Loading...
Legendary Nokia, the handset manufacturer was once the world’s handset maker, according to the Chicago Tribune, and yesterday it sold its business. For many, this is a sad moment, since Nokia’s long and steady decline in light of the smartphone revolution has taken the company’s enterprise value from 200 billion euros in their glory days to 15 billion currently. Their stock price has moved form 65 euros to 1.33 euros, and while they formerly held 40 percent of the handset market they now have only 15 percent of that market, with 3 percent of the smartphone market. The story of Nokia’s downfall is really tied to disruptive technology, and the foresight needed in survive in today’s breakneck pace of technological evolution; which they lacked.
A year ago I looked into the financial history and 10ks of Nokia, and I was happy that they allied with Microsoft, getting some smartphone software into their product portfolio. However it is too little too late. The smartphone market is saturated with Apple and Samsung products, and Nokia’s smartphone is so late that it didn’t make a dent in their market share. As things turned out, the Microsoft alliance didn’t boost the company at all; perhaps it only stalled the inevitable. I had a lot of faith in the smartphone produced by the alliance of Nokia and Microsoft, the Asha smartphone. This was supposed to be the smartphone that brought the technology to the next 1 billion in Southeast Asia and the Indian subcontinent. And it just didn’t pan out. Steven Elop, CEO of Nokia, oversaw that project, its failure, and the slow decline of the company when he took the reigns, and now, as he sells the company. Had I taken a position in the market, I would have gone long Nokia, as I really thought this project had a chance. Luckily, I stayed out of Nokia stocks, and they are currently at a low, and will be absorbed into greater Microsoft.
On Microsoft’s side, they are adding Nokia’s patents and experienced employees into their teams. Microsoft needs hardware, and Nokia’s fire sale was great timing. They comment, “bringing these great teams together will accelerate Microsoft’s share and profits in phones and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services.”
Get JD Journal in Your Mail
Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!
Finland’s Minister for European Affairs and Foreign Trade commented, “for a lot of us Finns, including myself, Nokia phones are part of what we grew up with. Many first reactions to the deal will be emotional.” Finland mourns their company, but as always the tides of technology ebb and flow, and come crashing down to disrupt the coastline of product services that companies hold onto. Customers are always pushing for the further shore, guided by the stars and their own desire for more efficient and capable device/services.
