Wen Wang Xinxi.
On February 1, according to foreign media reports, mobile phone manufacturer HMD announced that it will no longer launch Nokia brand smartphones.
Nokia was disliked
HMD previewed its upcoming product portfolio, which includes smartphones, tablets, and wireless headphones. According to industry insiders, HMD may launch its first private label smartphone at the upcoming MWC2024.
At present, some social media accounts of "Nokia Mobile" have been renamed to "HMD". HMD has said that the company is now ready to enter the market independently and create a new world of telecommunications focused on consumer needs.
Nokia's relationship with HMD dates back to seven years ago, when Nokia and HMD Global reached a partnership to announce the licensing of the Nokia brand to HMD, after which HMD could launch phones with the Nokia logo. On January 11, 2017, HMD officially held a press conference in Beijing, announcing the return of Nokia mobile phones to the Chinese market and the launch of the first model, Nokia 6.
Later in 2018, HMD also launched the Nokia 61 and Nokia 7 and other models. But since then, Nokia has not been able to reverse the decline of both mid-range and flagship models, and the brand has become a tasteless chicken rib that is a pity to be abandoned, and sales have gradually been marginalized.
Now, HMD wants to completely abandon the word Nokia and fully shift the mobile phone production line to its own brand. It seems that Nokia has been completely abandoned, but the essence is that HMD wants to completely cut the Nokia brand, and users cannot have any association with Nokia for HDM mobile phones.
To put it simply, the three words "Nokia" are disliked by HDM.
In fact, it is not for nothing that the Nokia brand is disliked, because Nokia, as the overlord of the feature phone era, its brand label has been deeply bound to the feature phone, and the story of Nokia being defeated by Apple has been applied to various fields to learn lessons and serve as a case of failure.
Therefore, it is understandable that HDM wants to erase the Nokia label.
Nokia's revenue in 2023 has fallen sharply, and the royalty revenue model has suffered a setback
Nokia was disliked, also because of the sharp decline in revenue. After the decline of the mobile phone business, Nokia mainly relied on the communication business to make money. The largest revenue comes from 5G communication services, that is, mobile network services and network infrastructure services. This business occupies 80% of Nokia's market.
In 2021 and 2022, Nokia's revenue performance is very good. In the third quarter of 2022, Nokia's mobile network business net sales increased 12% year-over-year to 285.1 billion euros.
This stems from the fact that after the decline of the mobile phone business, Nokia adopted a series of vigorous mergers and acquisitions to consolidate its own moat in the field of communications. For example, it has merged Siemens Communications, Motorola and Alcatel-Lucent to quickly surpass Ericsson, Cisco and ZTE. At the same time, Nokia began to deploy 5G patents as early as 2018.
In December 2018, Nokia had more than 1,471 5G SEP declarations, ranking second among global communications vendors, accounting for 13%, second only to Huawei's 17%.
As of the end of 2021, Nokia had about 20,000 patent families in the field of mobile communications (each consisting of multiple separate patents), ranging from 2G to 5G technologies, of which more than 4,000 are essential for 5G.
Nokia made a lot of money by making the most of its communications patents. In 2021, patent licensing alone brought Nokia 150.2 billion euros of revenue, about 10.6 billion yuan. According to the financial report, Nokia's net sales in 2021 were 2220.2 billion euros (156.5 billion2.4 billion yuan), with a net profit of 162.3 billion euros (about 11.4 billion yuan). A large part of this profit** is due to patent fees for various companies.
Due to the U.S. sanctions on Huawei, Nokia has almost formed a 5G monopoly in the U.S. and European markets, which has also made Nokia's profits.
Even Nokia has frequently launched patent wars with the patents in its hands, and obtained huge compensation through patent lawsuits, and in 2019, it launched a legal action against Lenovo, claiming that it infringed 20 first-class compression technology patents. In addition, Nokia has also frequently filed lawsuits against Huawei, vivo, OPPO, Samsung and other manufacturers in recent years.
It is worth mentioning that since June 2021, Nokia's global patent litigation against OPPO, vivo and other companies has been very large, covering more than 8 countries and regions around the world, and it has also applied for injunctions in each lawsuit. Even car manufacturers such as Daimler, Toyota, Honda, and Nissan are also unable to escape Nokia's patent stick due to the patent fees for Internet of Vehicles components.
In the past few years, Nokia has won dozens of patent lawsuits, so Nokia's "lying and earning" business has been "stared at".
Nokia has also earned the title of patent troll, and in 2021, the business of patent licensing alone brought Nokia 150.2 billion euros of revenue, about 10.6 billion yuan.
In 2022, Nokia's communication business is still growing rapidly, and patent licensing will contribute 4% of its revenue, and after 2023, Nokia's growth story will come to an abrupt end.
Nokia's financial report showed that the company's net sales and operating profit fell sharply in the fourth quarter and full year of 2023. For the full year 2023, Nokia's net sales were 2225.8 billion euros, down 11% year-on-year; Operating profit was 168.8 billion euros, down 27% year-on-year.
