Can Nokia Make A Powerful Comeback In 2016?

by Sohini Bagchi    Feb 22, 2016


In the Egyptian mythology, Phoenix is a fabulous bird that lived an extended life, but was consumed in flames, only to be born again with a new start in life. In the business world, Nokia’s untimely fall in the phone segment and likely rise with smartphones can be compared to the Phoenix bird. And in all likelihood, thanks to Nokia Chief Executive Rajeev Suri, who has huge plans to take the company at greater heights.

The Finnish company confirmed at the Mobile World Congress in Barcelona that it’s pressing ahead with plans to sell smartphones. However, Suri is in no hurry. “There’s no timeline, there’s no rush,” said  at a press event. “It could happen in 2016, it could happen later.”

Nokia however today outlined its ambitious plans as a renewed company for leading the development of next-generation 5G technology and the Internet of Things (IoT), targeting an addressable market opportunity that has nearly doubled in size following the acquisition of Alcatel-Lucent.

Reel back on Nokia’s reign in the mobile world began in the early 1990s, which lasted almost nearly 20 years, peaking with consumer favorites like the 3210 and 3310. Around the dawn of the iPhone in 2007, feature phones made by the likes of Nokia started to lose their luster. The company’s popularity waned as Nokia failed to keep up with the smartphone revolution.

Also read: Why Nokia’s Comeback To Phone Biz Will Be Tough

Once a favorite with consumers, sold its devices business to Microsoft in 2014 for $7.2 billion. It has since regained the rights to sell smartphones under the Nokia brand. In the recent past, the only offering from the phone maker was an Android tablet. In July, Nokia hinted it would re-enter the phone market in 2016, but there was not much buzz. This time however, Suri has announced a gamut of plans.

As part of its approach, delivered on the eve of Mobile World Congress, Nokia unveiled a series of announcements - from new 5G and IoT investments to a new 5G-ready product - that underscore the company’s deep expertise in developing the technologies of tomorrow.

“We are planning to dramatically increase our investment in 5G this year and unleash the power of our massive innovation engine,” Suri told a media and analyst briefing.

Flurry of plans

Suri announced a new 5G-ready AirScale radio access product to replace the very popular Flexi base station. Nokia’s acquisition of Nakina, a Canadian software company that specializes in preventing, identifying and eliminating security threats; and the company’s launch of a $350 million IoT investment fund through Nokia’s private venture firm, Nokia Growth Partners.

“We are already at the forefront of making 5G a reality and enabling massive capacity and massive connectivity - this is an integral part of our vision,” Suri said.

“5G must happen fast because important IoT use cases demand it. If we know that 5G can help save lives, improve our environment, and make our lives better, we need to move faster, not slower, Suri said.

With Nokia’s announcements today, Nokia is taking concrete steps to solidify its 5G leadership and demonstrate how it will drive the business forward, he added.

Alcatel-Lucent brings scale, scope

“Progress with integrating Alcatel-Lucent is going smoothly and effectively, avoiding the organizational angst and infighting that have characterized earlier deals,” Suri said.

He added that the combined company is targeting many different cross-selling opportunities and making joint bids to customers around the world. These opportunities are all part of the critical scope that Alcatel-Lucent has given Nokia, Suri said, in addition to greater innovation heft, scale and customer reach.

Also read: Nokia Closes $17 Bn Alcatel-Lucent Deal

“When you put Nokia and Alcatel-Lucent together, suddenly Nokia is in a dramatically different position with an addressable market that balloons to EUR141 billion. What we will be able to offer our customers - and their customers - is, simply, unparalleled,” said Suri.

Nokia and Alcatel-Lucent had combined net sales at the end of 2015 of EUR 26.6 billion, combined R&D spend of EUR 4.5 billion in 2015 with over 40 000 researchers and scientists, and combined net cash of EUR 10 billion. The official “day one” for joint Nokia and Alcatel-Lucent operations was on January 14, 2016.

Ready for 5G and IoT

Nokia said its new 5G-ready AirScale product supports any technology, from 2G through LTE Advance Pro and 5G when it arrives. It also includes a new base station with future-ready baseband and next generation RF elements that will give customers a connectivity experience that exceeds all others. AirScale also uses 60% less energy than the Flexi.

The Nakina acquisition, expected to close in the first quarter 2016, is part of a Nokia priority to have the best network security in place to enable 5G and IoT. The acquisition is consistent with Nokia’s long-stated view to do small, ‘bolt on’ deals that give Nokia new technology and unique capabilities. 

Also read: Nokia Chief Opens Up On Smartphone Plans

The new IoT fund will invest in promising companies primarily around the Connected Enterprise, Consumer IoT, Connected Car, Digital Health as well as technologies with a focus on capabilities in big data and analytics. The fund will support Nokia in defining future business opportunities and the technical underpinnings for the rapidly growing IoT market, according to Nokia chief.

According to a TechCrunch article, Suri believes that Nokia still has tremendous brand recall and people would rush to buy their devices once they start releasing them. He also revealed that the company plans to stick to premium devices as of now. This would mean it would end up competing with giants like Samsung and Apple in the mobile ecosystem once again.