Can Nokia crack Google's Moat? Interview Nokia has a radical strategy to outflank some of the world’s biggest technology companies, including Google, and it shared some of the details with El Reg in Barcelona this week.
According to Michael Halbherr, a key member of Nokia’s top executive team and arguably number two to CEO Stephen Elop, location-based human behaviour information is the new Google search results – instead of web pages, it’s “search results for the real world”.
This is Nokia's plan. To make intelligent inferences, it needs lots of data: Really, Really Big Data. What certain kinds of people do at a given time, on a given day, in a particular place. And the system needs to scale. So Nokia is licensing its location-finding services to rival phone manufacturers in order to achieve this.
Apple has its own. Android and non-Android manufacturers are reluctant to become dumb waiters as this valuable information is collected by Google. Fine, use our platform, Nokia says to them, and you can keep it and use it too. Google and Apple are not sharing their ‘behaviour platform’ quite as freely, if at all.
Halbherr provided some fascinating new insights into the thinking behind the plan for the first time anywhere.
He said we’re only at the beginning of what the technology can do. Mobile devices have maps – and in Nokia’s case, very good maps – that are responsive, vector-based charts that work offline and cover just about every corner of the world. They can include related information – such as traffic or restaurant reviews. So why’s it giving it all away?
Technology still doesn’t provide the right information people need when they need it - and still makes things really complicated for a mobile user, thinks Halbherr. “Licensing Frommer’s Travel Guide or Lonely Planet isn’t enough anymore,” he says.
“We think this is the next Google, only it’s indexing the real world,” said Halbherr. The platform learns about the individual and adds it to aggregate datasets, such as "what is there to do in Boston at 10pm after a football game".
Nokia EVP of Location and Commerce
“It’s a large-scale machine-learning problem,” he said.Halbherr arrived at Nokia in 2006 with the acquisition of mapping company Gate5; he has an engineering PhD, so when he talks about AI it’s in rather more grounded terms than what you might hear from other top tech execs.
If you think about how search engines started rating web pages – first by primitive keyword counts, then by Google-like page ranking – then it’s a natural progression. But you need a lot of data to do this, said Halbherr: “Where do people go at 10pm after a movie? It’s about building up these kinds of connections.”
Nokia isn’t alone in building these "placegraphs" or "human motion graphs" – but it is alone in seeking to share them with all-comers, which include rival handset makers. “Meaningful recommendations need deep analytics,” he told us.
Before going on to the implications, let’s clarify what Nokia is actually doing.Answering the toughest question of them all: Where's the nearest decent pub?
In 2007 Nokia acquired US electronic navigation company Navteq for $8.1bn, and thus grabbed a profitable intellectual property licensing business. Early on, Nokia sold upgrades to its handset users for turn-by-turn driving navigation, but then Google offered this for free. Nokia touted downloadable global maps – and Google now offers this for free, too. It’s a competitive business.
So how could Nokia realise some value from an asset that was being destroyed by commoditisation? By going horizontal. Halbherr sketches out a 3x3 grid for the HERE platform as it’s now called – there's no Nokia branding anywhere on the technology.
In one corner is where Nokia keeps its "first and best" products. Everything else on the grid is licensed out; this includes things that were touted as Nokia-only unique mapping-based apps but will rapidly become platform features. CityLens is an example: it’s now another HERE platform API called Livesight.
So the three tiers on the licensing grid are Nokia-only products, technology for Windows gear manufacturers, then things for all the other hardware companies.
“We look at the world through the eyes of an OEM [original equipment manufacturer]. We work with OEMs like HTC and Samsung, because an OEM controls the business model for the device,” he said.
The platform will be OS-neutral, and firms making an Android or Mozilla OS phone will be able to use the same features. And they’ll get the goodies that are Nokia’s exclusives today – such as vector maps and offline data: “There is a price for the data and a price for the SDK [software development kit]”, we're told.
