AS NOKIA prepares to return to the mobile handset market in 2016, TrendForce analysts have provided an updated picture of this volatile and difficult market.
Nokia, one-time mobile phone giant, was out-manoeuvred by the advent of smartphones. It sold the handset business to Microsoft in late 2013, in order to concentrate on making telecoms network equipment.
Under the non-compete deal, Nokia must wait until late 2016 before it can re-enter the handset business. In the meantime, the company is hiring experts, testing new products and seeking sales partners in preparation.
TrendForce says the mobile market is now very competitive, where profitability is extremely difficult to find, and Nokia would be better off licensing its brand and technology to limit its financial exposure.
Alternatively, TrendForce says Nokia should use handsets to shoe-horn its other technologies into the market. Done right, Nokia could prompt the wider market to use certain technologies that require the use of its patented ideas, and thus gain royalty payments.
A strategy could be to leverage the company’s brand strength in the consumer space, especially in geographic areas of growth like the Middle East and Africa, which have been strong regions for Nokia in the past.
By licensing its brand and technology, Nokia reduces its risk in a highly competitive environment, but will also have less control over the quality of devices sold under its brand. Without proper controls, the value of the Nokia brand could erode quickly.
Microsoft has the right to use the Nokia brand on non-smartphone devices until 2020. This means a potential situation where Nokia branded handsets will be available from two different companies for a few years, which could cause consumer confusion.
