The rumors have now started about Nokia buyers. Lenovo is first, and a Lenovo executive has already called this rumor so silly to be laughable. That may be, but it would not be the first time that a buyer had initially said no while was secretly pursuing the deal. And it would not be the first time that a company that initially was not interested, suddenly became so when rivals joined in the pursuit. I would think that Lenovo probably is not among those companies most interested in Nokia, but now we have a couple of good signals to the potential buyers.
First, that a major rumor has broken out, that there is perhaps another buyer in the race. This will motivate serious buyers to consider making a move.
UPDATE August 7, Swedish Newspaper Dagens Nyheter reports that Samsung has also been considering (again) buying Nokia (they also were interested a year ago).
And the Nokia share price which had been as low as around 1.60 Euros in the past weeks, has now rebounded to above 2.00 Euros per share. This is a signal that Nokia's share price bottom may have been reached. As Nokia will no doubt receive some kind of expectation bump when the Windows Phone 8 based smartphones are launched, that means that Nokia shares may be at a historical low point right now. So this will signal serious buyers, that now is the time to move on Nokia.
If there is a serious buyer out there, waiting for the optimal time and price, we should be getting more interest beyond this Lenovo rumor rather quickly. And if any one potential buyer expresses a more serious interest in Nokia, it could well happen that many buyer candidates emerge.
NOKIA THE TARGET
Nokia is not an easy beast to buy. Nokia has tens of thousands of employees in countries where the laws are very strongly protective of employee rights, like in Finland, Germany etc. To buy loss-making Nokia now, would mean taking over huge loss-making units such as Nokia's networking unit, NokiaSiemens Networks - where roughly half of Nokia's employees are. And there is not much synergy between manufacturing handsets and the networking unit, so for most buyers interested in one, they would probably need to get rid of the other. For example, pure handset maker HTC would have no use for Nokia's networking unit; while pure networking equipment provider LM Ericsson would have no use for Nokia's handset business, Ericsson just last year finally got rid of its own loss-making handsets partnership with Sony.
Two years ago Nokia branded phones sold one in three handsets in the world very profitably, Nokia smartphones ruled the smartphone space being bigger than Apple iPhone and all Samsung smartphones combined while generating a profit; and the NokiaSiemens Networking unit was ranked second or third in its market and bordering on being profitable too.
Since then Nokia has been spectacularly mismanaged by CEO Stephen Elop through 19 massive management blunders, several so big that all by themselves the management mistake is deadly. CEO Stephen Elop is ridiculed regularly in the press and increasingly being called not just one of the worst CEOs of all time, but the worst CEO of a Fortune 500 sized giant corporation of all time. Obviously I agree with that assessment.
So Nokia's troubles are not that its products are bad, or its customers have deserted it, or that it missed some major trend in the industry. Nokia's troubles are all self-induced, by launching highly flawed and undesirable smartphones on the highly flawed and undersirable Windows platform, to feuding with the international telecoms carrier community, to torpedoing sales support. These are all management mistakes that any sane manager - or new owner - can easily rectify. Most of the buyer candidates are for example currently providing smartphones that run on Google's Android OS. Simply by shifting Nokia's current Windows and Symbian based smartphone base to Android would revive Nokia's appeal to end-users, carriers and retail. While such a move would be costly of course, and consume more than a year of time, any such transition by a new owner could yield in the end, a smartphone maker easily in the top 3 biggest smartphone makers of the world, while running the most popular operating system. Can you imagine how well received a Nokia phone like the 808 PureView would be if it ran Android rather than Symbian? Or the Lumia 900 if it was running Android rather than Windows? Or the next edition of the N9 and N950 running Android, rather than MeeGo?
The big value in Nokia is its patents portfolio. Before Elop took over, Nokia's patents portfolio was the strongest in the industry. Motorola was sold to Google mostly for its patents, and the smaller Motorola patents collection yielded a price of 11 Billion dollars for Google to pay. Nokia's bigger portfolio is arguably more valuable, even if we discounted all other Nokia units to zero. And by current market capitalization, Nokia is worth less than what Google paid for Motorola's patents. Remember, just Apple alone pays Nokia in the tune of between 1 and 2 Billion dollars per year in intellectual property fees. Anyone currently engaged in bitter patent rows around the mobile industry (Samsung vs Apple for a start) would gain the instant upper hand, by acquiring Nokia's patent portfolio, by far the biggest in the mobile telecoms industry.
The problem with Nokia patents is the mess Elop has created selling parts of it to various patent trolling companies, and simultaneously entangling Microsoft into those patents gains. Why is a pure Nokia owned patent, sold to a patent troll, suddenly having a deal that pays Microsoft one third of the patent gains? I would think these patent contracts betweeen Microsoft and Nokia would come under scrutiny of the new buyers who would send some competent patent and international legal attorneys to get those agreements nullified, as clearly Elop as nominal Nokia CEO was not acting in Nokia's best interest when gifting valuable Nokia patent property to his former master, Microsoft. Nonetheless, the patents issues with Nokia are murky, no doubt done so with clear forethought by Elop last summer, when the first rumors emerged that Nokia might be bought. Elop has wanted to make it as complex and difficult as possible for any buyer - other than Microsoft - to acquire Nokia. And it seems to have worked. When Microsoft itself evaluated buying Nokia in January of 2012, Microsoft decided it was not worth it. Why buy the cow, if you can have the milk for free...
Two years ago at Q2 of 2010, Nokia sold 24 million smartphones with a market share was over 39%. Now in 2012, while the global smartphone market has more than doubled in size, Nokia sold only 10.2 million smartphones and its market share has fallen to 6%. Yes, in terms of existing loyal customers, under Elop's 'management' Nokia has scared away 7 out of every 8 smartphone buying customers it had when Elop took over in Q3 of 2010. Still, thanks to simultaneous tumblings over at RIM and to a lesser extent, HTC, Nokia has not fallen lower than to third among smartphone makers today, behind only Samsung and Apple.
Meanwhile over in the dumbphone sector, Nokia is still powerful and the biggest. As the world's largest handset maker now, Samsung, is aggressively shifting its handset production from dumbphones to smarpthones, Nokia still retains the crown of the basic phone market. Nokia is still the bestselling mobile phone handset brand of the continents of Africa, Asia and Latin America, where 4 out of 5 human beings on the planet live. A shrewd buyer of Nokia could gain an incredible foothold into the mobile phone, smartphone and digital device market of this decade, as those consumers shift their device ownership from dumbphones to smartphones. Most of them are utterly oblivious to Windows or Elop or Burning Platforms. They currently have a Nokia branded 'featurephone' in their pocket. They are highly satisfied with it. If they are offered a replacement phone in two years that still says 'Nokia' on the front, and runs on say Android, and the new phone has typical Nokia type of features that seem to suit the Emerging World markets particulary well, from full unrestricted Bluetooth connectivity to microSD cards, to dual SIMs to in-built FM radios and TV-out, etc, then those consumers will happily shift their dumbphones to smartphones.
This will not happen if the phones are designed to the rigid and restrictive Microsoft regime of Windows 8, where Microsoft has consistently opted for the most controlled, most limited system in contrast to Nokia's legacy of the most open and most user-friendly system. Also the Microsoft option may be usable in enterprise/business uses in the West, it will be useless in Africa and much of the Emerging World where phones are unsubsidised, and consumers do not have PCs, use Xbox 360 or Zune or have any accounts with Microsoft services. Even what PCs they may see, will often be unsuited for Windows Phone 8 uses, being either Linux based software or having old or pirated Microsoft software.
Almost any buyer candidate of Nokia (except Microsoft obviously) would have a preference of some other software than Microsoft, and would pursue a smartphone platform strategy that is different from the current one pushed by CEO Elop. That shift alone, would end the bleeding of market share that has been the hallmark of Elop's tenure at Nokia. The Microsoft partnership has also been a thorn in the side of Nokia's carrier relationships; ending the Microsoft path would also clear Nokia smartphone sales to more friendly treatment by the carrier community, and give a chance for a modest recovery by Nokia in smartphones. Imagine that, buying a company that is currently throttled, strangled by its own management, and simply by removing the managers in charge, would release a modest gain in sales. I have written on this blog many times, that if Nokia's management only allowed its best-rated smartphone, the N9, to be sold in every market where Nokia is traditionally strong, and that its sister phone, the N950 would be released too - Nokia's whole smarpthone unit would swing from loss-making to modest profit-making within the next immediate financial quarter. That option to Nokia is going to disappear soon, but as long as we await the Apple iPhone 5, this option is still on the table. Its not that Nokia doesn't know how to create world-beating phones, it still does - the N9 won the award as the best design of the 'design Oscars' the D&AD Awards this year beating out among other rivals the iPad 2. Who beats Apple at design? This is the skill that Nokia still has (or recently had, Elop has been firing a lot of Nokia staff).
Nokia also has some other units, most obviously Navteq, the mapping and positioning unit. That is tiny compared to the networks and handsets parts of Nokia but has some value.
INEVITABLY TO BE SPLIT UP
Nokia is a hodgepodge. I would say, that any buyer of Nokia wants the patents. But beyond that, there are seven other items that some buyers will want, but almost always some of the potential buyers would deliberately not want. So lets look at those seven.
The most obvious and best-known is the Nokia Smartphones unit, which used to make Symbian based smartphones and two years ago, was the bestselling smartphone brand on 5 of the 6 inhabited continents and selling so incredibly well, that in the world's biggest smartphone country/market, China, Nokia's (Symbian based) smarpthone market share was 77%. Apple's iPhone has never had 77% share in its best market, the USA. Think about that for a moment. The Chinese absolutely loved Nokia's smarpthones (running Symbian) as the Nokia Ovi store was the msot used app store of China, with tens of thousands of apps in the Chinese language, and carrier billing on all three networks. Now Elop tossed all that away, to force the Chinese to try to buy Windows based smartphones, where there was literally zero Chinese language based apps in the Windows app store at the start of this year, and the two biggest carriers of China refuse to sell Windows based Nokia Lumia smartphones. Chinese consumers do not have Zune accounts or Hotmail accounts and Xbox 360 is literally illegal in China. Yet Nokia desperately tries to push unwanted Lumia smartphones into this market? What madness!