Amazon is an SDK licensee, so programmers writing apps for the Kindle range are actually using Nokia’s HERE maps – they just don’t know it. The rebranding means apps formerly known as Nokia Maps, Nokia Drive and Nokia Transit (Transport in the UK) become the shouty-named HERE suite (and the equally shouty HERE Maps, HERE Drive and HERE Transit).
So a Nokia Lumia owner will get access to all the world’s offline maps, but an OEM gets just a country licence, Halbherr explained.
What would the platform be able to do once it had all this really big data? One example was that people would get a tip on which bar they might like after a movie. However, the very last bar I’d want to go to after a film is the bar everyone else had been tipped to go to. It would be pretty crowded, for a start, and hard to get a drink.
But the system could provide nudging information, Halbherr said, such as advising some people to leave work early for a faster ride and tell some others to depart later. Didn’t this risk running into the problems of behaviourism, I wondered?
The problem with this paternalistic approach is thatonce people realise they’re being manipulated, they stop responding as the system "thinks" they should. In fact, they may respond very negatively. This was a potential issue, said Halbherr, just as privacy was an issue. There had to be a strong trust relationship and not one manufacturers or service providers could abuse.
He’s certainly mindful of the pitfalls. Halbherr cited Frommer’s as an example of something that pleased mathematicians more than users – it averaged the feedback it received, and lost personal and idiosyncratic touches. It didn’t really give very good recommendations, in his opinion.
The mapping business at Nokia is doing very well today – bringing in #$%$400m in the last quarter – making it a significant company in its own right, and growingly rapidly. But with "real world search", Europe’s biggest tech company is launching the next epic industry battle, and Google is firmly in its sights. If it reaches even a significant fraction of Google’s web-page search revenues, then Nokia will be a significant disruptor, and a major player in its own right.
Will manufacturers nibble? We can't help but notice the fastest growing smartphone OS in the world is "Android without Google" in China. This appeals because it's cheap, it's a no-name manufacturer running on a MediaTek hardware package. HERE costs money. But if Nokia can get the pricing right, who knows?
Nokia’s sharp focus on its Location business, which we know as “HERE“, is as per its strategy to use HERE as its growth engine. Because of its huge potential, HERE is now getting some attention from analysts. Last we reported about Strategy Analytic’s take on HERE’s prospects.
Now, Counterpoint research’s analyst Neil Shah has come up with a very detailed article about HERE’s future strategy targeting various sectors. The article also deals with recent acquisitions, presents a good competitor environment analysis, discusses in detail HERE’s strategy for different sectors and what future holds for HERE. Some salient points,
HERE is pioneering the smart location and mapping platform: The HERE platform is evolving into a broader and intelligent location platform to expand HERE opportunities across different verticals beyond automotive and devices OEMs into consumer and enterprise. The recent acquisition of Desti and Medio, adds additional capabilities such as search/discovery and smartanalytics on top of the HERE’s robust core mapping and navigation platform to offer a more robust end-to-end location platform to grow
Not many competitors: There are a very few companies who have decent mapping assets with just couple of companies truly leading this space, namely HERE and Google. Apple with the help of struggling TomTom is trying to build its own-branded mapping solution but again Apple is not in the business of licensing and the mapping effort remains a pure vertical play not directly competing with HERE or Google.
Great Clientele: HERE may already have a reach to 600 million monthly active users thanks to its big name customers base from Microsoft, Amazon, Yahoo, Mozilla, Tizen, Garmin to Samsung Counterpoint believe that: HERE has a potential to become a highly contextual and intelligent search engine for consumers in coming years
Counterpoint research seems quite Bullish on HERE’s future prospects,
HERE is positioned right on the inflection point to be catapult to the next level of growth with its industry leading smart location platform. We believe HERE has a highly aligned strategy, offering and a unique position from business model perspective to go for the kill and tap into tremendous opportunities out there. We believe momentum is with HERE as competition is fading away and the next biggest competitors having completely different business models proving advantageous for HERE
After selling its handset business to Microsoft for $7.2 billion earlier this year, many people -- myself included -- thought Nokia (NYSE: NOK ) was done with devices and would focus on its core business of network infrastructure. Well, it appears we were wrong. Although the company can't manufacture cell phones because of a condition of the sale, Nokia is going to release a tablet next year.