Why? The key is that Nokia's patent litigation to make money is not a long-term solution after all, Nokia's patent war around the world has triggered the vigilance of major enterprises, and companies will naturally not be beaten passively, and many companies have picked up patents for counterclaims.
Chongqing No. 1 Intermediate People's Court made a first-instance judgment in the case of OPPO v. Nokia over standard essential patent royalties, confirming the global licensing rates of Nokia's 2G, 3G, 4G and 5G SEP portfolios - determining the global cumulative rate of 5G standards in the mobile phone industry at 4341%-5.273%, and then confirmed the single license fee for 5G multi-mode mobile phones and 4G multi-mode mobile phones, which is much lower than Nokia's publicly stated 5G patent license flat rate of 3 euros Taiwan's claim: the domestic 5G multi-mode rate is 0$707, 0 for 4G$477.
This is also China's first judgment on the global licensing rate of standard essential patents. OPPO has subsequently expressed its willingness to comply with and enforce the global FRAND royalties for Nokia's patents determined by the court decision.
This is undoubtedly a major setback for Nokia, which wanted to increase the price through litigation, but instead contributed to the creation of the 5G rate standard, which is not an exaggeration to say that this is the biggest setback for Nokia compared to the previous failure.
Clearly, the changes in the Chinese market are a reflection of Nokia's gradual global failure in patent litigation. Nokia's patent litigation in other markets around the world is also failing.
One change is that Chinese companies have changed from passive in the past to active in the past, and continue to consolidate their patent walls overseas. So far, among the 14 patents filed by Nokia against OPPO in Germany, 8 have been suspended by the court due to validity issues, 1 has been ruled invalid, and 2 have been ruled non-infringing. In addition, a number of Nokia's patents have been found invalid in the European and Chinese patent offices. Nokia's five patent cases against OPPO in Indonesia have also been dismissed by local courts, and Nokia has been ordered to bear all litigation costs, and Nokia's appeal has also been rejected by the Indonesian Supreme Court.
So, when Nokia can no longer survive through patents, Nokia's decline is truly revealed.
Originally, after the failure in the era of smart phones, Nokia seized the straw of the 5G era and had the opportunity to turn around, but Nokia did not consolidate its patent advantages and product innovation capabilities in the 5G era, compared with giants such as Huawei, it is obviously slow in 5G patents, technology research and development and market strategy. Huawei's 5G patent is still the first, but Nokia has fallen from second to fifth, and has been overtaken by Samsung, Qualcomm and Ericsson, and the accumulation of 5G patents by domestic players such as ZTE and OPPO has gradually kept up. OPPO rose to eighth in the rankings.
Therefore, from the current point of view, as the peers grow, Nokia's 5G patent advantage has been further reduced.
At present, Nokia's patent licensing business and main business are very weak, the demand for its next-generation 5G equipment is weak, the mobile network business is also challenged, and the weak spending of operators has had a negative impact on the IP network and fixed network business, and many investors have gradually lost patience and confidence in Nokia.
Revelations and lessons from Nokia's snooze again
Judging from the current situation, Nokia, which is still lying down and making comfortable money, seems to be napping again.
If Nokia's first failure is because Microsoft pits Nokia, then this time the big decline stems from Nokia's own lack of progress, over-indulgence in patent wars, patent licensing business contributed 40% of profits, Nokia is still lying down to make money after losing the mobile phone business, but also wasted its competitiveness in the mobile communication business.
The weakness of its next-generation 5G equipment is essentially that customers don't buy its products. HMD's abandonment of the Nokia brand means that Nokia is not only experiencing a sharp decline in business profits, but also experiencing a crisis in brand reputation.
As the tears of the times, Nokia undoubtedly taught people another lesson, as a communication giant with a large number of patented technologies, but did not develop new business in the era of emerging technology and the Internet of Things, always relying on patent licensing and patent litigation to make money, which is essentially a kind of lazy government, how to make money quickly, how to be comfortable.
Like Nokia, Huawei, once a communications giant, has expanded its business from the communications business to many fields, from mobile phone business to smart car business to EPR software, cloud computing, operating systems, and even whole-home intelligence, continuously expanding the depth and breadth of its business.
After Huawei's mobile phone business was sanctioned, it gradually made the smart car business a new trump card, applied technology to new product fields in the new outlet, and rose again in a new tuyere marketIn recent years, Nokia has been squeezing surplus value almost around the patents in hand, and Nokia obviously lacks motivation and determination to develop new businesses.
Nokia seems to be the same Nokia, and it may be reasonable to be abandoned, but if our enterprises, especially giants, want to learn a lesson from Nokia, then it is very important that if we want to get rid of the label of the old era on our own body and get rid of the burden of the old battlefield, the key is to find a new rhythm and direction, and rise in a new way in a new outlet, which may be a very important strategy to get rid of the brand "backward and outdated" label.
Nokia's stubbornness in the old battlefield is not wrong, but Nokia obviously did not make new achievements in the old battlefield, which may be an important reason why Nokia has never torn off the brand label of "feature phone" on its body, which may also be the key for HMD to completely strip off Nokia.
Author: Wang Xinxi, TMT Senior Commentator This article is rejected without permission**.