agile Method; a day of scrums and MVPs; a cycle of deliver, learn, develop, update, repeat. This new approach is a result of the shift to the cloud, modern mobile clients and the simplicity of tools and technologies making it dramatically easier to create products and ship them. Will anyone really understand beta in these ads when that language was going out of vogue more than 12 years ago? Perhaps some in their 40s and 50s will know what it means, but smartphones primary market is the hip, young, and gotta-have-it crowd. The MVP will ignite the lightning energy of the crowd, and you will know what needs to be revived in the next 2 month cycle. Thats the beauty of shipping fast, revving vast. Economists will tell you that Scarcity is a good thing, if a) you are the incumbent leader, and therefore in greatest demand, and b) you are not the the competitor starting from near-zero traction (in the smartphone market) attempting to drive a displacement strategy. In the latter case, you must market on your differentiation, not scarcity. You must flood the market with availability, an ultimate user experience, and blanket every channel. As I watch the exclusive arrangement to launch the Lumia 900 with AT&T again, I have to wonder if Microsoft and Nokia did their homework? Why not the other carriers simultaneously? There may be a partnership deal with AT&T, but it will be worthless if you dont generate enough adoption, and early numbers are low. Find a way to get the Lumia 900 to all the other carriers ASAP. This is a huge miss for the marketing team to think that replicating the Apple strategy, when you are the challenger has any chance of succeeding. The strategy to model is the Google Phone strategy, where you flood the market with products and attached services that work, making it an easy decision try the Lumia out. This is no time for a Lumia 900 marketing strategy based on, or appearing to be based on, scarcity. Action Steps Get Going

Advertising Language get a new Lumia 900 message and base it on value and differentiation. The current message is making many of us see the disconnect you have with the customer. The current approach is not going to work with the age group that is out in front, and the one that you need to win in volume. Swift Delivery accelerate whatever it is that is slowing your Lumia 900 delivery down. Find a way to Ship It. Find the cancer, fix or remove it. HTC, Samsung, iOS, and Android are proving that it can be done so whatever the bottleneck, swiftly remove it, use a sharp knife, it will draw less blood. Update Cycles Once the MVP is out there, get the cycle of firmware and OS going regularly. My android downloads an update once every other week Im used to it, it is OK, its painless. SHIP, SHIP, SHIP, its the cloud, right? Respond Rapidly Get recognition for rapid response and feature delivery in terms of firmware, software and application support avoid being so vivid in the press about failures. The news about Nokias potential financial miss, and the bugs causing rebates through AT&T cant happen in a strategy where you must compete with abundance. Launch Globally Go to China, Latin America, and Africa NOW. As news about people in developing regions trade a kidney for an iPhone, the demand here cannot be ignored. Without a sense of urgency, that market will also be lost if you dont get the Nokia / Microsoft combination delivered there in abundance, immediately. Carrier Adoption OK, who thought it would win customers to be exclusive at launch with AT&T? Customers are king, not the partner manager, not the alliance director, not marketing, or golf buddies. Developer Adoption If you maximize customers, in the four steps above, you will get developers. Everything done to slow down customers, is going to keep developers on the side-lines. This is not the 80s, where you have two-year product cycles to hold customers hostage, you have about a 60 to 90 day window, and that window opened at Mobile World Congress 2 years ago Innovate Fast Just as the iPhone 5 is inevitable, and in the press. The Nokia Lumia 950 needs to get visibility, and now. Already there are thinner phones from Samsung and Motorola, the Nokia 900 is already too thick and heavy relative to competitors. Lightening is striking

everywhere and igniting urgency and speed, except where you would expect it most. Last point to consider is to get a Lumia 900 on Sprint, is get new marketing. The current approach is going to do irreversible damage to the brand, and the ultimate level of success in the market.

3.8 MARKETING MIX I. Product: Produce more smart phones with slim, lightweight and fashionable designs to attract customers (e.g. the unique curved all-touchscreen of Nokia N9 and Nokia Lumia 800). Focus on extending the OVI store (including music, games, apps, map etc.) with the assistance of partner Microsoft and its advantages (e.g. office application) Design more series of smart phones so that customers will have many choices based on their ages, characteristics and hobbies The average age of people in UK is around 40. Therefore, It is a suitable market to put up for sale Business smart phones such as Nokia E7, Nokia Lumia 800 and Nokia 701. Build up more Nokia warranty/service centre in India to meet, satisfy and solve all the needs of customers. All the products should be green, including eco-design (mobile phones), energy-saving(adapters) or environmentally responsible (packaging materials) as they are serious global issues nowadays. II. Price: Attach value-added services to differentiate the companys offers as well as support higher prices (rather than cutting prices to match competitors). Offering reasonable quality and good service at a fair price, discount for customers in some special event (e.g. Diwali).