The tablet appears to be focused on the low end. Dubbed the N1, the device has a 7.9-inch display, will cost approximately $250, and will be focused on the greater-China region. However, the most interesting part of the release is the company will use Google's Android operating system rather than Microsoft's (NASDAQ: MSFT ) OS.
They aren't competing on price
Earlier this year, Microsoft took a bold step of giving away its Windows license for phones and devices under 9 inches in a bid to entice OEMs, or original equipment manufacturers, away from Android. That came after an earlier price cut of 70%. The company wanted to increase supply of Windows-based tablets in order to increase adoption. Unfortunately, this hasn't spurred the type of adoption the company would like.
The Android mobile operating system is also free for manufacturers to install, but it does require a license to access Google Mobile Services -- a suite that includes Gmail, Google Maps, and Google Play. The license costs nothing but requires a certificate from a testing facility; many OEMs have complained these costs are rather onerous. That said, it is apparent that Nokia isn't looking at cost when comparing these two ecosystems. So what separates the two?China is important here
The key may lie with the target market: China. When it comes to operating systems and ecosystems, this is an easy choice. In fact, a Kantar Worldpanel September report shows how one-sided this fight has become in the Middle Kingdom. Using smartphone market share as a proxy for tablets, Google's Android commands a massive 83.4% of the market with Apple's iOS taking a distant second at 15.2%; Microsoft's OS holds fourth place with an estimated 0.4% of the market.
The Mi line has been accused of taking "stylistic cues" from Apple. Source: Xiaomi.
Led by Samsung and new and exciting upstart Xiaomi, Android already has a loyal following here. The Xiaomi example is encouraging for Nokia in many aspects. Essentially, the company came out of nowhere to overtake Samsung as the leading smartphone in the Chinese market. The company accomplished this task by taking heavy design cues from Apple's iPhone at a lower price point. And it appears Nokia got the message: Nokia's N1 looks similar to Apple's iPad.
And while it's simply too early to predict success for the Finnish company, this will be an interesting challenge for Xiaomi. Utilizing a low price point and marketing to a receptive domestic audience has been good for the company. Xiaomi is in talks to raise roughly $1.5 billion at a valuation of $40 billion. If its success can be replicated by Nokia, look for other companies to quickly copy this strategy.Microsoft device woes continue, but are improving
Microsoft finds itself struggling with devices, but things are getting better. The previously Nokia-owned Lumia line of phones actually reported its highest quarter of units shipped ever in its September quarter, although it didn't experience substantive increases in market share. In addition, the Surface line of tablets actually reported its first positive gross margin since its launch.
As these little wins increase -- eventually gaining users, market share, and acceptance -- look for more OEMs to partner with Microsoft. And don't be too concerned by Nokia's decision to use Android in China. Should the company choose to launch the N1 in Europe, they might be more inclined to partner up with Microsoft to take advantage of the Windows-friendly market there.
Worldwide markets are poised to achieve significant growth as wireless car charging pads permit users to charge the electric auto without disconnecting/reconnecting cables. Electrical vehicle charging can be done anywhere just by driving the car over the charger and positioning it correctly to pick up the current.
Wireless charging in the automotive industry brings inductive power for EV cars. Short distance power transmission is based on magnetic induction. With this technology, power is transferred when the receiver is close to the transmitter. Magnetic induction has been used for decades in electronic equipment. It is good because it is simple, efficient, and safe. It is now being applied to charging for electric vehicles.
Access full report on Wireless Car Charging Market: http://www.radiantinsights.com/research/wireless-car-charging-market
Market driving forces relate primarily to the need for efficient power generation for autos. Wireless car charger manufacturers are positioning car models with wireless charging to drive demand at the high end. Many electric vehicle car vendors are making wireless power a reality. Only two vehicles are supported now, the Chevy Volt and the Nissan Leaf.
