Nokia's Here and now: The future for what remains after the Microsoft sale

Nokia's Here and now: The future for what remains after the Microsoft sale

Summary: Three business units will be left once Nokia sells its devices and services units to Microsoft. Its chairman has revealed what lies ahead for the company.

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Without devices, Nokia may appear a lot less interesting as a company, but it's still "strong" and has a bucket load of mobile patents, according to Nokia chairman Risto Siilasma.

Once Microsoft's acquisition of Nokia's treasured devices and services business proceeds, Siilasma notes, a little under half of Nokia's trailing 12 months revenues will move to Microsoft, along with 32,000 of its current 88,000 employees.

"Nokia will look very different without the mobile devices and services business," Siilasma writes on Nokia's Conversations blog.

What remains of Nokia is three separate business units: its network business, formerly known as Nokia Siemens Networks — and now, wholly owned by Nokia, its biggest source of revenue — as well as Nokia's Here location and mapping brand, and a newly formed business called 'Advanced Technologies', home to Nokia's CTO unit and the IP team.

For a recap on the relative standing of each group, last quarter NSN generated €2.8bn compared with revenue from devices and services of €2.7bn. Nokia has promoted Here more aggressively in recent months, but Nokia watchers know it remains a comparatively small income stream for the company, with net sales of just €233m last quarter.

At that rate, prior to Microsoft's acquisition, Here revenues were only slightly larger than those that will now fall under Nokia's new Advanced Technologies unit. Nokia estimated last quarter it had an annual run rate of around €500m from intellectual property rights revenues from its devices and services business alone. The new unit, Siilasma says, will focus on exploring "new, and strategically important topics". 

With a massive mobile patent portfolio, Nokia has successfully pursued licensing agreements with Apple and BlackBerry, and has ongoing patent cases with Google's Motorola and HTC, last week winning a case in Germany against the latter, as FOSS Patents blogger Florian Mueller reports.  

Nokia's IPR revenues should also rise after Microsoft's acquisition, which included licensing rights to Nokia's patents under a 10-year deal for €1.65bn.

Meanwhile, Nokia's deep patent portfolio could make it a rather significant figure as one of the mobile industry’s largest non-practicing entities after its devices business moves to Microsoft. The tens of billions of euros Nokia spent on R&D over past five years (for example, €3.5bn in 2005, €3.9bn in 2006, €5.7bn in 2007) didn't serve it well during the transition to smartphones, but as Siilasma notes, Nokia now has around 10,000 patent families under its belt.  

"Nokia's investment in research and development also helped us build what we believe is the largest and strongest intellectual property portfolio in our industry, with around 10,000 carefully selected patent families. We've already established a successful patent and technology licensing operation, which we will expand to continue to drive revenue and profit for Nokia through the new Advanced Technologies business," he writes.

And with devices out of the way, as well as Microsoft's ongoing licensing of Nokia's Here technologies, perhaps Nokia can lift that business more successfully than in the past.

Here, according to Siilasma, will be focusing on connected devices, enterprise solutions and cars, such as the embedded navigation systems Nokia's been showing off this week in Germany, aligning itself with self-driving cars.

"We believe that location technologies and services will be pivotal in the next phase of the mobile internet, where more and more devices are connected to the cloud. We also believe that location will become an essential building block across all industries," he writes.

Further reading

Topics: Nokia, Microsoft, Networking, Patents

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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9 comments
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  • “Non-Practising Entity” = “Patent Troll”

    It’s really sad to hear that what’s left of Nokia is going to take the greedy and unprincipled route, and start running yet another legal protection racket. Have they no shame? It’s like they are turning their back on all their past proud history of innovation, and becoming nothing more than a parasite.
    ldo17
    • They don't make phones

      But they are still significant players in the cell phone industry with NSN. I think it is a little strange to call them trolls.

      Furthermore, they *did* the R&D and deserve a return on their investment, if it produced anything worthwhile for the world. Trolls typically buy up patents that *others* have produced and then use them against big companies.

      I would argue, quite frankly, that profiting in this scenario is exactly what we would hope happens with the patent system. It is the system working, not being exploited.
      x I'm tc
      • Re: Furthermore, they *did* the R&D and deserve a return on their investmen

        What investment? It takes investment to actually make things, not to think up ideas. You don't actually have to show an idea works to get a patent.
        ldo17
        • Never been involved in product development, have you?

          No, it doesn't take investment to "actually make things", at least not a lot. Once you get rolling, you pay for with the revenue of the units sold. What DOES require investment is the D part of R&D, namely developing an idea to a usable product - and Nokia HAS done that for a lot of their IPs.
          hydroxide
          • Re: No, it doesn't take investment to "actually make things"

            You have got to be kidding.
            ldo17
          • You seem a bit thick

            If you don't want to exploit others peoples efforts in developing ideas, and products, then do it yourself, and don't be an intellectual thief.

            So if you developed an idea, spent a significant amount of your own effort, time and money in the process to develop into a product, and wrote it into a design spec. By your reckoning it would be OK for someone else to sneak in, pinch your design spec and make profits from it, without paying any royalties to you. That would be very gracious of you, but you would be out off business, and I suspect rather bitter at others profiteering from your endeavours.

            Patent protects those who persevere and invest in deep R&D.
            JulesVerny
  • Not sure I agree with Patent Troll comment...

    depends up on if they keep advancing the technologies or if they just hold them. There are opportunities for them to continue to do R & D and evolve the technologies. I agree that if they just sit on them, then they will eventually become a useless part of the technology arena. Now that Elop is out of there (or soone will be), it will be interesting to see if Nokia can evolve their previous ability to develop and promote useful technologies as standards.
    jkohut
  • Nokia is very much a practicing entity

    Liam Tung, get your facts right. Nokia invested billions in R&D and deserves to reap the rewards.

    Manufacturers who steal others IP and make copycat phones can sit and whine.
    The_observer
  • next sale

    The mapping unit to Apple.
    danbi