Free of devices, new Nokia's hand looks better than Microsoft's

Free of devices, new Nokia's hand looks better than Microsoft's

Summary: Would you rather be Nokia going forward or Microsoft, which now has to fix a mobile device unit that saw sales plummet in the first quarter? Advantage Nokia.

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The more time passes, the better Nokia's sale of the handset business to Microsoft looks. Just imagine how Nokia's sale is going to look a few years from now.

Nokia appoints Suri as CEO, plans to spend billions of Microsoft cash

Microsoft's new Nokia mobile unit made a €326m loss last quarter

Microsoft takes control of Nokia's phone business; acquires 25,000 new employees

Microsoft touts buying Nokia's handset business — now run by Stephen Elop inside the software giant (again) — as a transformative deal. The transformation rests with the old Nokia, now a networks, patent-licensing, and navigation company.

Last week, Microsoft welcomed Nokia's handset business into the fold, talked about the future and had an optimistic view of the mobility landscape. Nokia's earnings results, the last with the device business, tell a different tale.

The device business — Lumia and other mobile phones — are represented by discontinued operations for the most part. Simply put, the mobile phone business is in freefall compared to a year ago.

The loss for the quarter was €326 million.

Keep in mind that the year ago was no picnic either. Here's a look:

 

nokia discontinued

Microsoft's job now is to stop the bleeding, harness Nokia's hardware knowhow, and get its act together for what will be a critical fourth calendar quarter and holiday season.

Nokia's job is to spend Microsoft's money and retool. To wit:

  • The company will reinstate a dividend since the bleeding device business is gone.
  • Buy back shares.
  • Cut debt.
  • Throw shareholders a special dividend.

Meanwhile, new Nokia CEO Rajeev Suri will build the company's networks business, invest and monetize its HERE business or "location cloud," license its patents, and develop new products. Nokia's tech unit sees areas such as "low-power connected smart multi-sensor systems, distributed sensing, and intelligent interplay between various types of radio technologies" as fertile ground.

Down the road, perhaps the device swap with Nokia and Microsoft will be a win-win. Microsoft's purchase of Nokia wasn't terribly expensive and if the software giant cures its Apple envy maybe the deal is a steal.

But in the short term, Nokia has a better hand to build on. Advantage: New Nokia.

Read more on Nokia

Topics: Mobility, Microsoft, Networking, Nokia

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20 comments
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  • I'm not sure how Nokia looks in good shape

    Patents lose their value over time as new tech replaces them.
    Apple and Google are aggressively targeting automobile navigation systems.
    New products is just a way of saying they don't have anything to sell yet.

    Microsoft may end up taking a bath on the handset deal with Nokia, but that doesn't mean Nokia is in good shape.
    Emacho
    • the author talks as though MS doesn't sell anything else beyond phones

      their latest quarter says otherwise...
      William.Farrel
    • Well, one major problem with Dignans outlook...

      And I think its a problem for a number of people who should, but do not seem to understand exactly whats happening in the IT business generally.

      Evidence of Dignans misguided thoughts on what Microsoft is doing is proved in Dignans comment "Microsoft's purchase of Nokia wasn't terribly expensive and if the software giant cures its Apple envy maybe the deal is a steal"

      Ha! Whats that?? Apple envy? Ha! Well, lets just think about that, and I am sure we will see very quickly why the truth of the matter is that "Apple envy" has practically nothing to do with it.

      Apple envy certainly implies that the reason for Microsoft to wants to sell smartphone operating systems and tablet operating systems is because they are envious of what Apple is selling. And that's the reason for them doing what they are doing.

      It dosnt imply much about the fact that smartphones and tablets represent the newest forms of mobile computing which is a direction that computing seems to be headed in at least in some general way, and that it could well be a number of years down the road that the vast majority of computing is done through connections to devices that are normally mobile.

      It dosnt much speak to the fact that we already see what kinds of problems its creating for Microsoft to play "catch up" and how much more difficult it would be to start playing "catch up" perhaps even a few more years down the road.

      It dosnt speak to the fact that its entirely possible that if even a big company like MS just figures mobility is not for them, but 10 years from now Google and Apple have portable smartphone/computers that dock and do everything a modern day desktop can do, and MS dosnt, that MS at that point may have signed their own death warrant.

