8 ms·

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

70 points by guillermovs 13y ago

Artemis2 13y 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 13y 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 13y 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-letter/index.html http://www.microsoft.com/investor/reports/ar13/shareholder-l...
davissorenson 13y 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.
- Mikeb85 13y ago
  Compared to manufacturing costs and the revenues at stake, gigs, events and parties are cheap.
  - davissorenson 13y ago
    I meant more as a company culture.
sz4kerto 13y 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 13y 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 13y ago
    > How do you reboot a company's culture? Management declares it, which causes corrosive cynicism.
CmonDev 13y ago
"Android and Linux products" - please, no!
- vezzy-fnord 13y ago
  Yes, how dare they not make a Plan 9 phone!
container 13y 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 13y 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.
- davissorenson 13y ago
  > There's nothing to "save". To be fair, there's a lot of intellectual property at stake.
  - basch 13y ago
    Nokia kept all its intellectual property.
- ohwp 13y ago
  Well if it worked that way someone already would have done that wouldn't they? http://en.wikipedia.org/wiki/Goodwill_(accounting) http://en.wikipedia.org/wiki/Goodwill_(accounting)
- otoburb 13y 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.
- adventured 13y 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 13y ago
Why? Those two are a pretty good match.
ohwp 13y 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.
- sz4kerto 13y 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.
  - ohwp 13y ago
    True, but rumors are that they were testing Android on the Lumia series. But ofcourse rumors are just that: rumors ;)
- MikusR 13y ago
  Those android prototypes are meant to "scare" Microsoft nothing more.
Zigurd 13y 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.
- Geee 13y 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.
  - Zigurd 13y 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.
    - throwawaykf02 13y ago
      I'm not sure that was bunk in Nokia's case. When they realized that Symbian had to go, they also realized that the vast bulk of the company was organized around that one OS. And if sources are to be believed, most of that deadweight was fiefdoms jealously guarded by entrenched groups, which meant they were not going to be conducive to "pivot" to a new direction. Now they had to shed that humongous deadweight and produce a competitive "modern" smartphone. I think it's entirely possible that in that situation whatever resources you have left, you may well have no choice but to bet the farm. Nokia may have used Android to force Microsoft into a buyout, but I doubt they were going to seriously pursue it, for one big reason: that would have entailed compulsorily licensing Google Maps, which is a direct competitor to their own mapping division. You may think that doesn't sound so bad, but consider this: 1) It dilutes the billions they paid for Navteq. 2) As the SkyHook lawsuits have shown us(IIRC) Google demands all location data produced by Android devices to improve their own geo services. As such, Nokia would have ended up building devices that end up improving a competing service. 3) Considering the mapping division is one of only three divisions Nokia held on to, it's undoubtedly important to them long term. I am not sure, in their eyes, the pros of having an Android phone out there would have outweighed the cons of improving a competing mapping service.
MikusR 13y 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 13y ago
Can someone explain why Elop did a bad job? No one was buying Nokia phones anymore... they are now.
- icefox 13y ago
  [citation needed]
  - morkbot 13y ago
    WP started to get some traction recently, nothing earth-shattering but still... http://thenextweb.com/insider/2013/11/04/report-windows-phone-overtakes-ios-in-italy-and-makes-progress-in-europe/ http://thenextweb.com/insider/2013/11/04/report-windows-phon...
    - asveikau 13y ago
      And how does that compare with Symbian sales before Elop? I have not looked at a comparison, but it would not surprise me if Windows Phone has not yet caught up. Don't get me wrong, I am not a Symbian fanboy and I think Nokia held onto it for too long, but the notion that "no one was buying Nokia phones" is not the whole story. It probably resonates with the average HN reader, who is relatively young, lives in the US and carries an iPhone or Android device. It probably also accurately represents where the Symbian market was going long term. But it's not the whole story.
      - pmelendez 13y ago
        "And how does that compare with Symbian sales before Elop? I have not looked at a comparison, but it would not surprise me if Windows Phone has not yet caught up." I can give you a reference that is close to me. Windows phone is 2nd place in latin america (http://techcrunch.com/2013/08/22/windows-phone-snags-second-place-in-latin-america-validating-the-nokia-microsoft-relationship/ http://techcrunch.com/2013/08/22/windows-phone-snags-second-...) where the first is Blackberry and nobody used Symbian.
ZeroGravitas 13y 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 13y ago
Doesn't finland also now have an enormously successful 'little' slice of the games industry?
Mikeb85 13y ago
Honestly I hope they succeed. Lumia 1020 hardware with Android or Meego would be very enticing.
zokier 13y ago
Because what Nokia needs right now is a board full of nostalgic nationalists and yet another complete change of strategy and tech.
- basch 13y 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.
  - sirkneeland 13y 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.
    - 13y ago

70 points by guillermovs 13y 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 13y 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 13y 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-letter/index.html http://www.microsoft.com/investor/reports/ar13/shareholder-l...

davissorenson 13y 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.