If the Nokia smartphone unit was managed with 'normal' management intelligence, Nokia would safely be the second bestselling smartphone brand today, behind only Samsung, while powered by three separate operating systems, Nokia's own Symbian for low-cost smartphones, the Linux-based open source MeeGo for top-end smartphones, and Windows for some business/enterprise oriented smartphones mostly in the USA - just like how Samsung supports three operating systems today, Samsung's own bada for low-cost smartphones, the Linux based open source Android for top-end smartphones, and Windows for some business/enterprise oriented smartphones mostly in the USA. I am certain, that all top management at the handset-making rivals of Nokia who are considering possibly making a bid, will agree 100% with my blog identifying the 19 true strategic blunders that Elop has done in the past year and a half. They know, that Nokia smartphones business is nowhere near as bad, as its numbers today show, simply because of the total comprehensive mismanagement by Elop, the most incompetent CEO ever. So they would be buying a rival that is 'undervalued' and thus is 'worth more' than its perceived value and performance today. Or to put it in another way, if any major handset maker like Samsung, LG, Sony, HTC, etc were to take their number 2 guy at handsets, and put that person in charge of Nokia smartphones, simply by reversing the obvious Elop mistakes, the Nokia unit would return to profitable growth in less than a year.
What is Nokia smartphones unit worth? When Elop and Microsoft are removed, it should safely do 10% market share on profitable smartphones with Symbian diminishing in its low end, MeeGo based superphones at the high end and introducing Android to replace the mid-price Windows. Eventually Android would replace the low end Symbian (something Windows cannot do). Any monkey in charge would run this unit to 10% market share, and reasonbable profits like it had up to the first quarter Elop was in charge, and what would 10% smartphone market share be worth? To say a Sony who recently reaffirmed Sony's corporate future being tied to mobile? Sony currently has 5% market share in smartphones. If we add a 10% Nokia to Sony today, Sony would be safe number 3 in smartphones, and literally twice as big as number 4, RIM.
What about LG? LG lingers now in 4% of smartphones sold, while its cross-town rival Samsung has one third of the smartphone market. Adding Nokia smartphones to LG would instantly leapfrog LG from current 8th place to 3rd place, and from being one tenth the size of Samsung in smartphones, LG + Nokia would only be barely less than half the size of Samsung. If LG is serious about competing with Samsung in the future of the digital races, where smartphones are the central element, then buying Nokia for its smartphones unit would be the fastest way for LG to get back into the game. And 'fast' is the national value in South Korea. I could go on. If we accept the premise that Nokia's smartphone unit is not obsolete and fatally flawed, but rather it is a powerhouse that was mismanaged and throttled by the CEO who ineptly eliminated sales and pissed off all of Nokia's resale partners, then any buyer of Nokia could rectify those issues and restore Nokia to a modest growth path rather than its current catastrophic crash.
SMARTPHONES COULD BE DIVIDED 3 WAYS
I am pretty certain that whoever buys Nokia will not keep all parts of it. I can't see any buyer except maybe Huawei and ZTE of China, who would really want to keep all parts of Nokia. And by selling parts of what they just bought, the new buyer could then get the parts it really wanted, at a sort of 'discount'. So if for example you only wanted the patents and smartphones, and bought all of Nokia for 10 Billion dollars, then sold off the networks unit for 2 Billion and the dumbphones unit for another 2 Billion, you get to keep the patents and smartphones, and ended up paying, net-net, only 6 Billion for it. And you'd still have the Navteq navigation unit and Nokia brand and some other valuable items as bonuses.. That is what I mean.
And while some buyers may want all of Nokia's smartphone business, it is possible to divide it three ways, and any one part could be valuable, and if undesired by the buyer, could be sold to someone else. The main Nokia smartphone business runs on Symbian with what was known as the Ovi store as its app store and with such tools as the Qt developer environment by which you can create very rapidly apps that run on Symbian (and on Android, Blackberry, MeeGo, Maemo, LiMo etc). Symbian's installed base globally is more than 300 million smartphone users, second only to Android and far bigger than the total installed bases of say iPhone users or Blackberry users. Many accuse Symbian of being obsolete, but usually they have not tried using recent Symbian based smartphones, which are quite good. Not as good as the iPhone, certainly, but far better than say Blackberries.
And obsolete? Far from it, Symbian is very capable, but in ways of more traditional phone functions like messaging, phone calls, cameras etc. The 808 PureView which runs on Symbian just won the award as the best handset of the year of the biggest telecoms industry event, the Mobile World Congress this Spring. So there is life in the old dog still. And remember, that most smartphones sold this year will not be touch screen phones. Deloitte reported that this year 2012, a total of 400 million touch screen smartphones will be in use worldwide, which is 38% of all smartphones in use worldwide. Next year, 2013, will be the first year when more touch screen based smartphones are sold than keyboard based smartphones. While you and I enjoy our iPhones and Samsung Galaxies, most of the world still today uses smartphones that are operated by keyboard. And in many countries like Nigeria and Venezuela, QWERTY baed smartphones - Blackberries - are the bestselling smartphones. Nokia is traditionally very strong with QWERTY and basic T9 based keyboard operated smartphones at the low end of the market. Symbian is very well suited for those types of basic smartphones, and anyone who would want to own the major markets like the continent of Africa or the country of India - either of which is as big in population as the total Australia, North America and Europe - combined - then Nokia's Symbian currently is the bestselling smartphone on those markets and is very well suited for their immediate needs. The 'main' Nokia smartphone business running Symbian could be separated and sold for anyone who wants to be big in Africa, India, Latin America (and China), so handset makers from the locals like Mi-Fone and G'Five and Spice, to the second tier players who want to dominate those markets like ZTE and Huawei, or potentially an entrant who would want rapid market gain in those markets like say Panasonic or Sharp, who recently have signalled their interests to expand back beyond just the Japanese phone market.
Then there is the Lumia unit, Windows Phone based smartphones. Most intelligent buyer of Nokia would terminate that unit instantly as an experiment gone horribly wrong. But if the buyer has a Windows Phone based business, it could merge it with the Lumia business. And if the buyer is Microsoft, they would only want the Lumia phones, and sell off or simply terminate the other smartphone units of Nokia. In many cases I could see the buyer selling the Lumia unit alone to Microsoft, it is relatively easy to split off, as much of the Lumia smartphones are manufactured by Compal and not in Nokia factories, many of the parts used in Lumia are not standard Nokia parts so those bulk discount purchase contracts etc are also often specific to the Lumia sales, as is any Microsoft sales subsidy (worth $1 Billion per year to Nokia).
But if the buyer of Nokia turned out to be a long-time 'rival' of Microsoft, like say Apple, Intel or Google - then rather than selling the Windows unit to Microsoft, I would not be surprised if they simply shut down the Windows Lumia unit to damage Microsoft. Maybe I am being too vicious in my thinking, haha..
Lastly there is the MeeGo unit. The MeeGo unit, manufacturing only 2 smartphones and selling only 1 of them, in only some of Nokia's smallest smartphone markets like New Zealand, Kazakhstan and Norway, the N9 outsold all Lumia Windows smartphones in the first two quarters that smartphones on both platforms were sold by Nokia. The N9 defeated the Lumia rivals in practically all side-by-side user comparisons and has some of the highest resale value ever and lowest return rates ever by any Nokia device. The Lumia series, by contrast has its famous 101 problems (now with even more Windows magic, its up to 121 problems, get your Lumia now!). Even before the whole Lumia series was Osborned by Microsoft CEO Ballmer a few weeks ago, the Lumia line had the worst return rates and held the worst resale value of any Nokia branded smartphones ever seen. So any sane CEO would of course sell the MeeGo based smartphones, the N9 and N950, broadly, and introduce other MeeGo based smartphones that Nokia has produced or designed, like the N900 that ran Maemo but which can run MeeGo, and the N9-00 which was killed by Elop. I have estimated that the Nokia MeeGo unit would, if allowed to sell properly in all major Nokia markets, and just with the two devices the most highly praised Nokia smartphone of all time, the N9 and its QWERTY-slider variant, the N950, would sell about 4-6 million units per quarter, and generate at least 1 Billion Euros of revenues per quarter and be comfortably profitable. The Nokia MeeGo unit, if allowed to live to its potential, would be a company today with 4%-5% market share all by itself, so a company about the size of Sony or LG or Motorola smartphones. But differing from those, the Nokia MeeGo unit would be highly profitable too.
If the buyer of Nokia is smart and has strong intentions in the smartphone space, they would keep the MeeGo unit but give it a year to 18 months to prove itself. If the unit can get to say 2% or 3% market share all by itself and be profitable, it has the makings of great things, when allowed to thrive and not throttled by a Microsoft Muppet CEO who prefers to kill anything standing in the way of Windows. And if the buyer of Nokia was a PC maker - like Lenovo - then MeeGo obviously is a great open source license-fee-free alternative to Windows, to power tablets and netbooks, as it already has been launched for example on a netbook by Fujitsu. Where the Symbian unit is clearly last decade's hero, now nearing its end, the MeeGo unit is the future and could be a key to any buyer and its intentions to build a genuine 'third ecosystem'. With close ties to Android, for example the Qt developer tools can easily build apps that run both on MeeGo and Android. Even if the buyer is currently fully an Android house like Sony for example, then a shift to a totally different OS would be costly (like Windows) but as MeeGo is also Linux based such as Android, the port over would not be costly and time-consuming. We have seen for example a third-party port already of the N9 MeeGo smartphone to run the very latest version of Android OS. The MeeGo unit was perhaps the best hidden gem inside Nokia but recently Elop has been gutting the unit, cutting its resources and most of the staff has left - some who quite visibly went to launch a rival phone manufacturer named Jolla out of Finland, to manufacture - yes - MeeGo based smartphones. Their first new Jolla smartphone will be out before Christmas.
