Shulou(Shulou.com)11/24 Report--

The original title: "the" Dead "Nokia earns 150 billion a year.

Nokia, which "broke its arm" and "fell off a cliff", is not only alive, but also alive and well.

Although the company can't come up with anything brilliant in every crisis, it can definitely come up with a way that it won't collapse completely, even in the face of a free fall.

And as long as you survive, you will have a chance to pick yourself up.

There is an interesting piece of news reported by the media a few days ago that the State Administration of Market Supervision and Administration is currently investigating the antitrust issue of 5G patent holders such as Nokia in terms of license fees.

The first reaction of many people is, isn't Nokia acquired by Microsoft in 2013? why is it monopolized again?

When Nokia sold most of its proud mobile phone business and some patented technology to Microsoft, it experienced a "free fall" and investors classified Nokia shares as "junk stocks". Many people think it is only a matter of time before Nokia goes bankrupt.

But 10 years later, Nokia is not only alive, but also alive and well.

In early February, Nokia released its 2021 Q4 and full-year financial results. Nokia's net sales in 2021 were 22.202 billion euros (156.524 billion yuan), up 2 percent from a year earlier, and net profit was 1.623 billion euros, or almost 11.4 billion yuan at the exchange rate of the deadline, according to the financial report.

What is the level of net profit such as a screenshot of Nokia's official website?

Zhiyan Consulting has published a ranking list in the "net profits of listed companies in Shanghai and Shenzhen A shares belonging to parent companies", which can be ranked 67th if Nokia is included.

Xiaomi made a net profit of 19.3 billion yuan last year. Meituan worked hard for a year and lost 23.5 billion yuan, while JD.com also lost 4.467 billion yuan. In such a comparison, Nokia is really unknowingly lying down and making money.

Nokia also performed well in the first quarter of this year, with net sales of 5.3 billion euros, or 37.3 billion yuan, and an operating profit margin of 10.9%.

So the question is, what exactly does Nokia, which has lost its "mobile phone", do to make money?

It is not difficult to find out the composition of Nokia's main business in Oriental Fortune. In the first quarter of 2022, for example, there are three main items: telecom equipment supply accounted for 81.77%, enterprise operation accounted for 6.41%, and patent licensing accounted for 5.72%.

The screenshot answer is clear: Nokia is no longer making mobile phones and its focus is on telecom manufacturing equipment, which contributed 17.98 billion euros in sales last year, accounting for 80% of its total performance.

Out of sight, Nokia has become the world's third-largest telecom equipment maker. Huawei ranks first with 28.7 per cent of sales in the global telecom equipment market, Ericsson ranks second with 15 per cent and Nokia ranks third with 14.9 per cent, according to research firm Dell'Oro Group. In fact, as early as a few years ago, Nokia even stabilized Ericsson.

Dell'Oro Group Cartography should know that Nokia only established a complete telecom territory in 2016, when Huawei and Ericsson were two unavoidable mountains in the telecom equipment supply market. The former deployed a global 5G commercial network of 2Universe 3, and its sales revenue exceeded that of Alibaba and Tencent combined, making it the largest telecom equipment provider in the world. The latter is a nearly 150-year-old veteran company that has focused on the telecommunications industry since its birth.

Before that, no company had been able to break through the blockade of the two behemoths, better than Samsung, and Nokia trampled Ericsson underfoot in 2017, second only to Huawei, after rapidly integrating its telecom business.

In addition to the status of the world's top three telecom equipment suppliers, Nokia also has a household name-"patent rogue".

Last year, patent licensing alone brought Nokia 1.502 billion euros, or 10.6 billion yuan.

The point is that patent licensing is a real profit, which is the envy of a lot of hard-working mobile phone manufacturers.

We can't help but wonder, is this still the Nokia that used to be the end of the hero?

I remember that on September 3, 2013, Nokia finally announced that its mobile phone business would be sold cheaply to Microsoft for $7.3 billion.

I also remember that Nokia ranked first in the world for 15 consecutive years, with annual sales of 430 million mobile phones, and the world record of 250 million Nokia1100 sales has not been broken so far, and there are hardly any latecomers.

In my impression, Nokia's last picture is Lumia1020, which is the last flagship machine of an independent brand. After it was merged by Microsoft, there was little news.

But now Nokia is showing signs of Nirvana rebirth.

The almost abandoned telecom business Nokia has fallen from the altar of mobile phones and has been transformed into a telecom equipment supplier step by step. Let's go back to 2006.

At that time, both Siemens of Germany and Nokia of Finland wanted to develop 3G and 4G radio communication technology, which required a lot of investment, but the money needed was too large for the two companies to afford, so the two companies hit it off in 2006. Siemens' network business unit and Nokia Networks (Nokia subsidiary) each invested 50% to establish Nokia Siemens Network Communications (referred to as "NSN Communications"). Nokia owns gold shares, one more than Siemens.

