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June 22, 2011

Nokia to Outsource Symbian to Accenture

By Tracey E. Schelmetic, TMCnet Contributor

Troubled European cell phone giant Nokia is reporting today that it has completed a deal to outsource its Symbian (News - Alert) mobile operating system's software development to Accenture. The transaction will include the transfer of 2,800 workers to the global management-consulting firm.

The transfer appears to be a step in the company's plan to cut costs in order to remain competitive in the face of powerful competition from Apple, Google's Android and Research in Motion's (News - Alert) BlackBerry. Once the leader in the cell phone market, Nokia was overtaken by Apple in terms of revenue in the first quarter of 2011. In an attempt to remain a force within the global wireless handset market, Nokia is exercising a plan to cut its costs by 1.5 billion Euro by 2013, and will include about 7,000 layoffs across the company's global facilities, reported the Associated Press (News - Alert).

Nokia's share price has dropped precipitously as of late. Shares were trading today for about 4.23 Euro ($6.08) in early afternoon trading in Helsinki. The company issued a profits warning for the current quarter last month.

Under the terms of the deal, Accenture PLC will provide Nokia with software services through 2016. The transfer of Symbian workers is expected to occur in October when the deal is finalized. Half of the affected workers are based in Finland, and another 1,400 are located in China, India, the UK and the U.S. Nokia will also lay off about 4,000 people by the end of 2012, mostly in Denmark, Finland and Britain, says the AP.

Nokia's would appear to be unable to meet modern challenges of the smartphone market, the lucrative sector in the handset industry, where Nokia used to be the leading innovator, reported the Associated Press. Although the company sold 24 million smartphones in the first quarter of this year, 13 percent more than in 2010, its share in the handset market dropped to 24 percent from 39 percent a year earlier.

The company is trying to innovate itself out of a corner, introducing its new N9 smartphone, which is built on the company's new MeeGo platform. The N9 has received mixed reviews, with many analysts and consumers waiting for the debut of the company's first phone built on Microsoft's (News - Alert) Windows Phone 7 platform. That model is expected to be introduced at the end of this year.

Nokia reported last year that it planned to phase out both its Symbian and MeeGo platform in favor of Windows Phone (News - Alert) 7. The announcement was made shortly after Stephen Elop, a former Microsoft executive, took the reins of the company.

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Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Jennifer Russell
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