Is There A Future For Nokia?
The “New Nokia” will face new obstacles after the deal with Microsoft
Nokia shareholders have finally approved the $4.7 billion deal with Microsoft for Nokia’s smartphone business and many of us are quite curious to see how this valuable asset transfer would influence both Nokia and Microsoft. Redmond is jumping seriously into the mobile business after years of unproductive efforts, first with Windows Mobile and later with Windows Phone. The acquisition happens in really tough times for the business as a whole. There are only two big players on the market – Samsung and Apple, and the rest of the competition face declining revenues.
Seen in that light, Nokia’s move to get rid of its losing mobile business looks like a logical decision. On the other hand, Lumia sales are improving and they are capturing new markets. However, even though Nokia had returned to profitability, its mobile business generates only a half of the overall revenue. After the deal is completed, Nokia will focus on three key areas: its mapping services HERE, Nokia Solution Networks (NSN) and the patent portfolio. It looks like the Finish giant will try to monetize those assets, which carry higher margins compared with the current smartphone unit.
But the things are not so simple. In these businesses Nokia has already some stiff competition. In the mapping industry, Google has acquired Waze, which is a promising GPS / social / mapping service. The other big player, Apple, has also invested a huge amount of money in mapping, especially in the so-called connected cars, a service for which Nokia has some big plans and hopes.
In the mobile infrastructure industry, Nokia will need to compete against the aggressive Chinese vendors like Huawei and ZTE. These companies have already expanded outside China and they are now trying to attract capital spending budgets at the leading telecoms.
One is sure, even though Nokia will get rid of its losing business and receive fresh cash after the Microsoft deal, the company will have new obstacles which need to be overcome.
Source: Forbes
