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-Launched in June 2007, Apple's iPhone quickly grabbed a substantial share of the worldwide market for smart phones. Competing phones and operating systems include Nokia's Symbian operating system, Research- in-Motion's Blackberry, Google's Android operating system, and Microsoft's Windows Mobile. In September 2010, soon after joining Nokia as CEO, Stephen Elop reviewed Nokia's strategy for smartphones.
-Consider the strategic situation between Nokia and HTC, a Taiwanese manufacturer. If they both build phones on Symbian, HTC would earn $2 billion while Nokia would earn $4 billion. If they both build phones based on Windows Mobile, both HTC and Nokia would earn $2 billion. If HTC builds on Symbian while Nokia builds on Windows Mobile, each would earn zero. If HTC builds on Windows Mobile while Nokia builds on Symbian, HTC would earn zero and Nokia would earn $2 billion. Draw the game in strategic form and identify the equilibrium/equilibria.
-Use your answer in (a) to explain why Microsoft would offer to pay Nokia "billions of dollars" to build phones on Windows Mobile.
-Which of the following apply to the game in (a): (i) zero-sum game; (ii) positive-sum game; (iii) economies of scale; (iv) economies of scope. Please explain your answer.
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