I've been busily traveling but there are several developments that I know my readers would like my comments at least briefly, and also a place where they can then chat about it, by topic. So I'm posting a few short(ish) blog stories today about recent news past weeks and my brief comments. First up, Nokia purchase of Alcatel-Lucent.
If we look at the telecoms infrastructure world of 2001 just as I left Nokia, the seven big players in the industry were in order of their annual network equipment sales: Ericsson, Lucent, Nokia, Siemens, Nortel, Motorola and Alcatel. Nokia itself had in very rough terms a half-way split in it business between the fast-growing handset business and the more mature telecoms infrastructure business, about one third of Nokia total employees were with handsets, revenues were essentially split 50/50 and profits came 2/3 from handsets and only one third from networks. Early in my independent consulting career I remarked often that the telecoms infra market had too many players and we would be seeing consolidation as the big 3G related growth stage passed.
And so it was, Nokia got into a joint venture with Siemens, eventually acquiring that networking business. Alcatel bought Lucent. Ericsson acquired most of the assets of Nortel piece-meal. Nokia bought the Motorola networking business that had gone bankrupt and thus those seven were down to three. Now with the Alcatel-Lucent acquisition, Nokia brings that set down to two, and one wonders will some day come when Nokia would then acquire the Swedish based Ericsson or do some merger there. Now, in the interim, two strong Chinese networking equipment providers have emerged, of course, Huawei the larger and ZTE the smaller of those two. Huawei is about the size of Ericsson or the new Nokia-Alcatel-Lucent.
So now Nokia is essentially the networking businesses combined of Nokia-Siemens-Motorola-Alcatel-Lucent. And by that score, Ericsson is combined Ericsson-Nortel. Just a fascinating observation of free market dynamics at work.
Three quick observations here. First, remember my 'dream scenario' of Nokia re-acquiring the handset business back from Microsoft? Or the equally wild Sony Xperia unit? Those were quite wild ideas, but now, clearly, at least Nokia had been in the market to spend some of its cash and clearly wanted to acquire something. I'm also pretty sure that they probably won't buy anything else for now, as they now prefer to focus on making the Alcatel-Lucent acquisition work (like they turned around the loss-making businesses of Siemens networking and Motorola networking before).
Secondly, there are still rumors Nokia wants to divest the Here mapping and location-based services business. I told you right from the start, when then-CEO Stephen Elop announced his passion for Here and maps, that it was a losing proposition, and rather obviously now it can be seen, that it also was. So yeah, they will probably unload that hopeless mess to some unsuspecting victim from the West Coast who still believes in maps and location haha.
Lastly Nokia handset return? There are increasing rumors that such a project is indeed under way, obviously on Android. The first Android based N1 tablet has been quite successful in China, a market that greatly loved/loves the Nokia brand and was so poorly served by the Windows Lumia experiment. Expect Android Nokia smartphones to be tailored to fit Chinese needs particularly well and probably aim more for high-end than low-end initially.
So lets next talk about the misery at Microsoft's Lumia division..