Wireless power is an emerging technology that creates a better charging experience for consumers. Just as Wi-Fi replaced the need to use an Ethernet cable for Internet connectivity, so also wireless power is making recharging wirelessly a feature that is demanded by consumers with an electric vehicle.
- See more at: http://globenewswire.com/news-release/2014/11/19/684569/10108984/en/Global-Wireless-Car-Charging-Market-Worth-Will-Grow-To-4-6-billion-From-2013-To-2019-Radiant-Insights.html#sthash.I3WxyJdu.dpufMarket Participants:
Alliance for Wireless Power
Consumer Electronics Association
Good & Easy Technology
Google / Motorola
Integrated Device Technology Business
iPDA - Newlift Technologies
MC Power Technology
Microsoft / Nokia
Procter & Gamble
Procter & Gamble / Duracell
Power Matters Alliance
Qualcomm / WiPower
Rexpower Industrial Development
Shenzhen Koeok Electronic Technology
Wireless Power Consortium
- See more at: http://globenewswire.com/news-release/2014/11/19/684569/10108984/en/Global-Wireless-Car-Charging-Market-Worth-Will-Grow-To-4-6-billion-From-2013-To-2019-Radiant-Insights.html#sthash.I3WxyJdu.dpuf
European phone companies, emboldened by the region’s economic recovery and improving demand for data services, are showing signs they will spend more on networks, according to wireless-equipment supplier Nokia Oyj. (NOK1V)
Carriers’ revenue in Europe is either rising again, or at least declining at a slower pace, as they change the way customers are billed for the amount of data consumed. That’s encouraging operators to make larger network investments to improve Internet speeds and coverage, said Tommi Uitto, head of western Europe for Nokia’s network division, which raised a long-term earnings target last week.
“It’s not just a one-off, not just one quarter,” Uitto said in an interview this week. “Strong deal momentum” is set to help revenue in the coming quarters, he said.
STORY: Three Ways Europe Could Solve Its Youth Unemployment Crisis
Nokia, Ericsson AB (ERICB) and Alcatel-Lucent SA (ALU), the three largest European network suppliers, are among companies using an investor conference organized by Morgan Stanley this week to reassure investors the worst is over for the industry. Vodafone Group Plc Chief Executive Officer Vittorio Colao said at the event in Barcelona that demand is coming back, even in some of the weakest markets such as Greece and Italy.
Deutsche Telekom AG plans to keep up its level of network investments beyond next year as it starts rolling out more fiber connections and upgrades networks in eastern Europe, according to CEO Timotheus Hoettges.German Discounts
Phone companies are selling combinations of fixed and mobile services in a bid to generate more revenue and prevent customers from switching to rivals. In Spain, communications companies that added a new service, such as mobile, sold it at a discount, while in Germany, there’s been less of a markdown, Colao said. The temptation to use the bundles as a way of cutting prices could jeopardize profit, Colao said yesterday.
VIDEO: N.Z.'s English Says Kiwi in Mid-to-High 70s Sustainable
That would in turn affect carrier’s appetite to upgrade their networks.
Nokia said last week that it now expects adjusted operating profit for its networks unit at 8 percent to 11 percent of revenue in the long term, compared with a previous target of 5 percent to 10 percent.
Nokia’s networks sales in Europe rose 9 percent last quarter, while larger Ericsson’s revenue in western and central Europe increased 6 percent. Vodafone, which reported a smaller decline in service revenue than analysts estimated, is the latest carrier to show improvement after years of price wars, as rivals from Germany’s Deutsche Telekom AG to France’s Orange SA also exceeded estimates for the most recent period.Vodafone is spending 19-billion pounds ($30 billion) as part of its Project Spring network-investment plan to roll out more high-speed fourth-generation mobile and fiber-broadband infrastructure. The project will run through 2016.
The rebound in operator spending in Europe follows other regions, such as South Korea, Japan and the U.S., where carriers have focused on speedier fourth-generation networks, Uitto said.