So even the MeeGo 'ecosystem' has some life in it, from fellow IT companies, tentatively in that world like Fujitsu with its netbook, to obviously Intel as co-owner of MeeGo, to now now phone maker Jolla with a deal to sell Jolla MeeGo smartphones in China. The MeeGo ecosystem is not big, but its not dead either. And a clever, wealthy parent could use MeeGo as a platform to become a significant player in smartphones not just as handset maker but as platform OS provider - with multiple equipment vendors on that platform.
DUMBPHONES THE MOST VALUABLE PART
The Nokia Dumbphones ('featurephones') unit is currently the most valuable part of Nokia. It is the biggest in its industry sector, with Samsung a distant second. Most phones sold this year are not smartphones - two thirds of all phones sold in 2012 will still be
'dumbphones' or 'featurephones' as Nokia likes to call this unit. Nokia's dumbphones unit sold 73.5 million handsets in the past quarter for revenues of almost 2.3 Billion Euros. So we are looking at the world's largest dumbphone maker, with annual sales worth about 13 Billion dollars. Most of their business is in Asia, Middle-East, Africa and Latin America. In those markets Nokia's dumbphones unit utterly dominates the region. The dumbphones unit was once again profitable in Q2, barely, at 4% contribution margin. So we are looking at a business very similar to other 'box mover' high volume, low margin businesses, like Dell in PCs and say Foxconn/Hon Hai in mobile phone handsets. For this, Nokia has very efficient modern giant dumbphone handset factories in all of the biggest markets of the world such as in China, India, Brazil etc.
The global handset business is obviously shifting from dumbphones to smartphones. So whoever bought this part of Nokia would gain a unit that is backwards-looking, not forward-looking. Samsung just this quarter reached the point where half of its total handsets sold are now smartphones. Sony and Motorola have already passed that point, Sony is expected to complete its migration of handsets from dumbphones to smartphones by the end of this year.
So this is not the glamorous future but this is a huge viable and profitable part of Nokia's business, that delivers very basic phone functionality to the Emerging World markets. If you want to serve those markets, this is the fast way in, to becoming instantly the biggest. This is not unlike what Lenovo did when buying IBM's PC business. It took them a while, but right now, as we speak, Lenovo is about to pass HP and Dell to finally become the world's largest PC maker. If LG or ZTE or Huawei or whoever wanted to be the biggest mobile phone brand of Africa, Latin America, Asia.. then buying Nokia's dumbphone unit would be the fast way to achieve that. They would then have to think hard, about what to do with that, because in a few years, that market will diminish and by the end of the decade, be gone. And those dumbphone users would need to be migrated to smartphones. So I would expect the company that ends up with Nokia dumbphones, to also start an aggressive shift of that market to Android (or some other OS).
NOKIA SIEMENS NETWORKS
The networking unit is a difficult item because it is co-owned with Siemens of Germany. So any sale of the unit would require also Siemens's approval. And much of the staff of this unit is indeed engineers based in Europe who are protected by strong labor laws etc. Roughly some 40,000 to 50,000 employees who generate nearly 20 Billion dollars of annual business selling networking hardware to the various wireless carriers (and fixed landline operators too). They were just slightly profitable at under 1% in the latest quarter, but most quarters the NSN unit has generated a loss. This is the fundations of Nokia in telecoms - years before the first Nokia handset, Nokia was providing networking gear, and that started of course, on the fixed landline business. The current unit is formed of major parts of Nokia, Siemens and Motorola networking units of the past. It is ranked 3rd biggest networking provider in the world behind Ericsson of Sweden and Huawei of China. There is nearly no practical synergy today in providing handsets and networking gear, but in the past there arguably was. So Nokia has been trying to sell this NSN unit, at least as long as Elop has been in charge of Nokia, but there are no real takers. I would think, that if the price is low enough, one of the other big 5 networking providers, Ericsson, Huawei, Alcatel-Lucent or ZTE will bite. But this unit is likely to be sold at a severe discount, it might even be given away for a nominal feel. If Nokia's current market capitalization is about 10 Billion dollars, I can't see this NSN unit being worth even one tenth of that.
HANDSET PRODUCTION
While the handset business is in two parts, smartphones and dumbphones, that is not necessarily tied to Nokia handset factories. Many rivals like Apple make 100% of their handsets through third parties in China, and Nokia also makes a part of its handsets in factories operated by outsiders. The Nokia handset production capacity is very strong and modern, and differing from most Chinese rivals, Nokia's handset manufacturing capacity is dispersed around the world to near the customers. The factory operations could be operated independently, subcontracting work to manufacture say iPhones in India and Blackberries in Brazil, if Nokia's new owners wanted to do that. Think of this capability as a kind of Foxconn/Hon Hai part of Nokia. This is very low margin factory operation but it is profitable business. The sale of Nokia assets by the new buyer to interested parties, could theoretically bundle some factories to go with parts they bought. Lets say that the Symbian unit buyer of smartphones could get one or two factories, and the dumbphone unit buyer would get the rest. Or the production - parts of it, or all of it - could be sold to someone else who does this kind of business, yes Compal, Foxconn, Flextronics etc. I am very sure they would not want the actual handset sales and marketing units to go with the factories.
NOKIA BRAND
Another very valuable part is the Nokia brand, worth Billions all by itself. I would see the Nokia brand treated independently, and depending on who bought Nokia, it could be kept or sold. For example, if Samsung bought Nokia, it would use the Nokia brand as a 'discount' brand with Samsung as the premium brand, think of Toyota and Lexus, or Ford and Lincoln, or Tata and Jaguar, etc. With Nokia, Samsung would have the most sold handset brand of every one of the six inhabited continents, in most cases it would have the top 2 brands. And its market share in total handsets would be over 40% and in smartphones also over 40%. (But Samsung would then face international scrutiny for becoming too big by anti-trust regulators)
By contrast if a brand that is currently perceived as a discount brand was to buy Nokia, they would make Nokia their new premium brand, like say ZTE or Huawei or Mi-Fone etc. Then probably over time, they could try to 'do the Lenovo' by branding for example current phones as 'Nokia-ZTE' and next year switch it to ZTE-Nokia, and a few years later, drop the Nokia name altogether. Some of the potential Nokia buyers do not have a strong global brand, and would greatly value the Nokia brand. Others have a strong own brand and would have almost no use for the Nokia brand (like Microsoft, Apple and Sony for example) who would probably be happy to sell off the Nokia brand to someone - but someone who is not strong in smartphones obviously. Its likely that if the Nokia brand is sold, it goes independently or with the dumbphones unit. I don't see a buyer willing to sell the Nokia brand with the smartphones unit.
NOKIA CARRIER RELATIONS
Nokia had legendarily powerful carrier relationships and unmatched retail reach globally. Elop has been demolishing those during his reign. They are not permanently ruined, but they are tied to Elop, so any new buyer (except Microsoft) would start, as the first action, by firing Elop. He is now the personalization of Nokia's poisoned carrier relationships. All of his Microsoft Mafia would be expelled and the new owners would contact the top global telecoms carriers to start the healing process. This part of Nokia stretches across the networks unit and handset unit, across dumbphones and smartphones, and across all three smartphone platforms. Many of the top sales dudes and dudettes of the Nokia carrier relations machine have left resigning under protest or smartly headhunted by the competition, but there is plenty of talent still left. Elop did not start by firing his sales, he started by firing his engineers. He has only recently turned his attention to firing sales. So this part of Nokia is not as gutted as other parts are.
The sales talent and carrier relationships would be kept by the new owner, if their own sales is currently weak (like say LG or Sony) or needs to grow strongly (like Samsung) But if the new buyer did not want to own the mass market, then this talent would mostly be bundled with the dumbphones and mass market parts of the smartphones unit. Again, this is a massive competitive advantage of decades of building personal relationships with the carriers. It was poisoned by Elop's mismanagement, it is not permanently ruined. These relationships can come back if the idiot in charge is removed and his moronic decisions are reversed. This is one of the most difficult assets to try to build or acquire, and how the new owner treats Nokia sales will tell a lot about how clever the new buyer is about actually winning in the mobile industry. If the new buyer makes clear public noises about motivating and keeping the sales channel, and clearly immediately reverses in public those Nokia Elop decisions that have damaged carrier relations, then you can expect a rapid recovery out of this part of Nokia's strongest assets. But if the new buyer dismisses them and sells them piecemeal, it also tells you a lot about how well the new buyer understood what they got.
NAVTEQ
The last significant part of Nokia is the Navteq unit. Elop has recently started to talk about Nokia evolving from now longer being the 'Connecting People' company but rather becoming the 'Where' company. That may sound nice in soundbites, but dominating the Connecting People part, is what gave Nokia the overpowering position out of a Trillion dollar industry. The total global navigation, mapping and location industry is no more than 1/100th the size of telecoms, is far older as an industry, so this is no 'small today but will grow to become big some day' bet on the future. Rather, it is a bet on the past. During the time that Nokia has owned Navteq, its become the world's biggest mapping company, and yet, the total mapping industry globally has barely grown in size, mainly shifting from older printing based maps to more modern GPS satellites based digital maps, but meanwhile the mobile telecoms industry has doubled in size. Elop once again snatches defeat from the jaws of victory. Location-based services have existed for more than a decade. They are by far the worst-performing sector of the digital industries. Almost all competent experts in mobile know this, and at least, they accept, that location-based services and mapping and navigation businesses are not a major part today of the industry, and are not showing any sign of strong growth now, nor in the near future. The only part that grows in location, is the recurring hype cycle. So the Navteq unit is ripe for selling by any buyer, as its perceived value (due to the over-hype) is far bigger than its real value. The clever buyer will negotiate a deal by which they have rights to Navteq maps of course.. Then sell the perennially loss-making unit to some unsuspecting buyer most likely based on the West Coast of the USA, where the location-hype is currently the hottest. The Navteq unit alone could fetch something like a Billion or two dollars.
