Nokia may be returning to the smartphone market in 2016, according to a post by Recode. This may come as a bit of a surprise with the recent sale of the Nokia phones division but according to Nokia’s contract with Microsoft they only have to not sell mobile phones until 2016. If Nokia does make a comeback to the crowded mobile marketplace it may be as a very different looking company.
Nokia’s strength as a mobile phone manufacturer and high brand recognition are key reasons to why Microsoft bought them in the first place. After their now sold off line of mobile phones, their next most recognizable product is HERE Maps, at least for the moment. Considering that they may be without their two most recognizable products, Nokia seems to be looking elsewhere.
Recode reports that Nokia looks to rebound through licensing out technologies. Nokia has the rights to over 10,000 patents and companies can make massive profits from licensing out patents. For example, despite having their own line of mobile phones, Microsoft makes large sums of money from patented technologies that Samsung uses in their mobile phones.
However, the plan that Nokia may follow in the mobile phones market is different than how Microsoft makes money off of patents. According to Recode, Nokia would “Design cool products and then license the designs and Nokia brand to a company that will not only do the manufacturing, but also be responsible for sales and distribution” (emphasis added). This approach would place the responsibility of physically making and successfully selling Nokia branded phone with a company other than Nokia itself.
Nokia has an advanced technologies division that to some extent has already implemented this strategy through the N1 tablet, sold in China. That same division would be involved in the designing of new mobile phones. While Nokia is allowed to sell mobile phones starting next year under their contract with Microsoft, they would have to wait until at minimum the third quarter of next year to license out the Nokia brand.
The other main branch of the future of Nokia, their wireless network gear, has less details revealed at the moment but could prove to be quite lucrative. Nokia’s reported purchases of Alcatel-Lucent is worth $16.6 billion. Companies generally don’t spend that type of money unless they expect a more profitable return of investment.
The new look of Nokia is drastically different than what we as consumers may be used to but that does not indicate failure. If Nokia can smoothly transition from a mobile phone manufacturer to a successful technology licensing and network gear company, they will have succeeded where many others have failed.