After indulging in a little angst over the Microsoft one-two Surface-Windows 8 punch at Nokia and other hardware partners, I feel compelled to back up a bit and try a more positive fork. For balance if nothing else.
That’s easier said than done. As my disclaimer says below, I own a sizable chunk of Nokia stock… some collected as an optimistic former employee. When I say sizable think quantity only. The current value is negligible. Still, I remain heavily invested in the company’s success.
That success doesn’t have to come as a cell phone manufacturer. Remember, history fans, Nokia has a variegated product legacy. Buried in its foundational strata lie tires, boots, TVs, paper and other unrelated castoffs. Assuming the company can survive another major overhaul, it’s perfectly reasonable to consider it emerging in a new form with different purpose.
Reading this CNet article about Nokia’s need to get more aggressive with its intellectual property licensing got me thinking on this (again). The author, Erin-Michael Gill, describes his experience with Dupont, and how it slowly and deliberately evolved from base product supplier to knowledge base powerhouse.
This is the same sort of wholesale transformation that IBM underwent. The identical type of move HP hopes to successfully manage. And exactly what Microsoft has been working on in its effort to mirror Apple as an ecosystem owner. It’s a natural consequence of corporate maturity, as executives watch once-elite revenue drivers rendered into commodities by nimble competitors often eschewing their own R&D.
The only thing potentially holding Nokia back is a scary cash burn rate. Not long ago the company was flush with money; now making the next quarter looks iffy. Gill sees Nokia ratcheting up IP licensing and lawsuits to address that. But will they stop at just using that as a stopgap?
I don’t think so. As for options, remember that Nokia already flirted with becoming a service-oriented “Internet Company” just a few years ago, trotting out the now-shuttered Ovi as its answer to the likes of Yahoo. But Yahoo’s attempt to be the next AOL has gone bust, much like AOL’s own efforts, and juggernaut Facebook seems to have no serious competition. So I don’t see Nokia retooling Ovi for another run at internet services.
Rather, I suspect Nokia will continue shedding hard (and even some soft) assets across the globe, and concentrate its focus increasingly on research and development. Note that even as it struggles to sell phones, the Finnish stalwart continues to file patents for tomorrow’s technology– including one for this odd-looking solar cell phone.
In such a scenario, Nokia doesn’t get sold outright to Microsoft. Instead, the Redmond steamroller buys some or all of Nokia’s product development assets. If the Microsoft Surface turns out to have benefited significantly from Finland’s best, then that might bear me out.
I wouldn’t blame Nokia for bailing on mobile consumer products. The device lifecycles are too short these days, and the cost to maintain the pace too high. It will eventually catch up with Apple, too. Performing as an at-large R&D farm could be more fulfilling and less risky for embattled Nokia.
I still have to believe there’s some strategy lurking deeply beneath Nokia’s puzzling moves. Maybe very deeply. I can’t accept this idea of an all-in Windows Phone gamble– especially one that appears to be backfiring when Nokia can afford it least.
And then there’s the Nokia Siemens Networks joint venture. Suddenly it doesn’t look so bad compared to the mobile side of things. What role will it play in the majority holder’s future? Something to explore in a future article, certainly.
Anyway, back to the research and development scenario. Picture Nokia perfecting and then licensing its kinetic charging technology, its Humanform phone, even the Morph. Of course, many won’t like that image. It conveys “patent troll” to some. I don’t think it’s quite so simple or evil; Nokia will have simply reinvented itself as the R&D arm-for-hire of anyone interested in its frequently groundbreaking developments. That could include Samsung… Apple… and of course, Microsoft. And expect more purchases like that of Scalado, assuming funds are there. No reason to reinvent what one can purchase.
I would consider that virtual R&D lab prospect much, much better than a slow but sure total evaporation. After all, I have a lot of stock at stake.
Disclaimer: the conclusions in this article are largely conjecture on the author’s part and in no way reflect known Nokia plans