Erikka Askeland: R&D staff will be smarting after tech giants' tie-up

CASUALTIES have begun to emerge in the war of the smartphones. The latest is Symbian, the operating system lovingly crafted and used by Nokia. Chief executive Stephen Elop has signed a pact with the devil and decided that from now on, the Finnish smartphone handsets will use Microsoft's Windows Phone system.

The move is a necessary one. Microsoft found itself being pummelled by rivals, Apple's iPhone and Google's Android, after its development of a now much improved operating system lagged far behind.

Nokia too was struggling. Although it is still the largest smartphone handset maker in the world, Finland's biggest firm has been losing ground to Apple and HTC, which uses Android, as well as feeling the pressure rising underneath from the cheap, aggressive phone makers in Asia.

According to research firm IDC, Nokia's share of the smartphone market fell from 38 per cent in 2009 to 28 per cent by the end of last year.

Elop laid bare Nokia's plight in an e-mail to employees that was leaked earlier this week. He likened the firm's position to a "burning platform".

The shock of the memo softened up despairing Nokia staff for Elop's next announcement about the tie-up with Microsoft. A deliberate strategy perhaps on his part, so that they would cling gratefully to the news.

But the deal also means a cut in the firm's workforce, with possibly thousands of R&D jobs set to be axed across four Finnish cities.

"This is the biggest structural reform which has ever impacted new technology in Finland," said a mourning economy minister Mauri Pekkarinen.

If he wasn't already before, the decision marks Elop as a cuckoo in the Nokia nest. He was the first non-Finnish chief executive, replacing Olli-Pekka Kallasvuo in September. But the Canadian-born executive came to Nokia's HQ at Espoo from - no points for guessing - Microsoft, where he was a senior member of the software giant's leadership team.

The deal is a massive shift for Nokia. Symbian has some 200 million users and accounted for half of Nokia's sales in 2010. The alliance of Nokia and Microsoft may give them an edge in battling Apple and Google, but analysts have suggested that Nokia was the weaker partner in the deal.

The firm had previously rejected Google's Android system for its phones on the basis that it would get swamped by the cheaper handsets that also adopted the platform. But nor is the deal with Microsoft exclusive. And while use of Symbian was free for Nokia, Windows Phone is not.

Nokia has been around for a long time and is accustomed to change. But with this deal, its €8 billion (7bn) a year R&D budget, which is the sort of spending that has moved it from being a 19th century sawmill to 21st century telecoms giant, is set to be radicallycut.That does not bode well.

Twitter value: the return of the dot-com twits

AND now we have another gobsmacking valuation for a dot-com whose influence is undoubtedly global in scale but questionable in terms of its balance sheet.

Twitter may have been the key weapon in last night's dramatic departure of Egyptian dictator Hosni Mubarak (well, that and the army). But most are still scratching their heads, asking, is it really worth $8bn?

Considering that the firm may have hit $45m in revenues but was still lossmaking last year, the valuation may be just tosh - the sort of spurious and unsubstantiated claims that can be amplified around, well Twitter.

There are even rumours that the firm's board may have started cranking the mill themselves.

But then AOL, whose record for spending too much on assets that wither and die in its hands is unparalleled in corporate history, bought online news site the Huffington Post for $315m. Recent investments in Google make it worth an estimated $50bn, compared with $10bn in mid-2009.

Is this a dot-com bubble Mk II? Sure looks like one.