OTHER ASSETS
Recognize, that Nokia has tons of cash in its accounts. So buying Nokia means you also get that cash. But Nokia's current market evaluation by all three credit agencies is Junk, so buying Nokia would immediately damage the credit rating of the buyer. Thus immediate actions to fix the damaged parts of Nokia would be needed, so the parent won't suffer from the poor ratings and recent history of Nokia. But just remember, only 18 months ago, just before the Elop Effect, Nokia was seen as so strong in mobile, all three ratings agencies rated Nokia as one notch below perfect. As I did my recent review of Nokia's ratings downgrades, they are all due to Elop mismanagement and specifically the damaged sales and market share, that was caused by the Elop Effect and actions since. So again, the ratings agencies have NOT downgraded Nokia because Symbian is obsolete or the Networks unit is kaput or the dumbphones are undesirable. No. Each of the downgrades - several by two notches at once - were due to management failures in sales and market share - these were directly caused by mismanagement by Elop. They can be reversed, not totally, but partially. And if they are reversed, Nokia's market share collapse ends, and even a modest recovery becomes possible, with smart management.
But Nokia does have other assets, from engineering skills, to an unmatched end-user consumer insights into how to design desirable handsets globally, with regional variations etc. They have some businesses in highly promising areas such as Nokia Money (currently being shut down in India but could still be revived and recovered). I am not going to discuss those, as I think the main assets are the eight I listed, plus the cash. The patents are so strong, any buyer will value the patents as one of the best assets, and will want them. The buyer will also take the cash. The other seven assets will be divided, kept or sold or just ended, based on the interests and needs of the buyer. So lets look at the buyers then.
ALMOST SURE TO BID FOR NOKIA
The first group of rivals are almost sure to bid for Nokia. They may not want all of Nokia, but this group cannot let Nokia's patents go to a rival, like the very belligerent and lawsuits-prone Microsoft, or the recently ever more hostile patents player, Apple. These players to me, will all make a formal bid by themselves of Nokia, or will join in a partnership to buy Nokia openly or secretly, where someone else makes the formal bid, but the partners have already talked about how to divide up Nokia after the acquisition.
LG
I think no matter what, LG has to bid for Nokia. LG was once the third biggest handset maker and had a good path to profitable smartphones. LG was given awards for a radical handset design in 2006, which looks eerily like the iPhone that Steve Jobs showed us in early 2007 - one button, huge touch screen, and like the original iPhone, that LG device was not a smartphone (only the iPhone 3G was a true smartphone in 2008, the original iPhone 2G was classified a featurephone). We saw it launched before the iPhone sold, in many markets such as Europe and Asia, and in its first year, the LG Chocolate sold more than the iPhone. But LG made the fatal mistake that has proven deadly in mobile - it then partnered with Microsoft where rivals went with Google's Android. LG took a huge beating in its failing Windows smartphone project and limped into the Android family where it is now a bit player. LG sees the huge profits that Samsung does with mobile, especially with smartphones. LG can see with perfect precision the catalogue of management failures by Elop at Nokia, and know that any junior recent-hire MBA from LG would have run Nokia better. They see buying the badly injured Nokia now, as the fastest way back to near the top, where LG could restore its path and fight for the glory.
The nice thing for LG is that it is the second bestselling phone brand in the USA today, behind only Samsung. And with Nokia, LG would then be the second bestselling brand of Europe, and through Nokia the bestselling brand of Africa, Asia and Latin America. LG would keep the full handset unit, run the Nokia dumbphones brand under Nokia branding and then run the LG as the premium smartphone brand under Android, and quickly transition the Nokia Symbian and Windows units to Android. LG might want to run the MeeGo unit independently just like how Samsung has its own smarpthone OS in bada (and soon, Tizen). LG would sell the networks and Navteq. LG would need the factories and would use the Nokia brand in a long-term transition to LG as the only branding.
ZTE
Chinese handset maker giant ZTE who also provide networking services would probably be able to take all of Nokia as it is. By taking the Nokia dumbphones unit, ZTE would instantly become the world's biggest dumbphone maker and challenge soon for the biggest handset maker overall. ZTE would gain the reach and scale it always wanted in Africa, and by using the strong ZTE and Nokia brands in China, quickly reverse the dumb Elop decisions (Windows etc) and restore the Nokia brand to a growth trajectory in China. ZTE has the handset scale that it could consider running the MeeGo OS platform especially with China Mobile's support. ZTE would probably sell the Lumia unit to Microsoft so they would get some of their purchase price back, and probably sell the Navteq unit for some American investors for the same reason. But other than that, ZTE would keep the factories, the Nokia brand, and both the Symbian and MeeGo based smartphones. With NSN, ZTE's networking unit would leapfrog ahead of cross-town rival Huawei and become very close to the biggest networking provider running neck-to-neck with Ericsson. And in smartphones, Huawei has pulled ahead of ZTE, so with the Nokia smartphones unit (only its Symbian and MeeGo parts) ZTE would then again leapfrog Huawei in this category too.
HUAWEI
About all that I just wrote about ZTE would apply to Huawei too. Except that by acquiring NSN, Huawei would clearly pass Ericsson to become the world's biggest telecoms networking equipment provider. Huawei in dumbphones would gain huge footprints in the area it is relatively weak - Huawei has more focused on smartphones and data dongles etc for modern mobile data use. In smartphones it would be the clear number 3 worldwide, instantly. The Chinese are very smart business people, they would see that the value that Microsoft would place on Lumia far exceeds its real value, and the same is true of Navteq, so they would sell those units. I could see Huawei deciding not to keep the dumbphones unit, differing from ZTE, but woudl definitely not sell it to their Chinese rival. I could see Huawei selling the dumbphone unit, and related factories to some regional dumbphone maker like Mi-Fone of Africa or Spice of India etc.
APPLE
This seems ludicrous at first. Apple has zero use for Nokia's massive handset unit, any of Nokia's factories, or Nokia's brand, or god-forbid, Nokia's loss-making networking unit. All of these would be pure poison for Apple's reputation as a superbly desirable hyper-profitable mobile and IT giant. Except.. The one thorn in Apple's side is the patents payments they have to pay to Nokia into perpetuity, out of every iPhone ever sold. The amount of profit that Apple records in just one quarter, is more than enough to buy all of Nokia. And Apple would otherwise have to pay whoever buys Nokia, from 1 to 2 Billion dollars every year in royalties. Why not buy Nokia the cripple now, take the patents, sell the junk parts at whatever price they can get, but keep the Nokia patents and use them instead to force Samsung and friends to pay that Billion-per-year to Apple instead. This is one of the only ways a company as magnificently profitable as Apple, can actually increase its profits - by acquiring the world's largest patents portfolio in the very industry where Apple bets its future belongs.
Apple would literally want nothing else. They would sell the parts to whoever wants them, and Apple would not wait long in the fire sale either. Get rid of NSN immediately, the last thing Apple wants is to be known to be in the networking hardware business where profits are 0% on a good year. Dump NSN to the first buyer, Alacatel-Lucent, Ericsson, Huawei, ZTE.. whoever, whatever. This will never matter to Apple, and they just want to get rid of anything where the word 'factory' is involved. Nobody buys a glorious piece of networking equipment 'because it was designed to be so elegant..'
Next all Nokia factories too. Theoretically, Apple could want to bypass Hon Hai and Foxconn and operate its own factories. Except what is the point? Those companies run at 3% or 4% margins. Apple would damage its profitability if it took over the manufacturing. So off with the factories. Bundle them with the Nokia smarpthones and dumbphones units.
Of the top end smartphone knowhow, the sales retail competence and some software like Navteq, Apple could keep parts, or make the sales agreement give Apple the rights to the software (like in the case of Navteq). But most of Symbian and Windows based Nokia smarpthones and obviously all of the dumbphones, are utterly useless to Apple's iPhones. So off they go, sold to the fastest bidder.
The Lumia unit would be an interesting conundrum for Apple. If they feel they want to cause pain to Microsoft, they could just hold onto it and terminate it, but not sell it. If Microsoft plays real nice with Apple, they could be persuaded to sell the Lumia unit - and take Elop with it - to Microsoft. That episode could be an interesting soap opera.
This is a rare chance for Apple to add to its bottom line, make an aquisition, where selling all parts other than the patents, would almost pay back whatever Apple pays for Nokia. But then when calculating the annual payments of royalties, would make this purchase net-positive for Apple. And the total cost of acquisition would be pennies out of Apple's purse. And this would be one of the very few acquisitions that Apple could do, that would actually increase its profitability (after obviously all unnecessary parts are sold). Apple would obviously also sell the Nokia brand, and likely sell it to someone very VERY unlikely to become a strong smarpthone rival to Apple, to muddy up the Nokia brand as much as possible. The smallest buyer out of the Emerging World..
MICROSOFT
Microsoft's Windows dream dies if Nokia is no longer indepenent, or if it is sold to anyone other than Microsoft. The Windows platform lives on in the dwindling desktop space. In the laptops its is competitive. In the tablets it is nowhere and in smartphones what was once 12% global market share is now 2%. Nowhere. The only way Microsoft can hope to be at least a recognized player, with (ha-ha) the 'third ecosystem' is if Nokia continues to sacrifice its Symbian share in favor of Windows. Best case for Windows with Nokia and all remaining partners is perhaps 4% at the end of this year. Best case. And as I have already explained, any smart buyer of Nokia immediately releases MeeGo and Symbian sales to their full potential and stops pushing the unwanted Windows, thus effectively killing Windows. The other Windows partners have long since jumped ship such as Motorola, Sony, LG and Dell. Or are busily building their own platform like Samsung with bada and Tizen.
