Nokia and Microsoft’s road to division


Nokia, previously known as the most favored brand in the mobile phone business with more than 40% market share is now at its worst in the business.

IDC’s smart-phone shipments figures describe the shipment of 216.2 million smart-phones for the first quarter of 2013 in which Nokia shipped less than 5.6 million units, contributing only 2.6% in the total business.

This contribution is definitely not a good sign for Nokia.

Lumia accounts for 80% of the shipped smart-phones powered by Windows Phone during the quarter per IDC figures.

Nokia, however is not the only one facing this hitch. There are other names like Motorola and Sony , that don’t even make the top 5 when it comes to the smart-phone marketshare.

Nokia still stands on its feet while Motorola has gone under the acquisition of Google. Sony too has bought out its one-time mobile phone partner Ericsson .

What should Nokia do now?

Nokia’s CEO Stephen Elop’s efforts of selling the company to Microsoft recently witnessed a dead end.

There has also been a babble that Huawei could be a potential bidder for Nokia, but there are questions whether or not Huawei would receive approvals needed to make such a move.

While there could be other suitors — Dell, Hewlett-Packard, or Lenovo Group to name a few — Nokia’s lack of smartphone market share, continued losses and the barely profitable Nokia-Siemens mobile infrastructure business are enough to give the most potential buyers a pause.

With a market cap of $14.34 billion, likely reflecting merger chatter, and the company’s net cash position of $6.36 billion it could be a private equity takeout candidate.

The probability is quite less because Dell is facing troubles with the company going private, but not going private on proposals.

Nokia can only go private if the private equity shapes it up and if it were to carve the company up and sell off what businesses, facilities, technology, patents and other assets that is possesses.

If Nortel’s patent pool went for $4.5 billion to Apple, EMC, Microsoft, Blackberry, Ericsson and Sony, some cocktail napkin math would suggest Nokia’s patent portfolio would fetch a pretty penny as well.

If Nokia dies on the vine, what about Microsoft?

Nokia’s Lumia accounted for 80% of Windows Phone shipments in the March quarter and without Nokia, Microsoft’s share would be sub-1%.

With smart-phones and tablets outstripping PC sales, Microsoft has got to figure these two markets out.

If the Microsoft-Nokia partnership is not delivering the results that Microsoft needs, perhaps it should consider revamping its business model by taking a page from the Google playbook.

Perhaps Apple’s default integration of Bing into iOS 7 and the introduction of Samsung’s new Galaxy S4 smartphone and tablet running Windows are the start of something to watch?

The bottom line

Both Nokia and Microsoft need to swing big to get back in the game. On their current course together, the adage of 1+1 = 2 is looking more like 1+1 = less than 1. That suggests it could be time for Microsoft to cut the line on this once big mobile phone fish that has now shriveled to something more like a smartphone guppy.

From ITvoir News Desk/ Neetu Joshi