Why Nokia won’t take a cue from Ericsson

28 Oct 2011

Nokia’s investors may well be eyeing Ericsson’s exit from its handset joint venture with envy, despite all the fanfare about the Finnish vendor’s new Windows Phone 7 devices.

You see, unlike Ericsson, Nokia currently has no other business to fall back on if its latest breed of smartphones fail.

The firm has largely palmed off its infrastructure business into a joint venture with Siemens, and its software arm Symbian is now under the control of Accenture. Meego, its other mobile software effort developed in collaboration with Intel, is largely redundant thanks to the Microsoft-based Lumia smartphones unveiled on Wednesday.

Even if it were in a position to sell its smartphone and mobile phone businesses, there are huge question marks over who could, and would, buy it.

Microsoft seems the most obvious candidate, but it’s uncertain whether owning a device maker would really boost the US software giant’s mobile ambitions, particularly given that Nokia has never been strong in the US.

Google may have been a suitable buyer, but Nokia’s decision to run with rival Microsoft’s operating system largely put paid to any good relations between the search firm and vendor. And that’s before you count its acquisition of Motorola Mobility.

Other handset vendors can be counted out simply because most have now established their own brands. For example, if I’d been writing this three or four years ago, I might have tipped HTC as a likely suitor. Today, though, the Taiwanese firm has successfully made the leap from ODM to OEM, so why would it want Nokia and all its troubles?

There is some chance Chinese equipment vendors ZTE and Huawei would see benefits in acquiring Nokia. Both are currently investing heavily in handsets as key drivers of earnings growth. However, they seem to be doing well enough on their own, with ZTE shipping 60 million devices during 1H11 and Huawei 72 million.

It may, of course, all be moot. Nokia’s Windows Phones might fly, and the vendor might get back to leading the global device market – or at least parity with Apple and Android devices.

However, the boy scout motto – “be prepared” – means it can’t do any harm for the vendor to come up with a plan B, just in case.

Thumbail image from server side store: 

Michael Carroll



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