The Next Nokia: Networking and New Tech?

Nokia is dead right? Wrong. The parts of the business not sold to Microsoft are busy trying to chart a post-disruption future for the Euro tech giant.

It’s easy to write Nokia off. One of Europe’s great tech giants, slain by the new wave of smartphones, and sold off to Microsoft. Except… that’s not what happened. When Nokia’s handset division was sold to Microsoft, three sections of the company remained under the Nokia name:

  • Nokia Technologies – largely a patent portfolio
  • Nokia Networks – telecoms and networking infrastructure
  • Here – the mapping division

We’ve heard plenty of rumours in recent weeks about the mapping division being sold, which has been largely confirmed by Nokia itself. What’s happening with the other two?

The big, big infrastructure bet

Well, Infrastructure is the obvious one. Nokia acquired Alcatel-Lucent for $16.6bn. It makes a lot of sense on the surface – Nokia had money, and it makes the company a huge player in the growing networking equipment space.

However, not everyone is convinced:

It’s a financially complex transaction involving two complicated and venerable companies. Debt is assumed, debt is exchanged for shares, new debt is issued…there are a lot of ifs and buts.

Yet, it makes sense. The Nokia Networks section of the business is the largest one left. It creates consolidation in the marketplace, and gives the company more leverage in markets worldwide. The post-phones Nokia begins to look a lot like the post-Windows IBM – a company that has retreated from its core businesses, into services specifically for business.

And yet…

Tomorrow’s Yesterdays

Today, Re/Code is carrying a curious piece, but one that matches to previous speculation:

As early as next year, the company aims to rejoin the phone market, two sources briefed on Nokia’s plans told Re/code. In addition, the company has a number of other ambitious technology projects, including some in the virtual reality arena, these sources said.

That seems like a strange bet for a company that has just invested so much in becoming an infrastructure giant to do.


As Ina Fried makes clear, this move is being driven by Nokia Technologies – which appears to have ambitions way beyond just sitting on a pile of patents.

Unlike other patent houses that do little more than license intellectual property, Nokia Technologies has designed new products and licensed them to other companies. So far, these ambitions have been small in scale. The division has released just two products–an Android program called Zlauncher and the N1, an Android tablet design it licensed to another manufacturer that is selling it under the Nokia name in China. Its return to the market is likely to employ a similar tactic.

Nokia, as we have noted before, is a company with a long history of reinventing itself. The networking business seems to give it a stable foundation for growth, while the play by Technologies gives at least some hope of riding the next wave of technology, rather than being swamped by it – as happened in the recent past.

If they can pull it off, then Nokia may become an exemplar of how to survive painful disruption, rather than yet another case study of how an incumbent business can blow it.