      It dosnt speak to the fact that even right now today both the tablet and smartphone markets are profitable, and all big companies like to make profits, that Microsoft being a part of those markets should seem to even the uneducated a no-brainer for Microsoft to enter into, and it wouldn't matter what other company was selling millions of units, of course MS would want part of that, nothing to do with Apple envy itself. More like profitability envy.

      Unless your just saying that what Apple is selling, by way of iPhones and iPads, are really just plain old unimportant widgets in the long run, and there is no longterm evolutionary component to anything they are doing, just gadget salesmen really, and that Microsoft is envious for no particular reason, they just want to sell gadgets too, saying Microsoft has Apple envy is much like saying FORD has GM envy. It dosnt really mean anything or make much sense unless you just think in terms of one wants to "copy" the other.

      This process has so much more to do with much more important things than plain old envy for envy's sake.

      People who say unbelievably ridiculous things like "Microsoft should give up on tablets"

      Or, "Microsoft needs to give up trying to sell smartphones", the people who say these things seem to be thinking along somewhat the same lines, as if Microsoft is somehow doing what they are doing because they think its fun, or they are just envious, or some other silly thing.

      Microsoft is doing what they are doing because THEY MUST. THEY HAVE TO.

      Tell FORD to stop being so envious of another car company and stop making cars. Its ridiculous.

      Of course the Microsoft haters would just love to see Microsoft make that mistake. Don't look to where the long term is headed, even though its plainly in front of our eyes right now. Don't do what needs to be done today and should have been done yesterday, let it rot until its beyond too late and no amount of money work and patience will ever overcome how far behind you have fallen at that point. Just let al those things happen. Just say "we cant sell smartphones" just say, "we cant sell tablets".

      Sure. Stop being so envious, just fold up shop, admit defeat, close up Microsoft, sell off the remains of the company and retire.

      Ya.

      Sure.

      Like I said, envy has nothing much to do with it, unless you count the natural envy of wanting to make more money like others are doing and wanting to stay relevant in the future like others are trying to do. I honestly think about most of that kind of thing, particularly in business terms as self preservation, not envy. Isnt that kind of like saying a hungry kid is looking for a decent meal because shes envious of kids in America that have good meals? The kid may be envious of those who have better meals, but shes looking for one because that's what you do to survive and thrive, you don't do it because your envious.

      So no, Microsoft is not going to give up on smartphones or tablets or anything much. I can tell you as a fact they will continue until fully successful or pretty much broke.

      For Microsoft, you can bet every dime there will be no quitting.

      Like it or not, successful or not. And its not about envy.
      Cayble
      • why am I not surprised?

        Cable makes some really good points. Dignan has never demonstrated an aware ness of forward thinking or conceptualize where technology is heading. Is anyone surprised at MSFT's announcement of a keyboard that recognizes gestures? What does this portend for the future of mobile technology?
        primartcloud
      • Very well said, Cayble

        On one day Larry says "the future for PC (i.e -"Microsoft") looks dim because people are moving to tablets and smartphones for everything.

        The next day he says "I don't understand why Microsoft bought a tablet and smartphone company".
        William.Farrel
        • Not quite

          It's not that they bought a tablet and smartphone company, it's that they bought a failed tablet and smartphone company.
          rbgaynor
          • Because there are so many for sale, they should have chosen differently?

            Oh, and isn't that why you buy a company for a good price, because you can turn it around and make it a profitable one?
            William.Farrel
  • Free of devices, new Nokia's hand looks better than Microsoft's

    Not quite. Nokia still has to prove that it can survive without its mobile business. Microsoft has already proven they can. We need to see what applications Nokia will release. I have more faith in their software division than the others since they always put out high quality software.
    Loverock.Davidson
    • Nokia has still a mobile business

      Be careful with the word mobile. Nokia has still a mobile business, selling equipment like 4G radio and antenna systems to mobile telecom operators. This remaining mobile business was profitable in 2013. Of course the dynamics of this business are completely different: there are only a few telecom operators per country and they don't renew every 2 years thier infrastructure
      cropr
      • Nokia selling atenna systems and 4G radio?

        Dude, seriously that's Nokia Network solutions. They don't build smartphones or handsets there.
        YTjay
  • Do not know

    MS may have made a dumb move buying the handset business from Nokia. Handset hardware is probably much like the desktop/laptop hardware where the real value is in the added software including OS. So they now hardware manufacturing (phones) which means they are a direct competitor to other hardware competitors. The phone and tablet has not shown much enthusiasm for Windows based devices regardless of any technical merits they may have.