“4G rollouts are accelerating finally in western Europe,” Uitto said at Nokia’s headquarters in Espoo, Finland. “It’s a catch-up compared to the rest of the market.”
STORY: 2015 Global Economic Outlook: Better Than 2014—but Not By Much
Demand for wireless-network gear will grow an average of 2 percent to 4 percent each year through 2017 globally, Ericsson projected last week.
The market is improving after several difficult years. Ericsson announced two years ago it was reducing almost 10 percent of its Swedish workforce to boost profit. Nokia Chief Executive Officer Rajeev Suri slashed more than 25,000 jobs while he was head of its networks business to revive the company after years of losses.
Nokia shares rose 0.4 percent to 6.22 euros at 1:10 p.m. in Helsinki. They have gained 6.9 percent this year, valuing the company at about 23 billion euros ($29 billion).
HERE, a leader in navigation, mapping and location experiences, today launched Predictive Traffic, a new traffic forecasting product that can anticipate future traffic conditions in real-time.
HERE Predictive Traffic considers over 100 different traffic behavior profiles per road segment to provide up to the minute traffic forecasts as far as 12 hours into the future. HERE devised a proprietary mechanism that selects the appropriate profile from this exhaustive collection, and combines it with real-time conditions to provide travelers with the best travel time estimates for their destination. Drivers using Predictive Traffic saw estimated arrival times that were up to 20% more accurate for journeys over 30 minutes in length.
Automakers, transportation agencies and other companies can build applications that seamlessly integrate HERE predictive traffic data across all screens. Pre-planned trips could be synced to the cloud, for example, allowing for automatic integration with the car and real-time notifications via connected devices. Dynamic message signs on highways could broadcast better travel times to the public.
Predictive Traffic demonstrates how HERE is using its expertise in predictive analytics and cloud computing to create solutions for connected cars today, and lay the foundation for autonomous vehicles tomorrow. The product will initially be available to OEMs in the U.S., Canada and Germany.
HERE has the most comprehensive traffic portfolio in the industry. In addition to Predictive Traffic, HERE Real-time Traffic is available in 43 countries and historical traffic data are available in 81 countries. HERE also collects more than 70 billion probe points per month and has collected more than 1.3 trillion historical probe points over the past decade."With HERE Predictive Traffic, businesses and ultimately consumers will benefit from having the most accurate, real-time traffic forecasts at their fingertips," says Ogi Redzic, Senior Vice President, Connected Driving HERE. "With Predictive Traffic, drivers will learn of delays in advance and be able to plan around them. The most important thing is that people spend less time in traffic."
HERE will be demonstrating its Predictive Traffic product at the American Association of State Highway and Transportation Officials (AASHTO) annual meeting in Charlotte, North Carolina starting today.
Nokia has plenty of enthusiasm, but unfortunately for the resurgent Finnish vendor it's certainly not infectious.
On Friday, at its first capital markets day since 2009, the company forecast an improvement in sales and profit margins for 2015 and then watched its share price slump by almost 5% to $7.86 on the New York Stock Exchange in the hours after its announcement. (See Nokia Lays Out Financial, Strategic Plans.)
It may have been Rajeev Suri's overuse of the word "flattish" to describe the market outlook that spooked investors. Clearly, some do not share the confidence of the company's CEO that Nokia Corp. (NYSE: NOK) will grow "slightly faster" than other players, winning market share from rivals big and small. Nor did financiers take heart from Suri's prediction that Nokia Networks , which generates the majority of the company's revenues, will deliver an operating margin of between 8% and 11% next year, up from an earlier prediction of between 5% and 10%. (See Nokia Ushers In New Era, Retires NSN Name for Nokia's business unit structure.)
One problem may have been that Nokia raised its guidance just a day after Ericsson AB (Nasdaq: ERIC) lowered its own forecasts for market growth and promised to slash annual expenses by $1.2 billion. (See Eurobites: Ericsson Plans $1.2B in Cuts.)
