Under Nokia's plan to sell its mobile-phone business to Microsoft for $7.2 billion, the company will lose its biggest tie with consumers. So what would the new Nokia look like?
Very different. It'll have three businesses, and only the smallest, the Nokia Here mapping service, will be something the average person might see when using a smartphone app or in-dash car navigation system.
The other two businesses are Nokia Solutions and Networks (NSN), which sells network equipment to 600 carriers in 120 countries, and technology licensing, which includes Nokia's patent lawsuits against Google, HTC, BlackBerry, and others. A patent license with Microsoft was a major part of Monday's deal, too, with Microsoft paying Nokia a net amount of $2.2 billion for a license.
Selling off the phone business -- a deal expected to close in the first quarter of 2014 after clearing regulatory approval -- won't be the first big change for Nokia, though. It got its start in 1865 as a paper manufacturer, expanded into tires in 1898, became an electricity supplier in 1910, and started its radio business in 1963.
Patents a "big business"
In a conference call Tuesday, Nokia executives repeatedly pointed to the patents as an important part of the company's business, saying that more than half of them came from the company's research group, not from the the mobile-phone business that it's selling.
"Our patent portfolio remains a source of tremendous value going forward," said interim CEO Risto Siilasmaa. "We think we have a good patent generation capability."
The company has patents in connectivity, sensing, materials, Web technology, and cloud computing, Nokia said. It released these details about the assets:
Approximately 10,000 patent families comprising approximately 30,000 patents and applications
Approximately 1,200 patent families are declared essential to communications standards with more than 40 licensees
Approximately two thirds of our current patents will still be in force in 10 years' time.
As a fraction of Nokia's profits, "technology licensing is a big business," Siilasmaa added.
NSN, originally a joint venture with Siemens, had revenue of 2.7 billion euros, or $3.6 billion, in the second quarter of 2013. The Here business was less than a tenth of that, at $307 million -- but unlike NSN it grew from the first quarter.
The Here technology is used in four out of five cars with in-dash navigation, Nokia said, with auto-industry customers including Continental, Toyota, Audi, VW, BMW, Volvo, Ford, Hyundai, Chrysler, Mercedes Benz, and Kia. Other customers are Microsoft, Yahoo, Amazon, Firefox, Qualcomm, and Garmin, Nokia said.
There's a lot at stake for Microsoft, too, of course.
If Microsoft's acquisition of Nokia's mobile-phone business fails, Microsoft will have to pay Nokia a fee of $750 million, Nokia said.