Mikeb85 13y ago
Compared to manufacturing costs and the revenues at stake, gigs, events and parties are cheap.
- davissorenson 13y ago
  I meant more as a company culture.

sz4kerto 13y 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 13y 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 13y ago
  > How do you reboot a company's culture? Management declares it, which causes corrosive cynicism.

CmonDev 13y ago

"Android and Linux products" - please, no!

vezzy-fnord 13y ago
Yes, how dare they not make a Plan 9 phone!

container 13y 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 13y 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.

davissorenson 13y ago
> There's nothing to "save". To be fair, there's a lot of intellectual property at stake.
- basch 13y ago
  Nokia kept all its intellectual property.
ohwp 13y ago
Well if it worked that way someone already would have done that wouldn't they? http://en.wikipedia.org/wiki/Goodwill_(accounting) http://en.wikipedia.org/wiki/Goodwill_(accounting)
otoburb 13y 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.
adventured 13y 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 13y ago

Why? Those two are a pretty good match.

ohwp 13y 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.

sz4kerto 13y 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.
- ohwp 13y ago
  True, but rumors are that they were testing Android on the Lumia series. But ofcourse rumors are just that: rumors ;)
MikusR 13y ago
Those android prototypes are meant to "scare" Microsoft nothing more.

Zigurd 13y 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.

Geee 13y 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.
- Zigurd 13y 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.
  - throwawaykf02 13y ago
    I'm not sure that was bunk in Nokia's case. When they realized that Symbian had to go, they also realized that the vast bulk of the company was organized around that one OS. And if sources are to be believed, most of that deadweight was fiefdoms jealously guarded by entrenched groups, which meant they were not going to be conducive to "pivot" to a new direction. Now they had to shed that humongous deadweight and produce a competitive "modern" smartphone. I think it's entirely possible that in that situation whatever resources you have left, you may well have no choice but to bet the farm. Nokia may have used Android to force Microsoft into a buyout, but I doubt they were going to seriously pursue it, for one big reason: that would have entailed compulsorily licensing Google Maps, which is a direct competitor to their own mapping division. You may think that doesn't sound so bad, but consider this: 1) It dilutes the billions they paid for Navteq. 2) As the SkyHook lawsuits have shown us(IIRC) Google demands all location data produced by Android devices to improve their own geo services. As such, Nokia would have ended up building devices that end up improving a competing service. 3) Considering the mapping division is one of only three divisions Nokia held on to, it's undoubtedly important to them long term. I am not sure, in their eyes, the pros of having an Android phone out there would have outweighed the cons of improving a competing mapping service.

MikusR 13y 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 13y ago

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

icefox 13y ago
[citation needed]
- morkbot 13y ago
  WP started to get some traction recently, nothing earth-shattering but still... http://thenextweb.com/insider/2013/11/04/report-windows-phone-overtakes-ios-in-italy-and-makes-progress-in-europe/ http://thenextweb.com/insider/2013/11/04/report-windows-phon...
  - asveikau 13y ago
    And how does that compare with Symbian sales before Elop? I have not looked at a comparison, but it would not surprise me if Windows Phone has not yet caught up. Don't get me wrong, I am not a Symbian fanboy and I think Nokia held onto it for too long, but the notion that "no one was buying Nokia phones" is not the whole story. It probably resonates with the average HN reader, who is relatively young, lives in the US and carries an iPhone or Android device. It probably also accurately represents where the Symbian market was going long term. But it's not the whole story.
    - pmelendez 13y ago
      "And how does that compare with Symbian sales before Elop? I have not looked at a comparison, but it would not surprise me if Windows Phone has not yet caught up." I can give you a reference that is close to me. Windows phone is 2nd place in latin america (http://techcrunch.com/2013/08/22/windows-phone-snags-second-place-in-latin-america-validating-the-nokia-microsoft-relationship/ http://techcrunch.com/2013/08/22/windows-phone-snags-second-...) where the first is Blackberry and nobody used Symbian.

ZeroGravitas 13y 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 13y ago

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

Mikeb85 13y ago

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

zokier 13y ago

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

basch 13y 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.
- sirkneeland 13y 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.
  - 13y ago