Nokita: A Plan to Raise Billions and buy out Nokia before Microsoft

http://arcticstartup.com/2013/11/04/the-third-stage-of-grief-nokita-a-plan-to-buy-out-nokia-before-microsoft

by guillermovs • 13 years ago

70 77 13 years ago

Artemis2• 13 years ago

This will probably not happen.

I think Nokia will help Microsoft to compete with Apple in the field of smartphones, especially with custom-designed hardware and exclusive OS.

3825• 13 years ago

I don't know what the new Microsoft wants. What is it that they want to sell? This is important and you can't just say "everything to everyone".

Amazon.com has a focus on retail. They sell stuff and the Kindle (including Kindle Fire) line is just a medium to get it to the customer. If FedEx and others kicked the bucket tomorrow and Amazon felt UPS was too strong as a vendor, they'd probably start their own logistics department. If they felt Comcast was too dominant, they'd probably want to do something about that as well.

Google's focus is arguably its services (which it uses to push ads). Apple is stubbornly a devices (hardware) company.

However, it is unclear what Microsoft's angle is here. Do they want to make money selling software through OEMs? It doesn't seem like they want to push prices of hardware down. They make too much money off of enterprise software to cut that arm off. Online services does not make enough money to let it completely cannibalize the software licensing cash cow yet.

I am glad I don't run Microsoft. I would be lost.

wsc981• 13 years ago

From what I understand Microsoft's goal is to become less of a software company and more of a devices and services company[0]. In that light, the acquisition of the mobile devision of Nokia seems to make sense.

And I guess it's pretty much the same strategy as Apple is following, especially now Apple has made Mavericks and several Mac OS apps free of charge.

[0] http://www.microsoft.com/investor/reports/ar13/shareholder-l...

davissorenson3• 13 years ago

On this last point, they talk about leveraging a non-corporate image, like the Dudesons or Madventures, and throw “the largest events, gigs, and parties of human kind”.

Well that sounds really sustainable.

Mikeb856• 13 years ago

Compared to manufacturing costs and the revenues at stake, gigs, events and parties are cheap.

davissorenson3• 13 years ago

I meant more as a company culture.

sz4kerto2• 13 years ago

Corporate Culture Reboot to 2002

Wow, that would be very useful. Should we reboot Blackberry to it's 2008 culture, Microsoft to 1996, Yahoo to 1999?

jevinskie• 13 years ago

How do you reboot a company's culture? The culture is something that is developed over many years, "rebooting" it would take quite a bit of time if it is even possible at all.

a3n• 13 years ago

How do you reboot a company's culture?

Management declares it, which causes corrosive cynicism.

CmonDev• 13 years ago

"Android and Linux products" - please, no!

vezzy-fnord• 13 years ago

Yes, how dare they not make a Plan 9 phone!

container• 13 years ago

The name is a bit of a pun: it's a form of the Finnish verb 'nokittaa', which means 'to raise [the bet]'.

blahbl4hblahtoo• 13 years ago

It's really weird how people have started to anthropomorphize these corporations and their products...why do this? If you could raise billions you could start a new endeavor?

Nokia isn't an old friend of yours. There's nothing to "save". Raise your billions and hire some of their designers if you like the work that they do.

davissorenson3• 13 years ago

There's nothing to "save".

To be fair, there's a lot of intellectual property at stake.

basch3• 13 years ago

Nokia kept all its intellectual property.

ohwp3• 13 years ago

Well if it worked that way someone already would have done that wouldn't they?

http://en.wikipedia.org/wiki/Goodwill_(accounting)

otoburb• 13 years ago

Nokia's brand premium is worth quite a lot to some people, representing (at the very least) a quicker path to making money since you technically don't need to educate everybody about a new brand.

adventured2• 13 years ago

1) There's $12 billion in cash in Nokia, representing 42% of their market valuation

2) There's a lot of intellectual property

3) There's a global brand

4) I think it's safe to assume there are a lot of excellent people that still work for Nokia

There's a lot to be "saved." Whether Nokia could be turned around on its own is another matter.

greyman• 13 years ago

Why? Those two are a pretty good match.

ohwp3• 13 years ago

Could work but I think they should remember this isn't an OS thing but an app thing.

BlackBerry and Nokia are still producing very good phones. But they failed to jump the app train. Blackberry may survive since the new OS supports Android apps. Nokia should work on this as well.

There are rumors that Nokia is still working on an Android Lumia.

sz4kerto2• 13 years ago

Nokia won't be able to use the Lumia brand after the Microsoft deal is finalized. And they won't have their phone manufacturing department.

So we can safely say and Android Lumia won't happen.

ohwp3• 13 years ago

True, but rumors are that they were testing Android on the Lumia series.

But ofcourse rumors are just that: rumors ;)

MikusR2• 13 years ago

Those android prototypes are meant to "scare" Microsoft nothing more.

