Nokia pre­pares for mo­bile come­back

The Pak Banker - - COMPANIES/BOSS -

Nokia is hir­ing soft­ware ex­perts, test­ing new prod­ucts and seek­ing sales part­ners as it plots its re­turn to the mo­bile phone and con­sumer tech arena it aban­doned with the sale of its hand­set busi­ness.

Once the world's big­gest maker of mo­bile phones, the Fin­nish firm was wrong­footed by the rise of smart­phones and eclipsed by Ap­ple and Sam­sung. It sold its hand­set busi­ness to Mi­crosoft in late 2013 and has since fo­cused squarely on mak­ing tele­coms net­work equip­ment.Now Nokia boss Ra­jeev Suri is plan­ning a come­back. He must wait un­til late 2016 be­fore he can con­sider re-en­ter­ing the hand­set busi­ness - af­ter a non-com­pete deal with Mi­crosoft ex­pires - but prepa­ra­tions are un­der­way.

The com­pany has al­ready dipped its toe into the con­sumer mar­ket; it has launched an An­droid tablet, the N1, which went on sale in Jan­uary in China and days ago un­veiled a "vir­tual-re­al­ity cam­era" - herald­ing it as the "re­birth of Nokia". It has also launched an An­droid app called Z Launcher, which or­ga­nizes con­tent on smart­phones. Mean­while its tech­nolo­gies di­vi­sion has ad­ver­tised on LinkedIn dozens of jobs in Cal­i­for­nia, many in prod­uct de­vel­op­ment, in­clud­ing An­droid engi­neers spe­cial­iz­ing in the op­er­at­ing soft­ware Nokia mo­bile de­vices will use.

Nokia had also planned to lay off about 70 peo­ple at the di­vi­sion, ac­cord­ing to a May an­nounce­ment, but a com­pany source told Reuters that the fig­ure had since been halved. Nokia it­self is not giv­ing much away about its prepa­ra­tions, be­yond say­ing some staff at the 600-strong tech­nolo­gies di­vi­sion are work­ing on de­signs for new con­sumer prod­ucts, in­clud­ing phones, as well as in dig­i­tal video and health.

But it will not be easy to claw its way back to rel­e­vance in the fast-chang­ing, com­pet­i­tive mo­bile busi­ness where Ap­ple has been scoop­ing up nearly 90 per­cent of in­dus­try prof­its, nor for it to carve out a place in elec­tron­ics. One ace Nokia that holds is own­er­ship of one of the mo­bile in­dus­try's big­gest troves of in­tel­lec­tual prop­erty, in­clud­ing patents it re­tained af­ter selling its hand­set busi­ness. It does not want to waste such re­sources, built up with tens of bil­lions of eu­ros of in­vest­ment over the past two decades.

It will also get an in­jec­tion of tal­ent when it com­pletes the 15.6-bil­lion-euro ($17 bil­lion) ac­qui­si­tion of Al­ca­tel-Lu­cent, an­nounced in April, in the form of Bell Labs - a U.S. re­search cen­ter whose sci­en­tists have won eight No­bel prizes. It says it will not re­peat the mis­takes of the past of miss­ing tech­nol­ogy trends, be­ing sad­dled with high costs, and re­act­ing too slowly to chang­ing con­sumer tastes.

To blunt such risks, it is seek­ing part­ners for "bran­dli­cens­ing" deals whereby Nokia will de­sign new phones, bear­ing its brand, but - in ex­change for roy­al­ties - will then al­low other firms to mass-man­u­fac­ture, mar­ket and sell the de­vices. This is stark con­trast to its pre­vi­ous hand­set busi­ness which in its hey­day man­u­fac­tured more phones than any other com­pany in the world and em­ployed tens of thou­sands.

Suri said last month that Nokia aimed to re-en­ter the mo­bile phone busi­ness, but only through such li­cens­ing agree­ments. It will not fall back on the "tra­di­tional" meth­ods, said the CEO, who took the helm last May and has turned it into a slimmed down, more prof­itable com­pany. He sold off its map­ping busi­ness a week ago.

Such brand-li­cens­ing deals - as Nokia has struck for the N1 tablet - are less prof­itable than man­u­fac­tur­ing and selling its own prod­ucts, but also less risky. They can add a tidy sum of rev­enue for lit­tle in­vest­ment for the com­pany, which gen­er­ates the bulk of in­come from selling tele­coms net­work equip­ment to op­er­a­tors like Voda­fone and T-Mo­bile."They want to be in­no­va­tive and seen as a com­pany with long-term vi­sion in the (tech) in­dus­try and hav­ing a foot in de­vices plays into this im­pres­sion, even if it's not bring­ing mas­sive rev­enue at the out­set," said Gart­ner an­a­lyst Syl­vain Fabre.

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