What’s Nokia’s next step?

Nokia today announced that it has signed an agreement to enter into a transaction whereby Nokia will sell its handset business and license its patents to Microsoft for EUR 5.44 billion in cash.

The company plans to use this cash from Microsoft for its three established businesses– NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.

It seems Nokia is planning to transform from a handset company to a software or an apps company and plans to focus on applications related to mapping, location services, sensor and others and plans to use Nokia brand. Focus is also on material technologies as the company has lot of patents which would be handy in the long run for end devices.  With NSN, the focus remains on LTE infrastructure.

The company has not parted with Nokia brand name and plans to use this for a complete suite of applications to be deployed on a cloud model. As per the agreement, Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current mobile phones products.

Under the terms of the transaction, Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems.

Upon the closing of the transaction, Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia’s own mobile devices until December 31, 2015.

The cash will also help in benefiting a lot to Nokia Systems and Networks (NSN) and the company will now actively focus on mobile broadband and delivering innovation to the customers. It is also expected that NSN will focus a lot on software as 4G and beyond world will have a lot of software focus. The company will have to closely compete with Cisco and other carrier vendors to increase its market share.

With its financials looking healthy and with cash in hand, NSN will also look out for few acquisitions in future to help them focus on cloud and customer experience management in a big way.

Commenting on the announcement, Rajeev Suri, CEO, NSN said, “Today marks an important step for our parent company Nokia, and they have our full support. For NSN, it is business as usual. We remain focused on executing our strategy, completing our restructuring and delivering industry-leading innovation to our customers every day.”

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