Zigurd6• 13 years ago

Probably not this proposal, but there are a couple scenarios that could lead to Nokia being a takeover target:

1. Microsoft's activist shareholders tanking the deal, perhaps by pointing out that buying Nokia's factories and the whole legacy handset business including Series 30 and Asha is pretty crazy.

2. Nokia's board concluding that, now that they are rid of Elop, could reboot Nokia themselves: spin Jolla back in, and start selling Sailfish and Android smartphones.

Geee3• 13 years ago

Nokia doesn't have money any more to develop Android phones on their own. They don't even have money to continue with WP strategy on their own. Elop spent billions of Nokia's money to boot Windows Phone and restructure the operation as a Microsoft division. It was 'all in' with Nokia's money.

Zigurd6• 13 years ago

Nokia has, at least, the resources to operate its infrastructure division. There have been sorrier messes in the mobile OEM business.

Nokia has Android ready to go on existing devices. Bringing up Android isn't rocket surgery. You would have to ask the Jolla people how much it would cost to put Sailfish on existing devices. I bet their answer would be under $10M.

In other words, claims that Nokia had to "focus" on one OS due to costs were bunk then and they are bunk now. Lots of newcomer OS are hitting the market and the costs to try them are low enough that many OEMs will sell Tizen and Firefox OS devices just to test market acceptance. Nobody will spend so much they bet the farm.

adventured2• 13 years ago

Not accurate. They're flush with cash.

End of fiscal 2010, they had $16.4 billion in cash.

Today they have $12 billion in cash. With zero long term liabilities.

They have drastically more money than they would need to remake their business and target Android.

If it didn't work, that might be the last shot they get at it however.

Mikeb856• 13 years ago

Nokia doesn't have money any more to develop Android phones on their own. They don't even have money to continue with WP strategy on their own.

They actually do. If you were to check their quarterly reports you'd see they have plenty of cash...

throwawaykf024• 13 years ago

Regarding Asha: I hear Asha is doing crazy well in low-end markets. Not sure how Microsoft can leverage it, but I'm sure they are aware of this.

Zigurd6• 13 years ago

Asha WAS doing well is developing world markets. Asha is now a dying business. http://www.google.com/imgres?imgurl=http://allaboutwindowsph...

Microsoft bought itself another Kin.

specialp3• 13 years ago

The low end is being destroyed by "white box" Android phones from China. There is simply no way to compete with them on price since they do not have to develop software and sell nearly at cost. This will be the same with high end phones soon as improvements level off and it becomes commoditized. I think that mobile phone manufacturers will have poor to no margins quite soon. The only place to make money now is through the ecosystem.

MikusR2• 13 years ago

I my be mistaken but the first sentence in that article is false. Microsoft has not yet bought Nokia (although they think and act like they have).

jgreen10• 13 years ago

Can someone explain why Elop did a bad job? No one was buying Nokia phones anymore... they are now.

icefox• 13 years ago

[citation needed]

morkbot• 13 years ago

WP started to get some traction recently, nothing earth-shattering but still... http://thenextweb.com/insider/2013/11/04/report-windows-phon...

Noughmad• 13 years ago

It's more like the other way around. I used to know lots of people with Nokia phones, both feature phones and smartphones. Now there are only iPhones and Androids, I don't think I've seen a phone with Windows except in a store.

Besides, Nokia had great reputation as a quality brand. Some of their phones were unbreakable. They've lost their reputation since their deal with MS.

bentcorner• 13 years ago

I'd like to see them continue on the path that the Lumia 1020 set - premium camera smartphone. I think there's a good niche for them there that is very hard for Apple to get into due to asthetics (a Lumia can have a bump on the back for a large fast lens that would be very unusual for an iPhone).

specialp3• 13 years ago

They lost their reputation long before they went to MS. Symbian had over 3000 developers yet their interface was very confusing, and full of bugs. The N95 was a decent phone in 2007 besting the iPhone in many ways (fast CPU/GPU, 3.5G, full GPS, good display, 5MP camera with good optics) but it did not have touch. I was fine with it and owned one and loved it.

So Nokia then came out with the N97 and it was clear that they did not have the ability anymore to design software or pick a strategy. Their 'app store' switched from MoSH to Ovi and it just simply did not work. All the while Android and iOS were moving very fast. People were very unhappy with the N97 flagship and the rest of the offerings were not very clear. They had dozens of models. E series was supposed to be the business series and N series for "media". It was confusing marketing. From 2009-2012 they were losing double digit marketshare every year. Even strongholds like India and Asia were starting to view Nokia as a company that lost their direction. So yes people did have fond memories of their unbreakable candybar phones but they also associated Nokia with the old days of phones as they could not produce a modern, coherent UI. (until MeeGo where it was too late)

Mikeb856• 13 years ago

He canned their best phone (N9) and OS (Meego), only to pursue a clearly inferior business strategy, drive the stock price down, and enable a Microsoft takeover...

killme4• 13 years ago

best phone (N9) and OS (Meego)

Best phone and OS according to who? The same folks who cheered on the OpenMoko? As Elop said, the market has turned from a battle of devices into a war of ecosystems. Meego would've ended up like BB10 running on QNX(remember how many folks on here salivated about a QNX based mobile OS?), critically appreciated but with no apps and sales.

