Feeds

Cheer up, Nokia fans. It can start making mobes again in 18 months

The real winner of the Nokia sale is *drumroll* ... Nokia

Secure remote control for conventional and virtual desktops

Analysis When Microsoft swallowed half of Europe's biggest tech company, it was only a matter of time before it spat something out. And so it has, ending Nokia's thirty-year roller-coaster ride.

However, the decision will make tens of million of its customers take a look at Android – surely the last thing Microsoft wanted to happen.

Last week it emerged – via a painful drip of leaks, rather than briefings and official announcements – that Nokia's historic mobile phone business would be mothballed. This was the unit Nokia called Mobile Phones, as opposed to Smart Devices, which makes Lumia Windows Phones. It will continue to do so in a new Microsoft Devices unit.

That means no more devices in the "on ramp" Android X range, no more Asha phones, and no more useful 100, 200 and 300 series, as well as phones starting at £15 here or a little over £20 for the dual SIM model. Hundreds of millions of people use these today and find them very useful.

Over two decades Nokia built up a huge footprint in emerging markets, with a formidable distribution business. It was still shifting them in huge numbers. The last reliable numbers we have [PDF] are from the third quarter of 2013 ending October 29, which makes them a little old. But they show that Mobile Phones generated €1.489bn in net sales from more than 50m devices shipped. Smart Devices brought in €1.2bn.

Since then, all we know is that the growth of Lumia shipments has slipped, and probably more than current guesstimates reckon given that there's no new products expected for a while.

An impulse buy, but value for money?

Have Microsoft shareholders got the best out of this decision?

Well, you could argue that instead of being an expensive liability, these feature phones and subversive mutant Androids were actually an asset. They were what Microsoft needed to lure the "next billion" consumers to use Microsoft, rather than Google services. We can presume Elop made a strong case for this internally, because he'd already made the very same argument to the world at large.

Nokia's press release in February spoke of X as an "on-ramp to Lumia and Microsoft services like Skype, OneDrive and outlook.com". Elop's audience for this February announcement was surely his new bosses at Microsoft.

But having been unconvinced by the argument to keep Mobile Phones in-house, why would Microsoft not seek a buyer for the unit? A buyer would have found a useful brand and established footprints in markets like India attractive, not to mention some unique know-how for making phones durable in unforgiving conditions. Laying off European staff is slow and costly to a company, as BenQ found out when it acquired Siemens. Yet it's Microsoft, not some Chinese company, that's going to be footing the bill.

A deal could have helped retain Microsoft's services footprint in growth markets as one of the strings attached. As it is, Nokia customers will now look to Android and Google for their services. Low-cost devices running Google Drive, GMail don't need any on-ramp, they'll be the next devices these punters buy.

The reason for Microsoft taking the pain now is the flood of low-cost Android phones, which are as cheap as $30 for a 2G version. This has eaten up much of the market for featurephones. Mobile Phone unit revenue at Nokia fell 38 per cent year on year, the October numbers show, as Asha wasn't competitive. It's better to take a huge hit now than wait for obsolescence. Android phones will always be cheaper than Lumias in these markets, even though a like-for-like comparison gives Windows Phone a slight advantage as it needs less memory to perform well.

Nice move Nokia, leave Microsoft to clean up the mess

The real winner of the Microsoft acquisition would appear to be Nokia's board. Remember that it was Nokia's board that initiated the sale to Microsoft, over Elop's head. The Nokia board had no personal loyalty to Windows Phone, but a statutory responsibility to its long-suffering shareholders.

The Microsoft agreement was due for renewal, and the board couldn't guarantee that even after making a massive product investment in Windows Phone 2013, it could justify making the same kind of deal again, one that more-or-less promised exclusivity to Microsoft. Sooner or later, it would start having to sell serious numbers again.

Funnily enough, the oddball Android X line was starting to look promising. The most recent device, the XL, revealed last month, has enough RAM and processing power to perform comparably to very low cost Western Android models like the Moto E. It would have been fascinating to see how it performed in Western markets, possibly as a spearhead for a "Cloud First" push.

So it looks like Nokia's board has got the best of the deal. It got €5.4bn ($7.3bn) in cash, leaving it with units that all make money. It doesn't have to make anyone from the Devices units redundant. They're not Nokia's problem any more.

And best of all, in less than 18 months Nokia can start making "smart devices" such as smartphones again. Last September, Nokia executive and HERE boss Michael Halbherr reminded us that it had the know how to do so:

"We will still surprise people with leading-edge hardware," he promised, although smartphones aren't the cleverest choice.

I wonder if it will want to? ®

Beginner's guide to SSL certificates

More from The Register

next story
Xperia Z3: Crikey, Sony – ANOTHER flagship phondleslab?
The Fourth Amendment... and it IS better
Don't wait for that big iPad, order a NEXUS 9 instead, industry little bird says
Google said to debut next big slab, Android L ahead of Apple event
Microsoft to enter the STRUGGLE of the HUMAN WRIST
It's not just a thumb war, it's total digit war
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Netscape Navigator - the browser that started it all - turns 20
It was 20 years ago today, Marc Andreeesen taught the band to play
A drone of one's own: Reg buyers' guide for UAV fanciers
Hardware: Check. Software: Huh? Licence: Licence...?
The Apple launch AS IT HAPPENED: Totally SERIOUS coverage, not for haters
Fandroids, Windows Phone fringe-oids – you wouldn't understand
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.