    Nokia now has to execute a strategy not based on handset sales. They have a short term cash infusion from MS. This will only buy time to develop and execute a competent strategy.
    Linux_Lurker
    • Agreed, It's About the Ecosystem

      Microsoft has to make Market Place as killer as their consumer devices if they hope to win the World over to their camp. Their track record is poor on this though, and so I don't hold much hope for the division formerly known as Nokia.

      The other aspect is that Nokia's mobile sales growth was in the cheap phones market. This is another trouble area for Microsoft where we just learned that they are losing money selling the Surface. The Surface RT, which is the tablet most akin to a cheap Android tablet, has virtually zero sales.

      Nadella is pointing MS at the Mobile and Cloud iceberg. Their only hope of not punching a huge hole in their corporate coffers is if they can make their mobile devices the industry standard for BYOD. The chances of that happening is very, very slim based on their current trajectory.
      Pronounce
      • Wandering analysis

        You almost had some good points in your analysis, but really it just veers into an abyss of random yammering. Microsoft is already well ahead of Apple in the Big Data and Cloud segments which will help propel its offerings in tablets and phones ahead of where Apple has seemed to flounder.

        Android OS and Windows has the best chance of being the long term 2 horse leader, especially if Apple doesn't solve its cloud and big data woes soon.

        Ultimately it is more than just ecosystem, platforms, or hardware but is the seamless fusion of all of those pieces that matter. In that regard, Apple has been ahead because it controls all of those elements itself, but now that Microsoft now controls the one element it hadn't (hardware) their hand is now complete, and unfettered innovation can charge ahead. Will they get it right? Only time will tell.
        gomigomijunk
  • Wrong question

    The real question is, was Microsoft better off with Nokia making its phones, are they better off making their own? With Microsoft owning the phone business, the ceiling is much higher. They control the hardware and the software, and they can move both forward together more easily than they could apart. One thing that the acquisition of Nokia's phone business brings to Microsoft that Microsoft has never had is knowledge of how to market to consumers. If Microsoft fires all of their existing consumer marketing staff and turns consumer marketing entirely over to the new Nokia staff, amazing things could happen.

    Microsoft still owns the enterprise, and this acquisition puts them in a position to do amazing integration work across phone/tablet/laptop/desktop. We'll see what happens.
    FDanconia
    • @FDanconia. Nailed it!

      I am not sure i totally agree with you on Microsoft and consumers but your first and last sentence sums it up for me.
      MeMyselfAndI_z
  • Microsoft needs to do this. It may take a while.

    I see no advantage disadvantage scenario. MS needed to do this. Like it or not they need the hardware side of things so they can be in the mobile space or they have no control. They just need to execute it well.

    If you are going to talk advantage disadvantage, talk about life expectancy. 10 years from now? I would put my money on MS.
    MeMyselfAndI_z
  • Best news for Nokia

    Is that Elop went with Nokia to Microsoft. And that 85% of Nokia's value lost -- needlessly -- under Elop. That just went up in smoke...
    Hazydave
    • May this dumbf*ck never returns and stay where he belongs

      n/t
      T0rpid
      • Who?

        Elop, or Hazydave?
        William.Farrel
  • The article above is nothing but click-bait, because, nobody can believe

    any of the tripe written within it.

    MS bought a whole hardware company, to complement their own hardware division, with which it will be better able to pursue the smartphone, and even the tablets markets. They already own the smartphone and tablets OSes, and they've already been integrated into the corresponding devices.

    There is no other company that can compete with MS when it comes to total value, including the OS and the applications, and the services, and now, even the hardware side, where Nokia is/was known as "the" superior device maker for mobile; it's Lumia and Asha lines are better than, or at least equal in quality, than any other makers out there.

    The complete ecosystem already exists for MS's mobile strategy, and all that is needed now, is the proper marketing to go along with the great hardware and software, while the priced affordable to most consumers around the world.


    Nokia was left with the 7+ billion dollars, and a skeleton of its former self. Nokia could be out of business in about 3-4 years, because, they're no longer what they used to be at all. Microsoft just felt the need to rescue a great devices maker, while helping its own cause. MS + Nokia devices, is a marriage made in heaven, and that will be proven in the coming years.
    adornoe@...