Unlike its Swedish rival, Nokia is hopeful it can avoid any layoffs as it trims costs, but Suri refused to rule them out. "You just don't know, but we can certainly realize efficiencies through better management," he told journalists.Smaller rivals and IT upstarts could threaten Nokia's interim prospects, the CEO acknowledged. He insisted, however, that consolidation in recent years has eased some pricing pressure in the equipment market by reducing the number of global players to just three: Nokia, Ericsson and Chinese vendor Huawei Technologies Co. Ltd. . (That's a perspective that will be noted at Alcatel-Lucent (NYSE: ALU).)
Following the sale of its handsets business to Microsoft Corp. (Nasdaq: MSFT), Nokia is by far the smallest of this trio, based on reported 2013 revenues. (See Microsoft Officially Closes Nokia Buy, NSN Braces for Tough Start to 2014 and Ericsson Flatlines in 2013, Trails Huawei.)
But Suri reckons it can poach market share from both ends of the industry by targeting opportunities in areas such as LTE, small cells and virtualization. "In Korea we've previously taken market share from the largest players, and in Japan we've taken it from the smallest players," he noted. "We need to build in areas where we are strong today as well as expand into new adjacencies."
Indeed, according to data from market-research company Dell'Oro Group , Nokia managed to increase its share of the LTE market substantially in the third quarter (see table below).Table 1: Shares of Global LTE Market Held by Leading Vendors
Ericsson Huawei Nokia Alcatel-Lucent ZTE Samsung
Market share in third quarter 26.9% 22.7% 19.6% 13.7% 6.5% 5.3%
Change versus second quarter -1.4% 0.8% 5.7% -4.8% -1.1% 1.1%
In addition, its recent financial performance has also been encouraging. Net sales were up 13% in the third quarter, to US$4.12 billion, compared with the same period last year, while operating profits at Nokia Networks rose from $272 million to $497 million during the same period. Ericsson, by comparison, flagged a 9% increase in third-quarter revenues, to $7.8 billion, but an 8% drop in operating profit, to $528 million. (See Eurobites: Born-Again Nokia Blooms in Q3 and Global Reach Helps Ericsson Grow in Q3.)
One positive is the solid position that Nokia has carved out for itself in China, where it recently signed a major 4G deal with China Mobile Ltd. (NYSE: CHL), the country's biggest mobile operator, worth $970 million. Yet it has looked relatively weak in other parts of the world, lacking major radio deals with the main service providers in the US, for instance. (See Nokia Networks Unveils $970M 4G Deal With China Mobile.)
As Suri was quick to point out, "adjacent" opportunities could also include areas such as 4G-based public safety systems. "We've focused on that in North America but could reach government customers in other parts of the world with the right channel partners," he said.Another priority is turning around the underperforming Global Services outfit, whose revenues shrank by 5% in the third quarter. By addressing "pockets of growth," such as network optimization, managed services and systems integration, Nokia aims to bolster its performance in future.
By then, 5G could be well on its way. Talking to Light Reading on the sidelines of the capital markets day event, Hossein Moiin, the CTO at Nokia Networks, said his aim was to roll out a "pre-standardized" version of 5G in South Korea by 2018 and a "pre-commercial" service in Japan by 2020, in time for the Tokyo Olympics that year. A leadership position in this area, of course, might help Nokia to secure future radio business in some of the markets where it currently lags behind its rivals.Until that happens, Moiin is optimistic that operator spending on LTE-A will fuel revenue growth in markets where LTE has already taken off. The transition to the higher-speed technology will be similar to the earlier shift from 3G to HSPA, he says, while downplaying concern that margins may suffer because the upgrade will again mainly involve a software modification, and relatively little work on the hardware side. "We're now really a software company," he told Light Reading. "The shift from 3G to HSPA was more pronounced because we weren't [a software company] at that time."
Nokia's software expertise will be critical to the fortunes of its HERE digital mapping unit, which broke even in the third quarter but could "do better," according to Suri. That will mean standing up to competition from Google (Nasdaq: GOOG).
