Where is Nokia's future?

After the Nokia mobile phone and other business units were acquired by Microsoft, Nokia and its new quarterly earnings report were announced this week. The equipment and services business (the part sold to Microsoft) that is most concerned about in the industry has performed well and is quite outstanding, and the sales volume of Lumia series smart phones has increased significantly.

The current acquisition contract has not yet been completed. If everything goes smoothly, Microsoft’s acquisition of Nokia’s mobile phone business will be completed early next year.

Microsoft's "takeover" ahead of schedule Nokia Mobile's current acquisition contract has not been completed and Nokia's mobile phones and tablets can still independently plan its products. However, due to the general trend in the future, in this sensitive period, Nokia will almost certainly consider Microsoft's opinion on the introduction of new products.

As early as the beginning of the acquisition in early September, there was news that Microsoft asked Nokia to reduce its touchscreen low-end "Asha" mobile phone product plan in the second half of the year and focus on the Lumia series equipped with Windows Phone system. Although the two sides did not confirm the authenticity of the rumors, but from the financial report point of view, Nokia's focus is indeed shifting.

In the third quarter, the sales volume of Lumia smart phones reached 8.8 million units, far exceeding the 2.9 million units in the same period of last year, setting a record high. Over the past year, Nokia has adopted a machine-sea tactics on Lumia and launched a variety of Windows Phone handsets. This undoubtedly promoted sales growth. Similarly, compared with other mobile phone brands, Nokia covers the widest range of people, different price design, a very targeted response to stimulate the entire market.

On the other hand, sales of non-Lumia equipment fell in the third quarter, which was 55.8 million units, which was much lower than the 76.6 million units in the same period of last year.

Although Microsoft acquired the entire Nokia mobile phone team, there are various signs that Lumia is the strategic core of Microsoft.

From the financial report point of view, Nokia chose to shrink the volume, at the expense of revenue, to achieve asset optimization and stop loss. This quarter's operating profit reached 118 million euros, compared with a loss of 564 million euros in the same period last year. The biggest contributor to the losses was the equipment and services division that was sold to Microsoft—the loss dropped from 672 million euros to 86 million euros.

If this trend continues in the next quarter, it is very likely that Nokia’s mobile phone division will be profitable before Microsoft completes the acquisition. For Microsoft, the acquisition of Nokia's mobile phone business is a strategic choice, but from now on, this asset that is not yet in its hands is adding value. Microsoft will gain immediate benefits beyond its long-term strategy.

Elop's tangled original Nokia CEO Elop is currently the executive vice president of the equipment division, and will also be responsible for Microsoft's hardware and equipment division. He will face a new test - how to plan Nokia's coincidence with Microsoft's products: Tablet PC.

If it is said that the acquisition of mobile phone divisions is a blessing to Microsoft, Nokia's tablet computers will be in awkward position in the future. According to sources, in September of this year, Microsoft had internal voices demanding that Nokia stop the tablet product development program codenamed "Sirius" to prevent conflicts with Microsoft's own Surface products.

At that time, the Sirius plan was nearing completion, and the details of the two parties' communication and coordination were unknown. However, in the end, Nokia introduced the Lumia 2520 tablet in October. On the same day, Microsoft's Surface 2 was officially launched.

How to balance Lumia and Surface two different brands of flat product line, Elop and Microsoft need to give a clear answer. At present, the price of this generation of products is only 50 US dollars, and did not pull enough product levels. In terms of function, the gap between the two is also very small. This may also not be completed with the acquisition, Microsoft's influence on Nokia's lack of impact.

After the full acquisition, Elop must make a more rational design in the two product line plans in 2014. One of them may be that the Surface series will be promoted to the business office area and grab the notebook market; while the Lumia tablet will be kept at the consumer level, relying on Nokia's brand effect to compete with the iPad.

Microsoft's return to Microsoft, Nokia’s return to the future Although many people compare the acquisition of “Microsoft-Nokia Mobile” with the acquisition of “Google (Microblogging)-Motorola Mobile”, the two are very different.

Prior to Google’s acquisition of Motorola Mobility in 2012, Motorola completed the split of the company from the original Motorola to two separate listed companies, Motorola Mobility and Motorola Solutions. Google’s acquisition of the former is a complete company-level operation. People, brands and patents are packaged once.

Microsoft is different. Nokia did not split ahead. This is only a business-level acquisition. From the details of the outgoing terms, Microsoft got what it wanted, and Nokia left a fortune for the future.

For Microsoft, the takeover case may stem from a simple phone call from CEO Ballmer to Nokia's chairman: "Can we talk about it?" But the moment was a non-witted decision.

In 2012, Microsoft was only 2.6% (IDC data) in the smart phone operating system market, and even behind the BlackBerry. In the Microsoft camp, Nokia's Lumia series accounted for more than 80% of the share, almost alone to support Microsoft's somewhat embarrassing facade. Microsoft is not satisfied with its own performance, but at the beginning of the year inside Nokia, it also heard dissatisfaction with Microsoft's mobile phone system.

If this time, Nokia defected to Google's Android camp, will have a fatal blow to Microsoft's mobile strategy.

Therefore, it is an urgent choice for Microsoft to further consolidate the cooperation between the two parties and even directly acquire. There has always been a voice saying that Nokia has been pitted by Microsoft, but in fact, does Microsoft not affiliate itself tightly with Nokia and there is no way out.

From the results, Microsoft has achieved its goal. Nokia's Windows Phone handset R&D team, product technology, and market share that Nokia has concentrated on in the past three years have been bought directly by Microsoft, and there is no danger of defections, including Elop, who had previously jumped from Microsoft to Nokia.

Microsoft’s coveted Nokia’s additional assets, including the Here’s Map, have only been authorized.

In a word, Microsoft bought Nokia's related parts of itself and nothing more.

For Nokia, they have to say goodbye to the mobile phone business for the time being. From the contract details, the "Lumia" and "Asha" mobile phone sub-brands are all transferred to Microsoft, and for the "Nokia" brand, the details of such instructions: "After the transaction, within 30 months of Nokia banned on the move Nokia brand used in device sales."

If the acquisition is completed successfully, Nokia will not launch any mobile device separately in the short term. But after 30 months, Nokia will likely reopen the mobile phone sector. At least there is no bondage on the contract.

Of course, even if Nokia is no longer involved in the field of mobile devices, his future in system equipment (NSN subsidiary) and Here map is worth looking forward to. For Microsoft, this is also their most hopeful result - Nokia completely withdraws, even if the "Nokia" brand license expires, "Lumia" and "Asha" is still the most orthodox bloodline, can inherit a wide range of Nokia brand loyal consumer.