Nokia recently became the fourth largest OEM in the US market. http://pocketnow.com/2013/11/01/nokia-smartphone-sales I doubt that given Nokia never really had a brand in the US for smartphones, it could've done so without Microsoft's support.

specialp3• 13 years ago

I was an owner of a N9 and really enjoyed the OS. Most of the employees that developed Maemo and MeeGo are carrying on at jolla.com. They still have not shipped a phone yet and I have been following them for nearly 2 years now.

As much as I love the close to open source atmosphere and very good UI of the N9, Elop is right. Android turned making phones into a commodity. The only place where money can be made is by providing an ecosystem. Customers demand an ecosystem too. Nokia was losing market share so fast that as Elop said they were on a "burning platform". I am not sure they had the might anymore to create a MeeGo/Maemo ecosystem in time to save them.

I really wish that Nokia would have continued MeeGo development but I understand the decision to can it too. Nokia for many years was offering contradictory statements and making half assed partnerships. So they had to say we are going all in and all of our resources are behind Windows Phone. Developers got burnt several times. Even with Maemo they suddenly partnered with Intel's mobile OS and had to spend a year porting stuff with no apparent gain to customers. So I wish Jolla well, but Nokia did what they had to do.

JeremyNT• 13 years ago

The long and short of it: he bet everything on Windows Phone.

I think you can envision a successful strategy that would have included Windows Phone, potentially even as the only platform they offered, but Elop killed off everything else in a very visible way before WP was really ready. When it became the only offering, they alienated existing customers and left them with no obvious migration path.

WP sales have started to recover, but IIRC they're still lagging behind what Symbian was doing at the time Elop took over. Conceptually WP may have been a reasonable long term choice, but there were certainly ways to get there that didn't cost them so many existing customers so quickly.

sirkneeland6• 13 years ago

While both your statement and my response are gross oversimplifications, I would point out that when Elop took over, more people were buying Nokias than they are now.

Q3 2010 (when Elop took over): 110.4 million Nokias sold Q3 2013: 64.4 million Nokias sold

Parsing your statement, if when you said "no one was buying Nokia phones" you means "no one [in developed economies] was buying [Nokia high end smartphones]" you'd then be correct.

Pedantic reply is pedantic :)

ZeroGravitas• 13 years ago

Or just wait a couple of years until the block on using the brand on smartphones is removed and sell the name to Xiaomi, Huawei, or Lenovo.

jheriko• 13 years ago

Doesn't finland also now have an enormously successful 'little' slice of the games industry?

Mikeb856• 13 years ago

Honestly I hope they succeed. Lumia 1020 hardware with Android or Meego would be very enticing.

zokier• 13 years ago

Because what Nokia needs right now is a board full of nostalgic nationalists and yet another complete change of strategy and tech.

basch3• 13 years ago

"Upon the closing of the transaction, Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia’s own mobile devices until December 31, 2015."

Nokia sold Microsoft its production lines, and licensed its patents. Starting in 2016 Nokia can reenter the cell phone market again. Basically Nokia gutted its legacy capital, and is taking a two year break and reevaluating what direction it should orient itself.

Nokia and Microsoft could not have made a more mutually beneficial deal. Microsoft gets a thriving hardware division NOW, and Nokia gets cash and the ability to reboot itself with no short term risk.

My point is, Nokia DOES need a change of strategy and tech, they will just be taking at least two years to blow bucketloads of cash on R&D, instead of worrying about short term end-consumer sales. Personally I'm kind of excited to see what Nokia comes up with. (Everyone seems to also be forgetting that Microsoft only purchased the mobile device business. Nokia's most profitable sector was its Nokia/Siemens Networks, which it still owns. They also kept their Patents and Mapping software. Microsoft get's a 10 year license with the option to upgrade to a perpetual one. Nokia is going to make a TON of money off one of the worlds largest companies, and Microsoft gets cheap intellectual property. Win/Win.) The sky is their limit.

sirkneeland6• 13 years ago

As a Nokia R&D employee (staying in Nokia), I'm glad other people are starting to get the insane potential of New Nokia (with its retained R&D labs and talent, its mountain of patents, and its newly found mountain of cash--and no longer dividing attention between smartphone improvements and going after "the next big thing")

That said, I'm still emotionally bummed at what happened to Nokia in the last few years, and don't think it was inevitable that this had to happen to Nokia.

Nokita: A Plan to Raise Billions and buy out Nokia before Microsoft

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