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Nokia may re-enter smartphone market in 2016

Nokia says there may be a path back to mobile phone manufacturing through a brand licensing model

As Microsoft prepares to make a series of job cuts and swallow a $7.6bn impairment charge relating to the mobile devices and services businesses it acquired in 2014, the business’s former owner and partner Nokia has given its clearest hint yet that it may seek to re-enter the smartphone market.

Nokia Technologies spokesman Robert Morlino said in a statement that the issue over whether or not Nokia could return as a standalone phone maker was complicated because it had sold all of the manufacturing, marketing and distribution capabilities it needed to make phones to Microsoft.

“The right path back to mobile phones for Nokia is through a brand-licensing model. That means identifying a partner that can be responsible for all of the manufacturing, sales, marketing and customer support for a product,” said Morlino.

“If and when we find a world-class partner who can take on those responsibilities, we would work closely with them to guide the design and technology differentiation, as we did with the Nokia N1 Android tablet. That’s the only way the bar would be met for a mobile device we’d be proud to have bear the Nokia brand,” he said. 

The soonest that could happen would be the fourth quarter of 2016, said Morlino, due to an existing agreement with Microsoft.

Failing business

Microsoft took the decision to cut its mobile business in an attempt to develop a “more effective” mobile device portfolio.

Following a lengthy partnership with Nokia, and having failed to gain traction with its own device portfolio and operating system, Microsoft bought Nokia’s mobile business for $7.2bn.

However, Microsoft has also failed to make much headway with Nokia under its wing, having previously cut more than 12,000 Nokia staff as the acquisition weighed heavily on its quarterly results time and time again.

The advent of Satya Nadella’s leadership and his decision to backtrack on many of predecessor Steve Ballmer’s strategic goals – especially around devices – did not help the case for the Nokia business in Microsoft.

“The mobile phone market has gone. Nadella realises this and is focusing on building integrated cloud platforms of services to ‘join up the dots’ of carriers, content and mobile devices,” said Mark Skilton, a former IT consultant and current professor at Warwick Business School.

“Without diagnosing the failing of the Nokia technology platform investment, it’s clear Microsoft don’t have the scaling and user community to support it in a highly competitive market,” he said.

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