Microsoft needs Nokia Lumia unit to continue to push Windows to smartphones. The promise of a third ecosystem sounds quite hollow today, but the Microsoft PR machine is strong and can still push the unlikely story, if Nokia is onboard. But if a rival buys Nokia, and immediately announces shifts that signal end of Nokia and Microsoft, the bottom would fall from Windows in smartphones.
This is why Microsoft is definite to bid for Nokia, once the bidding war starts. And Microsoft has deep pockets, they could easily end up outbidding the others, simply because the long-term survival of Windows is at stake. But Ballmer is no fool. He has seen how comprehensively the world is rejecting Windows Phone on Lumia now, after literally the world's biggest handset launch of all time. You can be sure Microsoft will be in the bidding at the start, but Ballmer may well feel that he has a limit and at some point they pull out of the races. Or he might be the last man standing, if he really wants the Lumia unit.
But Microsoft has no need for the other parts. Ballmer doesn't need the Networks, nor the dumbphones. They will be sold. He has no use for Symbian or MeeGo based smartphones, but can't risk a rival buying it and making it a success, so he'd keep them to kill them. The Nokia brand would be pretty useless by now, Microsoft would be better off by rebranding the Lumia smartphones as Microsoft Xbox phones for example. So the Nokia brand would be sold too. Microsoft would likely keep the Navteq unit and some top end smartphone skills, plus the sales organization (and just watch them depart in disgust and despair soon thereafter haha) but all factories would be sold, as the Lumia series shows, the Microsoft based Nokia smarpthones can be easily made by third parties like Compal. Microsoft would only want the Lumia unit, the patents and a few incidentials perhaps, like Navteq. But MS would keep the Symbian and Meego units only to kill them and deny them from any rival.
If Microsoft does not get Nokia directly, they would be the first call in the morning to the new happy owner of Nokia, to try to buy the Lumia unit - and get this - Microsoft could pay as much as half of the total bidded value of Nokia, just to get the Lumia unit for itself... Microsoft knows its future lives and dies with whether Lumia smartphones continue on Windows. The buyer of Nokia would receive an offer too good to refuse, and anyone would sell the Lumia unit to Microsoft, except those companies who want to screw Microsoft royally - and there are a few of those companies too, out there, haha..
VERY LIKELY TO BID
In the second category I have companies I think 'should' bid for Nokia but might not. This includes many of the 'obvious' candidates but I can see a 'but' in the case, which I will be focusing on. Why is this company perhaps staying out of the bidding.
SAMSUNG
Samsung could take all of Nokia and make good use of it. The Samsung corporate policy is not to compete in any area where they are not in the top 3, and even the Networks unit is ranked 3rd, so Samsung could take it all and then put some South Korean magic to the anemic bureaucratic Nokia, and turn it all around. Samsung is already the world's biggest tech company, this would make Sammy even bigger.
UPDATE August 7 - Swedish newspaper Dagens Nyheter reports that Samsung is also looking into possibly acquiring Nokia
I think they would not keep NSN, they'd sell it, at best value possible, bidding it out to the networking rivals, Ericsson, Huawei, Alcatel-Lucent and ZTE. They could even chop up NSN into parts and sell it piece-meal. Samsung is big enough and profitable enough, to be able to take the time, but the South Koreans are very good at business, so they could well see that parts of NSN might be of value to different rivals..
Samsung would have been taking informal readings from the regulators especially in the USA and EU, about the merger. If the regulators fear too much the dominance of SamsungNokia in handsets, then Sammy would of course sell parts of Nokia's handset business. What parts? Haha, obviously the dumbphones part. That would take care of the anti-trust issues, and that is where Samsung knows the future does not lie in. They could sell the Nokia brand with that, or else keep the Nokia brand as the Samsung discount brand, for low-end smartphones. Samsung would rapidly shift the Symbian production to bada and the MeeGo devices to Tizen. Samsung would be very happy to sell the Lumia unit to Microsoft in return for promises of not being sued left and right by Microsoft on a million reasons. Samsung's single biggest gain would be the instant 'global victory' against Apple in patents - the lawsuits against the Galaxies would end instantly. With Samsung's strong growth - and high quality expectations - they would have good use of some of Nokia's factories, but would sell most of them with the dumbphones unit.
By giving the Lumia unit to Microsoft, Samsung's overall jump in smartphone market share would only be modest, and would not breach the 40% level when added to Samsung's own sales today. By suppressing early MeeGo sales by the transition to Tizen, Samsung would have big potential for future jump again in smarpthone market share, once the regulators have approved this sale.. The Nokia brand and dumbphones would not be sold to a strong smartphone rival of Samsung, and likely not to one of the biggest Chinese rivals either, ZTE or Huawei. It could go to a smaller Chinese rival like Lenovo or G'Five etc. More likely to a regional player.
Samsung would instantly fire the whole Microsoft Mafia (and/or package them with the deal of Lumia to Microsoft) and strongly incentivize the Nokia retail and carrier relations teams to remain. They would find the Samsung culture not far different from Nokia in sales and would find their new masters far more sensible to modern sales work than that under Elop. Samsung would also make very fast and efficient use out of Nokia's world-leading competence in end-user studies of mobile. You could expect big leaps forward in consumer love and satisfaction in the Galaxy S4 next year, etc. If the best knowhow of Nokia was truly used to its ability, with the enormous speed and efficiency that is Samsung, this would be the powerhouse of the decade and beyond.
So why not? Samsung is perhaps the only company that does not 'need' Nokia. Yes, it could use the patents, but beyond that, Samsung is doing so well without it, but having grown more-or-less organically, all at Samsung are part of the Samsung family, well trained into the South Korean style of management and work ethic. The bureaucratic attitudes and short working hours of European staff would find a massive conflict when faced by expectations from new top management from Seoul. Samsung can see what the mistakes were that Elop made - so much so, that nearly every time Samsung has been able to capitalize the best and much of Samsung's growth in smarpthones in the past 12 months, was due to adjusting to mistakes made by Elop over the past 18 months. If Samsung has been able to already capitalize on those mistakes, why now take the crippled Nokia onboard. Just let some other rival take that headache, and let Samsung run unencumbered, and continue to grow the fastest. My gut says Samsung will bid, but will pull out early. They are not really hungry enough to want Nokia. Not now, that they have already passed Nokia as the biggest handset maker in the world.
INTEL
Intel had seen the mobile revolution for years and attempted very hard to get into it. As Intel chips do not power smartphones, they road in was the operating system. Intel created the Linux based Moblin OS for which it had secured several dozen major IT brands, home electronics giants and car manufacturers. Then that project was merged into Nokia's Maemo, to create the MeeGo ecosystem. This was Intel's big opportunity. And then came the platform arsonist, Elop, who destroyed this dream. Calling the Intel CEO literally the night before, Elop announced the end of MeeGo and the shift by Nokia to Microsoft Windows based smartphones.
Intel had seen the future of computing. They had made the smart play, by partnering with the biggest handset maker and (then) biggest smartphone maker - and together they had over three dozen partners lined up to MeeGo. Fujitsu had just days before introduced the first MeeGo based device, a netbook. Nokia was committed to two devices to release during that year, 2011. And then the new Nokia CEO torpedoes all of Intel's mobile dreams in one flashy moment on stage with Microsoft, the sworn enemy of Intel.
Does Intel want to buy Nokia just to ruin Microsoft's play in mobile? You betcha! Does Intel want to own Nokia just to restore its strategy into the future of computing: smartphones? For sure! But how to do that, without pissing off the current strategic partner, Samsung? This would be a delicate dance for Intel, done with total knowledge of Samsung. The two could easily make a joint bid in fact.
This is what Intel wants and doesn't want. Intel wants the smartphone future. Buying Nokia Intel would then become a smartphone maker. It would want Nokia's main smartphone business on Tizen (the new iteration of MeeGo, after Samsung joined Intel). Samsung would not in principle be against 'Nokia' shifting from Symbian, Windows and MeeGo to Tizen, they would be probably happy with that. What Samsung doesn't want, is for Intel, the software partner, to become a major rival to Samsung suddenly in the handset space.
So Intel could do one of several things. It could offer to sell the smartphones business to Samsung, and let Samsung pick those buyers who would be allowed to buy Nokia's dumbphones unit from Intel (obviously not LG, ZTE or Huawei). What Intel could do really please Samsung, is to keep the Symbian smartphone business but shift it to bada and thus expand Samsung's ecosystem there. Samsung is far bigger than Nokia today, so to have Intel take over Nokia's crippled smartphone business would not really pose a huge threat to Samsung, but would actually add to a partnership of 'equals' perhaps. And Nokia smartphones all shited to Tizen or bada, would be the best possible ending of Nokia from Samsung's perspective, especially if Samsung didn't have to pay for that transition..
Intel would almost certainly not sell the Lumia unit to Microsoft, but rather just kill it. Intel would have no need for the dumbphones, for most of the factories, and the networking unit. Intel would love to have the patents but again, might use them to keep Samsung happy, by sharing the patents to help protect Samsung.
With Intel as owner, you would see a very rapid roll-out of Tizen based (ex Meego and ex Maemo) smartphones. Every Nokia MeeGo handset project would be resurrected, and each Lumia smartphone would be rapidly ported to Tizen too. Meanwhile low-cost Symbian smartphones would be ported to bada. And the new smartphone chips developed by Intel would then be integrated into the design of upcoming 'Nokia' smartphones. I think Intel's brand would gain a lot from Nokia, so we'd likely see dual branded phones, like Lenovo did with IBM early on, so the phones would be 'Nokia Intel' initially, eventually then only Intel.
AMAZON
Amazon has said recently that they are not going to make smartphones but there have been long-standing rumors, ever since the Kindle really. Why not? If you are in the portable digital hardware industry, and its biggest growth opportunity is the smartphone, why not also then enter the smartphone wars? If Amazon bought Nokia, they could even keep the cheap phones, they would shift the three smartphone platforms to Android and sell the networking unit. Amazon would probably open up the much-idling Nokia factories to subcontract phones for rival makers, to bring them to full utilization levels. Any Nokia tablet projects would soon become premium Kindles. Amazon would evaluate the Nokia owned platforms and soon decide Symbian is gone but MeeGo is very good and would expand the offering on MeeGo from smartphones to Amazon tablets. They would of course immediately end the Windows smartphones, Amazon know sales and consumers - that dog don't hunt.
