Nokia wants back into the mobile phone business?

Plans for next year may only be about licensing technology and the Nokia brand, not manufacturing

nokia

Nokia sold off its mobile phone business to Microsoft last fall, but now one of Nokia's remaining business units is eyeing a return to the consumer mobile phone market next year.

Nokia Technologies, which controls thousands of technology patents, plans to re-enter the mobile phone market in 2016, according to unnamed sources cited by Re/code.

Such plans would be ambitious, especially given the super-competitive global smartphone and feature phone market. It isn't clear precisely what Nokia Technologies is up to, and at least two analysts are skeptical it will work.

"People loved Nokia [in previous years], but I am not sure consumers will think that this is the same Nokia," said Carolina Milanesi, chief of research for Kantar WorldPanel ComTech via email. "From a business perspective, it will be hard to see how they can be competitive against white box players."

It is also hard to see how devices will fit into Nokia's overall business strategy, she said. Milanesi assumed the devices would be built on the Android platform, but that hasn't been confirmed.

"The Nokia brand is a well-recognized brand, but I would think their re-entering the phone market is not going to happen," added Jack Gold, an analyst at J. Gold Associates.

"They certainly will be fighting an uphill battle," said Jitesh Ubrani, an analyst at IDC. "Nokia doesn't have the brand catchet it once had and the phone market has gotten increasingly competitive as Chinese vendors like Xiaomi, Huawei, ZTE, etc., continue to gain share of wallet and mind, while driving down prices."

Under terms of the $7 billion sale to Microsoft, Nokia can't sell any phones under the Nokia brand through 2015 and can't license the brand until the third quarter of 2016.

In some respects, Nokia's plans make business sense, especially if Nokia Technologies only licenses novel technologies -- such as virtual reality -- to fit inside another maker's phones.

So far, it doesn't appear that Nokia would manufacture any phones, but would instead design products and license those designs and the Nokia brand to other companies. The N1 Android tablet from Nokia Technologies was licensed to a Chinese manufacturer under that scheme.

Last week, Nokia announced the purchase of Alcatel-Lucent for about $16.5 billion in what analysts described as an ideal combination of the two companies' networking equipment patents to face global competitors. Nokia also said it may divest itself of its Here navigation business, which would leave it with the networking equipment and Nokia Technologies divisions.

In announcing the deal with Alcatel-Lucent, Nokia said it would keep Nokia Technologies as a "separate entity with a clear focus on licensing and the incubation of new technologies."

Nokia didn't respond when asked to comment on the Re/code story.

If Nokia licenses only phone designs to get royalty payments, the risk would be minimal to Nokia, Gold said. "It's incredibly hard to make money" making phones, he added.

If Nokia does license its brand and designs to others, the resulting devices will likely be sold in emerging countries, rather than going head to head with Apple and Samsung, he said.

This story, "Nokia wants back into the mobile phone business?" was originally published by Computerworld.

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