Nokia on the road to absorption

   Obviously Nokia will survive. One day the company will may be selling anti-gravity engines for spaceships or energy cells based on cold fusion. But it will never be the same Nokia – the legend in mobile phones and market capitalization close to the value of 1 billion troy-ounces of pure gold.

   Yes, Nokia did exist for almost 150 years and was engaged in much different businesses. Founded as a wood-pulp mill in 1865, Nokia’s transformations have included switches from rubber boots and toilet paper to cables, televisions, computers and mobile phones. So what prevents it from selling spaceship engines one day?
   But the fairy tale with mobile phones and world domination will barely repeat.
   Electing a new CEO and focusing on network business, services and patents is a way of preparing the company for being acquired in mid future. There is enough competition in these areas to allow serious growth. And Nokia and its products are not “stars” under the Boston Consulting Group Matrix. They look more like “question marks” supposing this business has growth potential as a whole. But Nokia is not a big player here so it looks more like a useful addition to someone else’s business. For me it looks much like Bay Networks before merging with Nortel.
   The most valuable asset of Nokia was its trademark and name in mobile phones. With the Microsoft deal this asset is de facto erased from existence. I think for Nokia would be better to become an universal producer of mobile phones like HTC. Producing all types of phones and under different software platforms in combination with the legendary name (not less valuable than “Apple”) would provide a stable cash flow and business prospective. In this case Nokia could have a “cow” business in its portfolio and think about the future.
   Now with mobile division going to Microsoft the Android option for business disappears. Even the name of Nokia will vanish. Microsoft will use Nokia knowledge and professionals in an effort to revive the Windows Phone OS. Probably will not have big success, but even having it, this will not revive the Nokia-legend.
   I always thought Nokia had good chances and was not a bad deal. But I don’t think they have chosen the right way.

Dobri B.
Apr-29th-2014

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