Amazon would do a lot with Nokia retail channel and carrier relationships and the Ovi store ecosystem. I would think Amazon would keep the Nokia phone brand as an independent brand across all its phones and not even try to bring the Amazon brand into it. But imagine the S40 series dumbphones with one-click Amazon store links and the full Nokia phone line with cloud-computing based services powered by Amazon. This would instantly vault Amazon into the top players in mobile, something they have often expressed a desire in, but never really moved aggressively to achieve. Amazon would see a lot of value out of Nokia's Qt developer tools, that serve multiple platforms.
YAHOO!
If Google is likely to stay away from Nokia, I would think Yahoo! would be the opposite. The new young CEO knows that the future of Yahoo! is in mobile and they have a poor track record in it. If Google can make use of handsets in its portfolio, so could Yahoo!. If Google can build and develop its own OS, why could not Yahoo! and actually with two OS platforms, Symbian and MeeGo. They would sell the NSN unit and the dumbphones unit, and quite possibly the Nokia brand too, but would have instantly Yahoo! branded smartphones to sell. Toss out the incompetent CEO Elop, sell the Lumia unit to Microsoft, and then reverse the mistakes of the past 18 months, and voila! Yahoo! is instantly bigger in smartphones than Google (ie Motorola). Release the N9 and N950 globally running MeeGo and watch how the Nokia smartphone unit is returned to growth and profits under the new wise young management from Yahoo! and then yes, toss in all kinds of Yahoo! services to these new Nokia devices.
PROBABLY NOT FINALISTS
Then we have more tech giants who may be bidding, but I don't see these guys winning. They should have interest, but probably not enough to stay in a bidding war till the end.
SONY
Sony is an obvious bidder too. They would triple their market share in smartphones, they could use the Nokia brand as the junior/discount brand with Sony the premium brand, but gain a ton of very highly valued premium capabilities from the PureView camera tech that would suit well with Sony Cybershot premium cameraphones to Carl Zeiss optics to the Dolby sound tech that Nokia recently added, that would work well with Walkman musicphones. Sony would sell the dumbphones unit and the networks unit, and factories they serve. Sony would evaluate the MeeGo option as its own OS - as Sony has a vast library or content and services starting with movies, Playstation games and music - but would instantly end the Microsoft madness, and likely sell the Lumia unit to Microsoft. Sony would greatly value the distributor and carrier relations, which SonyEricsson had been moving away from during the past years. As Sony recently decided to focus on mobile, this would be as if they went back in time, to the 'good old days' in terms of Sony's global sales reach.
The big problem with Sony is the pain of the Ericsson partnership. If it didn't work out with the Swedes, why would it work now, with the Finns? Sony may think that this is too risky and they are better off growing internally organically, rather than by acquisition. And Sony is one of the few major players out there with a healthy patent portoflio of its own in mobile, so that part, while definitely interesting, is not as appealing.
HP
I think HP should buy Nokia and make their big play into the smartphones space with Nokia, that they floundered with the wasted Palm purchase. It would be poetic justice too, as the original Nokia Commnunicator, the world's first smartphone, was a collaboration with Nokia and HP. HP could put Palm WebOS onto Nokia smartphones, have their own OS on them. In 12 months or so, Palm would have 3% market share, bigger than Windowsm, and in 24 months would have 8% to 10% global market share and be truly the 'third ecosystem'. Or Intel could run WebOS and MeeGo in parallel. HP would definitely end Windows and likely not even sell Lumia unit to Microsoft as their relationship is not warm. HP could keep the networking unit but likely would sell it. HP would be best off selling the dumbphones unit. If HP gained the Nokia resale and carrier relations, they would now have, what they wanted in the Palm purhcase, a global instant play into smartphones. But I don't think HP is into mobile now, they feel they got burned with Palm.
LENOVO
Lenovo could also make good use out of Nokia, especially its smarpthones, but arguably even its networking unit. Lenovo would sell the dumbphones unit, only keep the smartphones, and likely sell the Lumia unit to Microsoft to keep them happy. Lenovo would then rapidly develop the MeeGo OS into their own OS for not just smartphones but tablets and netbooks too, cutting big chunks of royalties that would no longer need to be paid to Microsoft. Lenovo would soon shift its own LePhone Android based smartphones to run MeeGo. Lenovo would do the same kind of brand shift, early phones sold as Nokia-Lenovos and later Lenovo-Nokias, and then a few years from now, as only Lenovos while the Nokia brand would die into oblivion. But I think Lenovo's current attention is 100% on becoming the biggest PC maker, passing HP and Dell, and they aren't really paying attention to smartphones. Their own LePhone is underperforming even in China, their home market, so they may feel this is not their strong suite and don't wnat to get deeper into it. They also can see that most smartphone makers whose name is not Apple or Samsung report regular losses, so as Lenovo itself is borderline profitable, why take on the hassles?
HTC
I do think HTC would have a very big job in taking over Nokia and would sell off most parts, but they must be doing their calculations over in Taipei many times, on can they afford this. This could be the one grand play, that brings HTC finally to the level they always wanted. But for a company the size of HTC, this purchase would need considerable blessing from their investment bankers and yes, HTC would sell off most parts. They would sell the NSN unit and the dumbphones, obviously. HTC would also happily sell the Lumia unit to Microsoft. HTC would love the patents to protect itself and would shift the Nokia Symbian smartphones business to one of two platforms. Either to Android, or .. HTC has always wanted its own OS and was a finalist bidding for Palm - yes, MeeGo. HTC could go so far, as to only keep the patents and the MeeGo unit, and even sell the Symbian low cost smartphones unit and factories that go with it. But it would make more sense to me, if they could afford it, to keep the Symbian unit, and rather than try what Elop did, forcing Symbian owners to take the undesirable Windows, give them MeeGo based smartphones instead. And yes, migrate HTC's Android phones - most of them, not all - to MeeGo. And keep one smartphone still running Windows Phone so Microsoft won't sue them.. Except, that now with Nokia patents, HTC would for the first time be essentially lawsuits-proof. They could in fact end the Windows nightmare and only sell Android and MeeGo based smartphones!
The HTC play for Nokia would be very similar to how an relatively unknown Lenovo bought IBM's PC business and made it big, but it could turn out like the Siemens sale of its handsets to BenQ of Taiwan, where is BenQ today? A high-risk acquisition that might pay off, or might destroy the parent.
NINTENDO
I think Nintendo is strangely out of the handset business. Their chances to join the races are slim, this is one play that would bring them up to a reasonable chance against Sony, the iPhone obvioulsy, and even Xbox now kind of in mobile, with Windows Phone. As Nokia has its Ovi store and carrier billing already in place, a new Nintendo-Nokia gaming phone could be a hit device sometime for next Christmas (ie 2013, not 2012). To run what? MeeGo or Android. Nintendo would sell the networks unit, the dumphones unit, and the Lumia unit to Microsoft. They might want to try some location-based gaming with Navteq? Nintendo has been so vocally against any play into mobile, that they might not know what to do with even the small slice of Nokia that I would imagine they would keep. But it would massively increase their total sales per year and would instantly bring them current, out of the increasingly irrelevant platform play in gaming.
PANASONIC, SHARP, FUJITSU, TOSHIBA
Several Japanese consumer electronics giants have recently expressed some regrets about abandoning the global mobile phone market or a desire to return to it. Buying Nokia for any one of those would be a fast way to the top. In any case, I would see the Japanese buyer holding to both the smartphone and dumbphone units, but selling the networking unit. In smartphones, they would sell the Lumia unit to Microsoft. As all of these have considerable experience with Symbian, they know the strengths and would not be in haste to terminate Symbian. They would evaluate MeeGo, and initially obviously open the sales floodgates to sell MeeGo based N9, N950 and other MeeGo handsets. They would not be afraid to ditch both platforms and go with the safe bet, Android, as being 'newcomers' to the battles, why take on the added hassle of building ecosystems etc. These companies are known for making consumer hardware after all. Keep one or two of the modern smartphone capable factories, sell the others. Keep the retail channel. And shift the branding soo to their primary brand, perhaps keeping Nokia as the discount brand (or selling the Nokia brand to the buyer of the dumbphones unit).
SAP, ORACLE, CISCO
Some big IT tech and software companies might be interested in parts of Nokia but are not obvious. Cisco could want NSN and become a fully-fledged network player in that space. They might even entertain some play in the handset side but then only the top end smartphones, and sell dumbphones. A software house could see the software play and the smartphone play as trying to do something like being an Apple. Clearly Nokia has been dumb recently (not just under Elop, also under previous management of Kallasvuo) and with the right management, this could be the entry to the future of software and hardware integration, and Nokia would even bring to the table two of its own OS platforms so you wouldn't have to pay royalties to Microsoft haha. A software house if anyone knows the value of royalty payments. I would see the software owner seeing how promising MeeGo is and pushing it hard, but also seeing how old and tired Symbian is, and soon putting it to bed. And selling Lumia Windows unit to Microsoft. The software houses would not want to own NSN.
UNLIKELY BUYERS
Some of the big names in tech and telecoms are kind of 'obvious' plays, but I think they won't be in the final bidding for Nokia.
ERICSSON
I think Ericsson will be bidding early on, but only modestly, with interests in NSN, but will be making a more serious bid after Nokia has been sold to try to buy just the NSN unit. Ericsson really has no need for any other parts of Nokia except the networking unit, and being already the biggest, I don't see Ericsson as hungry to really want to go all out and win the bidding war.