In the meantime, the Nokia Technologies business remains under pressure to monetize its substantial patents portfolio. It has indicated that operating expenses will rise "meaningfully" in 2015 as it continues to work on developing "licensable technologies."
"It will take time for those opportunities to come to fruition and I would suggest caution when it comes to timing," said Suri.
If he can deliver on the other parts of his strategic vision, the investment community may be willing to wait.
NOKIA CORPORATION: ACQUISITION OF OWN SHARES 17.11.2014 Date 17.11.2014 Exchange transaction Buy Share class NOK1V Amount 807 206 Average price/share 6.1942 EUR Highest price/share 6.2700 EUR Lowest price/share 6.1500 EUR Total price 4 999 995.41 EUR - See more at: http://globenewswire.com/news-release/2014/11/17/683863/0/en/NOKIA-CORPORATION-ACQUISITION-OF-OWN-SHARES-17-11-2014.html#sthash.gTLeNxrT.dpuf
Don't call it a comeback yet. But Nokia is thinking about how to revive its brand name in consumer markets just months after selling off its former flagship mobile phones business to Microsoft for more than $7 billion.
"I think you can expect our brand will return to the consumer world," Nokia's chief executive Rajeev Suri said on Friday when asked about rumours that the networks equipment maker was looking to re-enter the handset market.
Suri told investors at a presentation in London that his company will look to licensing the brand name to other firms rather than starting up a new handset business itself.
"We see brand licensing as an opportunity ... But I would say it is more of a long-term opportunity," Suri said of potential deals where other makers of consumer electronics might pay Nokia to use its brand on their products.
Another company executive on Friday pointed to Porsche Design as an example of the sort of brand-licensing deals Nokia might consider.
No deal is imminent but the Nokia brand could eventually appear on a range of electronics, not necessarily phones. "This is not a sentimentality thing," Suri said.
Microsoft this week dropped the Nokia name on its latest Lumia 535 smartphone, having acquired the Nokia business back in April.
Nokia was once synonymous with mobile phones but the brand's ranking sank to 98th this year among the world's best known corporate names, down from fifth in 2007, according to a survey by market researcher Interbrand.
The slide came after first Apple Inc and then Samsung Electronics entered the smartphone market to successfully challenge the Finnish company's decade of market leadership.
Good question could not tell you do not have my crystal ball handy :) Do you own Alibaba? Tempted to buy just do not like Chinese Companies.
Nomura analysts Stuart Jeffrey and Woo Jin Hoo noted that the “surprisingly strong revenue turnaround" of Nokia Networks seems to improve the sustainability of marginsNokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) showed a turnaround sustainability with its solid financial results for the third quarter driven by the excellent performance of its Networks business.Nokia continued to beat estimates
In a note to investors, Nomura Global Markets Research analysts Stuart Jeffrey and Woo Jin Hoo noted that Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) continued to beat the expectations of Wall Street analysts after reporting excellent 3Q results.
Nokia Networks posts surprising revenue growth
The sales performance of its Networks business was 11% higher than expectations while its operating margins were 2% above estimates. According to Jeffrey and Hoo, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) seemed to have increased the likelihood of sustaining high margins.
During the third quarter, Nokia Networks posted 13% revenue growth year-over-year or 15% growth quarter-over-quarter. Jeffrey and Hoo described it as “surprisingly strong revenue turnaround,” that seems to improve the sustainability of margins.
According to Jeffrey and Hoo, the progress of the Networks business of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) “highlights sustainability of turnaround.”Jeffrey and Hoo said they raised their valuation for Nokia Networks is in line with Ericsson (ADR) (NASDAQ:ERIC). The analysts estimated that the company’s market share increased 4pp qoq in the third quarter. However, they expected a limited upside on the company’s stock.
“Networks accounts for just 50% of fair value and is now at industry-leader multiples, seemingly limiting the scope for much upside. The rest of Nokia’s valuation consists of items with limited valuation volatility (cash, deferred tax assets and mapping) or where any changes in valuation are likely binary and still some way from resolution (patent licensing),” according to Jeffrey and Hoo.
