Sci & Tech

Nokia Denies Smartphone Reentry

Nokia Denies Smartphone Reentry
Nokia Denies Smartphone Reentry

Sorry Nokia fans, it seems Finland's once mighty phone maker has denied reports that it is looking to reenter the cut-thought smartphone arena next year.  

Engadget reported on Monday that "Nokia noted recent news reports claiming the company communicated an intention to manufacture consumer handsets out of a R&D facility in China.

"These reports are false," Nokia said in a statement posted on its website. "Nokia reiterates it currently has no plans to manufacture or sell consumer handsets."

However, Nokia has said it is looking into returning to the smartphones business by brand-licensing. The Helsinki based firm sold its phone business to Microsoft last year, but just months after that it launched a new brand-licensed tablet computer, produced under license by Taiwan's Foxconn, with an intention to follow up with more devices.

Nokia has agreed with Microsoft that it will not enter the mobile phone business before 2016.

"It would be crazy not to look at that opportunity. Of course we will look at it," Sebastian Nystrom, the head of products at Nokia's Technologies unit, told Reuters in November. Nokia this month announced a takeover of France's Alcatel-Lucent, a bid to boost its network equipment business against Korean and Chinese growing competition. The company also said it may sell-off its map business called HERE, which has reportedly drawn interest from carmakers like BMW who use their service as well as Facebook and online taxi service Uber.

There is almost no way for a relatively small company with a high operating cost model like Nokia to prosper in the mobile phone business currently.   The smartphone division was already collapsing when they bought out by Microsoft.  Nothing has improved in the market since. Competitors like Samsung are also feeling the pressure with a string of their flagship phones flopping one after another. Chinese smartphone makers have also added to the stresses of the traditional phone manufactures with their cheaper but often similar phones.  

It makes a lot of sense for Nokia to focus their resources where they can have some competitive advantages based on their research capabilities.  Licensing schemes, like the one they used for the N1 tablet may actually detract from their brand value in the long run. Mobile phones are becoming increasingly a commoditized item with even Apple facing margin pressure over time as fewer people think they must have their latest geek fashion accessory.

Microsoft may actually have the last viable strategy for gaining market, by going to the low-end and grabbing emerging market buyers like India, Iran and China who need smartphones but need it to be relatively cheap, while still being supported by a mainstream company.