GOOGLE
If Apple and Microsoft, then surely Google. Yes and no. Certainly, Google could use much of Nokia. But Google thinks strategically, and its handset partners expressed very much unease about the Motorola acquisition. Google has over 50% market share in smartphones today, while Motorola only has one tenth of that. Why take on Nokia, and with Motorola and Nokia control 15% of the market, while pissing off the other 35% that gives you half. Google wants to control the big slice, not be boss of the small part.
If anyone, I think Google is the big player most likely to say from the start, we shall not bid on Nokia at all. Yes, they would love to have the patents, but hardly anything else. Google is a software and services company, why would it want factories. Android is smartphones OS, why the dumbphones. Google isn't in the networking hardware business. Most of Nokia is actually bad for Google and they would have to sell those parts. If there is a consortium that buys Nokia for its patents, that is about the only way I see Google actively involved.
ALCATEL-LUCENT
For the same reasons as Ericsson. Why take the hassle of all of Nokia. Wait until its sold, contact the new buyers, make a far smaller bid only for NSN. And as NSN is at best slightly profitable, its not the end of the world if you don't end up getting it.
RIM
I can see plenty of synergies and gains for RIM out of buying Nokia's smartphone unit and the protection of the patents, but the headache of all the other parts would probably be too much for the troubled Canadian smartphone maker. I doubt RIM will be bidding for Nokia.
DARK HORSES
Then a few dark horses. These are not obviously on the horizon but could make a surprise bid and be rich and big enough to be able to pull it off, too.
AMERICA MOVIL
First, is the richest man on the planet, Carlos Slim with his America Movil empire across Latin America. He is a sharp businessman. He's turned around badly run operations in the past. He has no doubt laughed out loud many times looking at the tomfoolery of the management decisions of Stephen Elop, and knows that appointing one of this lieutanents to run Nokia would return the company to profitability in no time. His empire is big enough, that just the handsets sold on his network would cover much of Nokia's production. But now he would control end-to-end the whole customer experience of mobile. He could make phones that he truly wants and play the game 'against' both other networks, and against other handsets. I think any big carrier group would contemplate this, but it would take a kind of ruthless boss, and one in total control, to be able to pull it off. Carlos Slim might be one to do that. I am 100% sure he has had his investment advisors do the analysis of this option, also evaluating what would be the backlash from other carriers against Nokia handsets in their markets, and possibly other handset makers against America Movil in his backyard.
America Movil could utilize immediately all parts of Nokia. Standardize his networks to NokiaSiemens hardware, as they migrate to 3G and beyond. Standardize Nokia low-cost dumbphones to run on his network as the primary phones, and then migrate those over time to Nokia own Symbian low-cost smartphones, and then to Nokia own MeeGo based high end smartphones later in this decade. The Nokia Ovi store would become the America Movil Store as the primary app store of his networks. He might sell the Lumia unit to Microsoft (or keep it too) and he probably would sell those factories not in Latin America, but mostly keep most of what is Nokia today. His own empire could absorb a major portion of the total production and he'd still have the scale to make handsets and network equipment very competitively to other markets. Maybe local rivals like Telefonica would protest, but why would a rival like Vodafone or China Mobile care, their own carrier operational footprints have no overlap with America Movil?
CHINA MOBILE
This is a very dark horse play, but Nokia built the world's largest handset factory in Beijing, just to serve the Chinese market. China Mobile alone controls 12% of the planet's mobile phone accounts and the Chinese customer is migrating rapidly from dumphones to smartphones. The Nokia brand is very strong, two years ago 77% of all smartphones sold in China were Nokia branded. Nokia and China Mobile were partners in the MeeGo project and Nokia's current Ovi store on Symbian has tons and tons of apps in Chinese. If China Mobile ever thought, they would like their own in-house handset production, they could buy Nokia now. And add to it the NSN unit to act as China Mobile's networking hardware production house. China often plays 'by its own rules' and if China Mobile got the blessings of the governemnt that they could do this, they might make the move. They would keep most other parts of Nokia as it now exists, but would sell the Lumia unit to Microsoft.
HUTCHISON
Hong Kong's richest man, Li Ka Shing has been involved in mobile for a long time. He is very familiar with buying and selling and particularly astute in buying when cheap and selling at the peak. The Hutchison group includes the Three carreir/operator businesses in about a dozen countries in Europe, Asia and Australia; and their in-house handset manufacturing unit is INQ. So they know the handset busines kind of from the inside and have had a major play - often buying and selling - parts of their telecoms empire. I could see Li Ka Shing making a surprise offer to buy Nokia.
And then what? He'd have no qualms about selling major parts of it - but differing from most buyers, Li Ka Shing would not sell assets when their value is artificially low. So for example, I have been reporting how poorly the MeeGo based smartphone unit sales have been managed. Li Ka Shing would appoint a top sales guy to run the MeeGo unit, with the intention of growing it to be healhy and big, and THEN sell it. Like I said, any monkey could turn the N9 and N950 smarpthones in to a 5 Billion dollar highly profitable business per year, and if so, that would be a valuable unit to sell then - one or two years from now, not today in a fire sale.
Similarly the NSN unit. Elop has already announced another 10,000 layoffs at NSN. It was tinkering on the border of profits. Under Li Ka Shing's tight management and after those already announced 10K layoffs, the NSN unit could be in far better shape this time next year. Not to discount the fact, that obviously the whole Hutchison empire would be buying all their networking gear in the meantime from NSN, dimnishing sales to rivals and temporarily boosting sales to NSN, helping make NSN look stronger - then sell it fast!
What parts would he want to keep? The patents, the smartphones, maybe some other minor parts. He'd sell almost immediately the dumphones unit, as its value is unlikely to grow a lot, but may diminish soon as the world shifts to smartphones. And Li Ka Shing would definitely sell the Lumia unit to Microsoft for a very high price indeed. Those negotiations might drag till next year haha. Same I think the Navteq unit, he'd sell it instantly but through a big bidding war, as likely the hype around location will not grow, it will soon diminish, so the time to sell Navteq is now.
SK
One other very dark horse would be the SK Group of South Korea. Originally from the petroleum industry they are now Korea's largest carrier. I think they look at Samsung and think, we could be like that. They see cross-town rival LG - also South Korean carrier as their competitor - who also sells handsets globally. If LG can do it, and Samsung uses that idea to become biggest tech company, then why not SK follow suit? They could buy Nokia with the intention of doing what LG has proven incapable of, of competing head-to-head with Samsung. This would instantly poison the handset relations with Samsung and LG in South Korea, obviously, but they would take it as their global play. Now they could use SK's considerable insights into domestic South Korean advantages in digital, into a global play. So they would, for example, instantly reverse the decision to end Nokia Money in India. Rather, they would expand that to Nokia Money/SK Money to all markets where Nokia handsets are sold - of course! (Most South Koreans use mobile money already, so for SK this would be obvious).
SK would likely keep only the smartphone parts of the handset business, sell the dumbphones parts. And sell the networking unit and most incidential parts, but of course keep the patents. If SK ever felt envious of Samsung's rapid rise, this would be the way to catch up. An SK with Nokia would be .. about exactly as big as Samsung actually..
So that is what I think about Nokia buyers and what they might value and what not. What do you think? Also, I have said now for months that we need for Nokia share price to bottom out, before the real bidding starts. We may have seen the bottom and now with this recovery in Nokia share price the bidding war may be about to start for real. Is Lenovo in the game? Maybe not, but they should be..
Most likely of the above: None of them.
Nokia is just too much of a poison pill for anyone to swallow. The secret deals made with Microsoft and the patent trolls rule out any hostile take-over. Samsung, Google, Apple, and possibly even Microsoft, would also fear the regulatory process that follow such a purchase. Apple and Samsung would likely be denied, or tightly regulated, like with the Nortel sale, since they already control such a huge slice of the market.
Nokia's old competitors are already getting what they want the most for free: The know-how and engineering talent, which is fleeing Nokia as fast as they can send out their CVs.
Most likely buyer: An investment company nobody has heard about before. It can slice up the company, and tear up contracts far more freely than any of the above mentioned companies would dare. Then the investment company can sell the pieces unencumbered. But why buy now? The share price is still dropping.
Posted by: NoNameRequired | August 02, 2012 at 12:08 AM
no need for this post - Nokia marketing strategy will revive lumia sales to the point where it will overtake Apple for number 2 spot.
http://www.gsmarena.com/nokias_latest_bid_to_boost_the_lumia_900_sales_involves_nail_polish_-news-4595.php
Yes nail polish!
Posted by: ejvictor | August 02, 2012 at 02:26 AM
I bet the "support payments" from MS that add up to slightly more than nothing when offset by "minimum royalty commitments" according to Nokia's SEC filing about the MS deal, would be required to be paid back if the deal were broken.
All of that money which only existed on paper, would suddenly be real, because MS wouldn't have to pay back the so-far $1 B worth of WP royalties (67 million phones' worth... cause you know, Lumia should be outselling iPhone by now according to the plan).
Even if the deal was ruled to be made in bad faith and no breakup fee was awarded, MS may claim that the fake support payments were real costs that can be recouped???
Elop destroyed and poisoned anything at Nokia that was of value to anyone but MS.
Posted by: m | August 02, 2012 at 03:41 AM
Tomi,
You wrote that WP phones is not suitable in Africa and much of the Emerging World where phones are unsubsidised, and consumers do not have PCs, use Xbox 360 or Zune or have any accounts with Microsoft services. You forgot to mention that WP phones need a data connection to do simple things like transferring files and contact backups. Zune will not transfer any files other than photos, music and video, all other files need to use SkyDrive. WP phones also terminates the wi-fi and reverts to 3G for notifications and backup transfers when it sleeps. So WP phones need a data connection to be useful which is just not optimal in developing countries where users still depend heavily on bluetooth file transfer. It is really no point for Elop to talk about making an extra cheap Lumia for the 3rd world when the OS has been designed for users in rich Western countries where data is cheap, fast and widely available and everybody have data plans.
Oh, btw, Zune will not even install on a PC without an internet connection.