The analysts maintained a Neutral rating for Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) with a target price of #$%$6.79 or $8.55 per share.
Nokia remains a mixed bagOn the other hand, analysts at Bernstein Research emphasized that Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) remained a mixed bag with a truly successful Networks business and standstill HERE maps and Technologies businesses.
Bernstein Research analysts Pierre Ferragu and his colleagues noted that the Nokia Systems and Networks business continues to outperform, but HERE made no profits. Nokia Technologies delivered lower than expected operating profits for the third quarter.
Ferragu and his fellow analysts said the shares of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V ) remain “un-actionable” and they not perceive catalysts over the near-term.
“Today’s margins and near-term expectations are the higher end of the range, which makes the stock unattractive for now,” according to the analysts. They have a Market perform rating for Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V ). They raised their price target to #$%$5.50 per share to reflect a potential deal with Alcatel Lucent SA (ADR) NYSE:ALU).
We just reported about Nokia assessing re-entry into world of mobile phones and devices, once the Microsoft-Nokia agreement, that stops Nokia from pursuing smartphone in near-future, is over. Now, Nokia Twitter account has teased “Nokia story continues” and asks to stay tuned as “More updates soon”. The tweet also features the link to earlier Nokia post in reply to misleading reports of “Nokia brand getting killed”.
Things are really moving fast now and most of us Nokia fans want Nokia back in the mobile phone game. While many wonder about feasibility of such decision given Nokia’s D&S division and all resources are now with Microsoft. But you may like to read how Nokia has already moved some key people to a new team, before the deal was officially announced. You can read more here.It seems Nokia had started planning for impending Nokia-Microsoft deal in advance by shifting some of its top designers and highly-skilled team from D&S division to emerging devices team in CTO office. This team never existed in past, so it is easy to assume that it was a vehicle to retain the talented few with Nokia and the team had names like Peter Skillman, Hans Peter Brondmo, and Axel Meyer. Now all of them are part of HERE. Similarly, many joined Nokia Technologies team too.
We will analyze the situation with some input from our sources soon, but it seems Nokia management has made up its mind and Android is the way!
Exchange transaction Buy
Share class NOK1V
Amount 723 000
Average price/share 6.6387 EUR
Highest price/share 6.69 EUR
Lowest price/share 6.605 EUR
Total price 4 799 780.10 EUR
The shares held by Nokia Corporation on 28.10.2014
NOK1V 67 509 548
Exchange transaction Buy
Share class NOK1V
Amount 750 000
Average price/share 6.6267 EUR
Highest price/share 6.74 EUR
Lowest price/share 6.51 EUR
Total price 4 970 025 EUR
Earlier this year the purchase of Nokia’s devices and services division was completed by Microsoft. The Redmond-based software giant has even phased out the Nokia branding from smartphones, even though it is sticking with Lumia. As part of its agreement with Microsoft, Nokia can’t re-enter the smartphone market for a couple of years, but it looks like the option hasn’t been taken off the table for when the restriction is finally lifted.
One thing that Nokia undoubtedly enjoys is brand recognition. The company’s name is nothing short of iconic and is synonymous with well-built devices around the world. It has even more recognition in emerging markets where Nokia’s low-end feature phones have ruled over the market for years.
During its conference call for the company’s third quarter report, Nokia reiterated that it recognizes that “Nokia brand is the most valuable recognition perspective in the area of mobile phones and mobile devices.”
As previously mentioned Nokia is the lock-up period with Microsoft which bars it from using the brand in the smartphone market and that is expected to end in 2016. Once that happens perhaps Nokia will think about returning, that will certainly make a lot of its fans happy.
But its easier said than done. Nokia gave up all of its talent and human resource to Microsoft under the deal. Not only will it have to build up that capacity once again, it would also require significant capital to capture the market against the likes of Apple, Samsung and the plethora of Chinese companies dominating the low end.
It will be interesting to see if Nokia decides to do this again, and whether it takes the easy route of adopting Android and then coupling it with sturdy hardware that it is best known for.