Reduce prices for customers buying a new product when they give back an old one, encourage them to buy products as well as protect the environment. III. Place: Centre on expanding current branches in potential markets (e.g Peterborough as it get the fastest 3G mobile broadband speed in the UK with an average of 3.86Mbps, according to new research.) Other ideal markets include London, Birmingham, Leeds, Manchester since they are the most developed and popular cities in UK, which attract many people worldwide. Focus more on selling products directly to consumers via the websites to save distribution and labour cost Franchising in some places that appropriate and convenient for the customer to come and buy the products (e.g. near the shopping centres, famous sightseeing, high living standard areas) The main advantages for the franchiser: 1.The franchiser secures fast distribution for its products and services without incurring the full cost of setting up and running its own operations. Franchising also enables the franchiser to expand a successful business more rapidly than by using its own capital. 2. The franchiser gets very highly motivated management as the franchisees are working for themselves rather than a salary. 3. The contractual relationship ensures that franchisees operate to and maintain franchisers standards. IV. Promotion: Associate with major providers in UK like Airtel and Vodafone- which have all launched 3G services. Advertise new products on the media (official website, televisions, newspapers, magazines) and on Microsofts products.

Create advertising videos and images outdoor (in public transport like buses, tubes, trainsor in the cinemas) to attract customers. Send messages, email or phone to prospective customers informing them of new products Visit customers houses or their places of business to advertise and sell the products. V. People: The company needs to train its people to be customer centred (having good attitude toward customers, be able to share expertise with them when required). Recruit native employee as they know about the customers tastes and habits better training as well as encouraging companys distributors and dealers to serve the customers well. 3.9 MARKET RESEARCH Before iOS and Android became the dominant smartphone operating systems, Microsofts Windows Mobile was battling it out with Symbian and Research in Motions email-focused BlackBerry OS for supremacy. This wasnt all that long ago either, five years perhaps, but in terms of mobile development its a lifetime. The proof is that now, BlackBerry is struggling, Symbian still exists but has been officially retired and Windows Mobile has exited the scene entirely. Just like BlackBerry and Symbian, Microsoft failed to keep up with changing trends, and after Windows Mobile 6.5s release in 2009, the OS was discontinued. As interest in smartphones exploded, Android and iOS became runaway hits, with Microsoft being all but forgotten at a consumer level. Then, in October 2010, Microsoft unveiled the operating system with which it would make its return to the smartphone world. Windows Phone 7 was brand-new, integrated itself with other Microsoft products such as Xbox Live and Zune, and was designed for touchscreen devices. Its fresh, modern look was completely different to Android and iOS too.

Critically well received, by the end of the year, according to industry analysts Gartner, Microsoft had grabbed a 2.7-percent share of the worldwide smartphone market. Things were looking positive, fast forward to the end of November 2011, and Gartners new figures showed Windows Phone was down to a 1.5-percent market share. In-between this time, Microsoft and Nokia had announced a partnership, second generation phones had been released, and the OS was receiving its update to Windows Phone 7.5. If Microsoft couldnt build or even sustain its market share at a time when activity was high and interest should have been piquing, what chance does it and Windows Phone 7 have for the future? Here are four reasons why that future still looks bright. Microsoft Money Microsoft has plenty of money, but how much of it is being invested in Windows Phones success? If speculation, which appeared around the new OSs launch, is to be believed, it was a total of $1 billion, with at least $400 million used for marketing. Later, a joint budget of $200 million was pledged to the Nokia Lumia 900s launch on AT&T in the USA this year, showing how serious Microsoft and Nokia are about re-entering the US market. Make no mistake, theres a huge war chest supporting Windows Phone. Developers and the App Marketplace. Smartphone operating systems mean nothing without a strong application store, and although it has taken a while to get going, the Windows Marketplace is gathering pace. A report shows that at the end of May 2012, the Marketplace offered 100,000 apps available for download, up from just over 80,000 in March and 65,000 in January. Microsoft knows how important it is to get developers writing for Windows Phone, and has been busy attracting their attention ever since the OSs launch. It looks like the hard work is paying off, but it still has a while to go before it matches the Apple App Stores astonishing total of 650,000 apps. Emerging Markets

Thanks in no small part to Nokias exciting Lumia phones, it has been reported that in China, Windows Phone has 7-percent of the market. While it may not sound like a number to shout about, it is when iOS has 6-percent. In Russia, its almost exactly the same situation, with Windows Phone reaching 8.2-percent at the end of the first quarter this year, and iOS trailing on 7.3-percent. Android and Symbian may be far ahead with both earning around 35percent each in Russia, and Android alone grabbing a massive 69-percent in China but the fact its ahead of iOS, which is arguably more fashionable and better known, is incredibly important. Markets such as China, Russia, India and South America represent a huge percentage of the worlds population, and success there is equally, if not more, important than in established markets. Windows Phone wont have to play catch-up to the same extent as it will elsewhere, giving it a far greater chance of beating much of the competition. Windows Phone 8 and the Death of Zune Expected to launch at the end of this year, Windows Phone 8 is the first major overhaul of the operating system. Ready to integrate with Microsofts new Windows 8 desktop software, it could also see the end of Zune, currently used for syncing with a Windows PC, and all its content moved to the Cloud. Windows Phone has had a rocky start, but as we can see, it has serious financial backing; a growing app eco-system and the seeds of success are spreading in important emerging markets. Windows Phone 8 needs to be big though, and must build on the excellent Metro UI to capture young and experienced smartphone buyers imagination instantly. This is Microsofts second chance with Windows Phone, and it may not get a third. Looking back to when Microsoft was leading the pack with Windows Mobile, its easy to see how quickly things can change, and if the combination of Windows Phone 8 and Windows 8 is strong enough, it could tip the balance in Microsofts favour once again. 4 FINANCIALS 4.1 SALES FORCAST