Posted by: Kenny | August 02, 2012 at 04:04 AM
IMO the one that stands out as a good match with minimal overlap is HP. pre-Carly HP was like the old Nokia, a rock-solid engineering driven company. HP has a big enterprise market including computer networking and servers; so IMO it would make sense for them to keep both NSN and Lumia, while also offering other OSes on the same mobile hardware platform. Is there enough of the "HP way" left in its culture to repair the damage done to Nokia engineering?
But on the whole I agree with Tomi's view that HP is "once bitten, twice shy" when it comes to mobile acquisitions... Also I worry that HP is itself too damaged by greed to live through the pain of such an acquisition, and too self-important to not spoil the good bits of Nokia by assimilating it too fast and forcefully.
Posted by: Mark | August 02, 2012 at 10:28 AM
Hello Tomi
Unrelated to this article, but you might want to read this:
http://www.phoronix.com/scan.php?page=news_item&px=MTE1MTc
It was shared on the Qt development list that Nokia is about to sell of any remaining parts of Qt it has.
Posted by: J. Hacker | August 02, 2012 at 11:10 AM
Timo ... since when you are looking of the stock price of Nokia ?
You post many time you did not care about it ;-)
Anyhow, I don't agree with your view over NSN.
NSN right now is the best unit of Nokia. All other units are making losses.
Nokia Dumbphone unit is going to get more and more under pressure by cheap Android. Feature phone will not exist in the future ... you are the first to predict that there is a migration from normal phone to smartphone ... so the future of Nokia Dumbphone is the death.
Yes, they could be cheap smartphone ...but ... Meltelmi has been closed down, S40 is getting old like it was S60 and S3 before in the other segment.
Finally ... you seam to believe a take over action is going to happen over Nokia ... if you are right, for sure the Nokia BoD is aware of it, they have been approached by some buyers ... so this inside buying from Nokia BoD, over 1 millions of share ... is again ... another prove that Nokia CEO, Nokia President and all full Nokia BoD are a bunch of CRIMINALS ... why Finland does not send police and investigator to check Elop ? His doing in Nokia has been looking illegal since 11.2
Tchuss
e_lm_70
Posted by: elm70 | August 02, 2012 at 11:38 AM
>> Remember, just Apple alone pays Nokia in the tune of between 1 and 2 Billion dollars per year in intellectual property fees <<
Tomi ... I was telling you already, this is totally WRONG.
You can read in the Nokia Q2 2012 PDF ... Nokia expect only 500m Euro of IPR per year.
Either you know more and Elop and Nokia are telling lies ... or your sources are wrong.
Tchuss
e_lm_70
ps: Excluding last balance where Nokia state it got 400m in IPR, but they say this include in advance payment for the rest of the year ... in the Nokia balance was never visible nothing more then 100m € in IPR (IPR are hidden inside different voices, for keep Nokia non-transparent and allow Elop Crime to be more easy)
Posted by: elm70 | August 02, 2012 at 11:44 AM
What if Microsoft hand-picks a PC manufacturer to take the poisonous Nokia pill?
Microsoft could offer cheap Windows and Office licenses to that PC manufacturer, which would be an immediate strategic advantage against all other PC manufacturers.
Example:
Lenovo buys Nokia, and receives free Windows and Office for the next 5 years. All the other manufacturers need to pay Microsoft $250 to distribute the same software, which makes a *huge* difference, when the laptops cost just $600.
Lenovo wins.
Nokia wins.
Microsoft wins.
All the other PC manufacturers loose.
The fact is that Windows and Office can cost as much (or as little) as Microsoft wants, so they can do that.
They can use their software to leverage any operations they wish.
Posted by: foo | August 02, 2012 at 01:29 PM
Hello Tomi, glad to see you're alive ;)
Is it stupid to think that a potential Nokia buyer wouldn't be an IT one ?
I mean, would it be surprising if Middle-East investors or companies like Tata of India tried to buy Nokia ?
Tata for instance is (at least seems to me) quite a big company, which offers quite a wide range of services, from cars to food, not to mention heavy industry and chemicals. They could be interested in adding a branch to their mega-group.
Same thing about Middle-East investors; if they're able to buy soccer teams, most desirable buildings in European capitals, media, etc. just to prepare the "after oil" period, why wouldn't they try to buy a former Telecom giant?
Again, it may be stupid, I'm far from being a specialist, but I think it would be an interesting case.
By the way, you say that Nokia is the biggest dumbphone maker. As I recently found out that many dumbphones (Nokia 1280, 102, 103 and certainly much more) are made by other companies (ie. Sky mobile in India), what dumbphones... what phones do Nokia still manufacture itself ?
Posted by: vladkr | August 02, 2012 at 01:47 PM
@elm
Now that Elop and Siilasmaa have bought shares, and if there happens a bid-off competition soon afterwards, I think that they cannot get away out of that one without a criminal investigation. Not even in Finland. This could be a way to increase the stock value of the company before Q3. It is hard to say at the moment, since both of them have had less shares in the company than recommended. Their current amount of shares is still below the earlier recommended levels.
For me it seems that Microsoft is starting to lose ground with Windows 8. Valve has launched a Linux version of Steam, that move is probably monitored by other software entertainment companies very carefully. I suspect more pressure is building up towards Microsoft. The positive development is that the preliminary pricing information of Windows 8 states that it would be very cheap. It all goes down on what sort of restrictions have been built in Windows 8, and what sort of Office package is released with it. Microsoft still hasn't got over the backslash they got from changing the user interface in Office and doing that once again with desktop UI and Office package is not going to win them friends among hardware industry.
Posted by: MikaA | August 02, 2012 at 03:04 PM
Sorry Tomi, Nokia does not have the best patent portfolio in the business. It's Qualcomm. Remember them? They're the company Nokia surrendered to the day the Nokia died:
http://www.nytimes.com/2008/07/24/technology/24qualcomm.html
It's not the royalties that Nokia agreed to pay that's the biggest part of the surrender, it's this:
"As part of the settlement, Nokia said it had agreed to withdraw a complaint it made to the European Commission against Qualcomm and assign ownership of a number of patents to Qualcomm."
And about the time of the surrender by Nokia, Qualcomm fully unveiled its plans to sell an entire SoC wireless solution including ARM-based processor and even graphics. Observe that even Samsung has to modify its Galaxy SIII for the US market to use Qualcomm's processor solution, not the one that Samsung itself is developing.
Posted by: John Phamlore | August 02, 2012 at 05:28 PM
Hey Tomi, what do you think about this?
http://www.theregister.co.uk/2010/07/22/nokia_manifesto_risku/page4.html
Poor Nokia it just need some improvements and
become so damn!
Posted by: geektech | August 02, 2012 at 07:30 PM
Hi Tomi,
Great analysis as usual. Some of your points are arguable, but I think it makes sense to mention that most analysts think that Samsung is interested in NSN, as infrastructure vendor. Samsung is investing a lot in their networks division and are trying to become top3 by 2015. In order to reach that spot they need some help. They can't do it growing organically... at least not that fast. An acquisition would be the only way to do it, and NSN would be a possibility, IMO.
Posted by: Omar Moya | August 02, 2012 at 08:21 PM
What I would love to see is Google broker a joint venture with all its Android partners.
Set up a new umbrella entity to run Nokia that they jointly own.
As Tomi pointed out recently when breaking down how bad Lumia sales likely were you cannot expect to take 100% of the market. If you are part owner of the second biggest major platform you still make a percentage on the part of the market that they're never going to control with your primary products.
And then you can beat Nokia, Microsoft et al to a bloody pulp with a gigantic shared patent pool managed explicitly to aggressively destroy those that want to 'innovate' in the courtroom.
Posted by: Chris Hanlon | August 02, 2012 at 10:33 PM
Hi, this was a very long post! I have been interested in the smartphone market for the last several years as it has jumped up and become the fastest growing way that people access the internet (it used to be only computers). I came across your website from other web references mentioning your good phone industry statistics. I have only one question: who is Nokia?
Posted by: SVE | August 02, 2012 at 11:06 PM
"And there is not much synergy between manufacturing handsets and the networking unit, so for most buyers interested in one, they would probably need to get rid of the other."
Actually there is some synergy. You can properly test your hardware before it goes on sale. Harald Welte wrote about this when to his surprise an Ericsson engineer showed up at an Osmocom User Group meeting:
http://laforge.gnumonks.org/weblog/2012/05/07/#20120507-berlin_osmocom_meetings
Posted by: chithanh | August 03, 2012 at 01:17 AM
Microsoft must buy certain assets from Nokia in order to secure the product and services they have publicly promised. These are the Navteq mapping services, recently acquired Scalado (which was aquired for the needs of Microsoft), the imaging technologies of Nokia, all the patents of course and many more that I don't know or think about right now. Basically, any asset that is of value to Microsoft so that they can continue making smartphones of their own. If Nokia is alive, Microsoft cannot secure these assets in the long term and therefore Nokia must die so that Microsoft can claim ownership of these.
What is obvious is that Microsoft doesn't really need the production capability of Nokia, only bits and pieces of their intellectual property and supplier relations. In the meantime Elop is doing what he can to kill Nokia, deliberately. NSN isn't killed off that easily and it will probably be sold to someone else. The dumb phone business will be terminated as Nokia goes bankrupt.
Nokia MUST die so that this can go undetected passed regulations. That is the plan.
Posted by: AtTheBottomOfTheHilton | August 03, 2012 at 01:23 AM
@John Phamlore
Samsung use Qualcom chipset in north america and south korea because qualcom is the only company that offering CDMA+LTE baseband.
Whereas the rest of the world that use GSM/WCDMA+LTE, could use samsung CPU.
Posted by: cycnus | August 03, 2012 at 01:38 AM
This question is too hard to think about. Nokia has so many parts, there are so many legal, technological and financial considerations, important pieces are secret, and there are so many possible deals. It seems to me you would need a whole team of M&A specialists to figure out what would be best.
Posted by: eduardo | August 03, 2012 at 03:14 AM