The figure of $250 million for Q1 is the same as the amount Nokia received for platform support in Q4 2011. This means Microsoft has paid $500 million over two quarters. During the same time frame Nokia shipped approximately three million Windows Phone devices. The average cost to Microsoft to acquire a Nokia Windows Phone user is therefore $167 per user. This is down from $250/user in the last quarter.[1] If the royalty is equivalent to a license fee then the more interesting question is how and when the royalty payments will nearly match the platform support payments as expected. This might give us an estimate of what both parties are expecting from the relationship. If the payment schedule of $250 million per quarter is maintained through 2014, Microsoft will have paid $3.25 billion to Nokia. This is well within the billions of US dollars range that is cited above. (The minimum would be $2 billion which would mean payments through the end of 2013). We also need to estimate the royalty payment structure. One figure that has been circulating for a long time is that Microsoft prices Windows Phone (and its antecedent Windows Mobile) at $15/unit. Its an aggressive price point for a mobile software license and should be subject to volume discounts but lets assume its correct. If it is correct then the only remaining question is how quickly will Windows Phone units grow at Nokia? One way to begin is to calibrate WP growth to iPhone growth. For the first two quarters iPhone and Lumia have sold at rough parity.[2] iPhone sold 1.4 million in its first quarter (including opening weekend sales of 270k in previous quarter) while Nokia sold approximately one million Lumias in its first quarter[3]. In the second quarter Nokia cited 2 million Lumia units and Apple had 2.3 million iPhone sold in Q4 07. So far Lumia is slightly under the iPhone ramp, but lets give it the benefit of doubt. If we apply iPhone growth rates to Lumia then we have the following sales forecast for Nokias Windows Phones: This looks like healthy growth, as was the iPhones. However, this iPhone growth pattern only results in about $1.4 billion in payments in exchange for $3.25 billion from Microsoft, leaving a deficit of $1.9 billion in the platform support balance.

To erase the deficit, I tried an approach where I assigned 3 million and 4 million for Q2 and Q3 shipments respectively then applied a constant (y/y) growth rate thereafter. Solving for a figure of growth which results rough parity with platform support payments gives us about 250% growth. The resulting sales profile looks like this:

This ramp would result in 210 million Windows Phones shipped over about three years. It would also generate nearly $3.2 billion in royalties for Microsoft offsetting $3.25 billion in platform support payments by Microsoft to Nokia. There are many assumptions in this, royalty rate and length of contract chief among them, but the key question should be a sanity check: is this a feasible product ramp. Its certainly far faster growth than Apple has been able to achieve. On average Apple obtained about 160% quarterly y/y growths. It also exceeds the growth rate that Samsung has been able to achieve (165 to 170 million smartphones shipped from a standing start three years ago). It implies

150 million units shipping in the third year of sales and nearly 50 million in a peak quarter. It assumes perhaps as much as 20% market share in smartphones in 2014. Its certainly ambitious. But even if its achieved, its only a break-even point for Microsofts relationship with Nokia. It would imply that payments to and payments from Nokia would be in balance. The road to (dare one say it?) profitability for Microsoft in mobile would just begin to be visible at that point. 5 INTERNAL STRUCTURES 5.1 HOW WILL YOU IMPLEMENT IT Nokia Lumia being a good smartphone had not been the pick for customers. We will have to restructure the promotional strategies and other marketing strategies to increase its sales. Promote the product with new ad campaigns. Make people fell necessary to own that product. Nothing will come in an instant; you have to wait for it. So Nokia needs to wait till their new plans and strategies work. Implementing these strategies wont be easy but as Nokia is very eager to increase their market share in smartphones market they need to be act quick and wisely. 5.2 CONTINGENCY PLAN Nokia has already made one critical mistake with respect to Windows Phone 8, though admittedly it is Microsoft's doing: None of its existing Windows Phones will be updated to the new platform. That's bad news for early buyers who took a chance on Nokia's Lumia line. They may feel burned about the lack of support from a company that very badly needs to retain customers. Instead, Nokia will offer Windows Phone 7.8, which brings the new platforms revised Start screen, to the Lumia 900. Really, it can have only one. Sure, the company might divest certain business units or properties, spin off divisions into their own corporations, and so on. But none of these will resurrect Nokia's core business of selling smartphones. If Windows Phone fails to help turn Nokia around, it has to adopt Android. Nokia would be insane if it isn't already working on Android smartphones. Despite the fact that such a pursuit would cost sparse development resources and may ultimately be scrapped, it's really the only way Nokia can reasonable expect to sell smartphones if consumers don't begin to adopt Windows Phone.