As we all know, the first generation of iPhone went public in 2007, and Apple rubbed Nokia on the ground a few years later, until Nokia couldn't hold on and sold its mobile phone business to Microsoft in 2013.

What you may not know is that there is another big thing going on almost at the same time as Microsoft's negotiations to buy the mobile phone business-Nokia's acquisition of Nokia Communications. Interestingly, at that time, Nokia was thinking of buying and selling.

In fact, Nokia has been planning to sell NSN Communications. Because it is so crappy, expensive, redundant and beaten down by Huawei's cheap equipment in the market, it has lost billions of dollars in the past six years.

Nokia has tried to sell NSN for a long time, but neither Siemens nor Nokia is willing to do so because the bids are too low. In September 2011, the two companies had to invest another 500 million euros in the hope that NSN Communications would make a last-ditch effort.

At that time, the patience of the two companies was really running out, and they had already invested an additional 250 million euros as early as 2009.

However, this "abandoned son", which was disliked by both sides, became the seed of Nokia's renaissance six years later.

On April 1, 2013, Siemens publicly announced that it planned to sell all its shares in NSN Communications.

Nokia also set up a special committee of the board of directors to discuss related issues, and finally came up with three plans:

A plans to merge with Alcatel-Lucent to surpass Huawei by leaps and bounds. After the merger with the listed company Alcatel-Lucent, NSN Communications will naturally become a listed company. Since then, the sale of shares, spotless, all out.

B plans to sell a majority stake in NSN Communications to private equity investors, and Nokia has since become a small and medium-sized investor.

C plans to bring together some investors from familiar Nordic countries to buy out Siemens' stake in NSN Communications.

As can be seen from these plans, at this time, Nokia did not realize the value of NSN Communications, and the way to come up with was either to raise the share price and get out, or to retreat to minority shareholders and fish in troubled waters.

Just at this time, the market environment changed quietly, which saved not only the life of NSN Communications, but also the life of Nokia.

At that time, the booming Internet services demanded more and more bandwidth, which in turn stimulated the demand for a new generation of mobile broadband infrastructure, and NSN Communications began to turn a profit.

CFO Ihamotila at the time put forward a hypothesis that completely changed the course of things:

"what happens if we buy out Siemens and keep NSN Communications?"

It was this proposal that gave the board another possibility beyond thinking, which seemed impossible at the time-to create a new Nokia based on NSN Communications.

In the end, Nokia won NSN Communications at an ultra-low price: a total valuation of 3.4 billion euros and a buy-off price of 1.7 billion euros, of which 1.2 billion was cash and 500 million was bridge financing provided by Siemens.

At the end of October 2013, Nokia finally decided that it would not sell Nokia, because there was little left after the sale of its mobile phone business. Nokia accounted for 80% of its employees and 80% of its operating expenses. Sales also account for 80% of total revenue, and Nokia Communications has become the largest business owned by Nokia.

The business, which was almost abandoned, is now the mainstay of Nokia.

Nokia has grown up to be the only telecom equipment provider in the world to provide 5G network technology to the four major operators in the United States, the three major operators in Japan and the three major operators in South Korea, and it is also the only one that covers all the elements of the 5G network. an equipment provider that includes an end-to-end portfolio of products such as radio, core network, cloud, management, automation and so on.

According to data released on Nokia's official website, so far, the number of commercial orders for Nokia 5G has reached 214. Ericsson has only 142 copies.

Nokia even returned to Fortune 500th with $26.11 billion in revenue in 2017 and has been on the list ever since, ranking 485th in 2021.

Fortune China official website screenshot Nokia has developed so fast in recent years, why do we hear so little about it?

Nokia's market is mainly in Europe and North America, accounting for 34.4% and 28.3% of net sales, respectively, followed by 12.6% in the Asia-Pacific region, according to the data. The market in the Asia-Pacific region is only 1/3 of that in Europe and less than half that in North America.

From 2019 to 2021, Huawei gradually upgraded from being blacklisted by the United States to "Huawei's device suppliers are not allowed to supply Huawei 5G equipment as long as they are related to American technology." Sanctions for three years and four times have closed the door of the North American market to Huawei, and the attitude of the European market is also ambiguous.

Under pressure from the US, the UK government has pushed for the complete removal of equipment from "high-risk suppliers" such as Huawei from the 5G network, banning the purchase of new Huawei 5G equipment after the end of 2020 and removing all Huawei 5G equipment kits by 2027.

Fortunately, countries such as Spain, Portugal, Luxembourg, Austria and the Netherlands are neutral and do not explicitly ban Huawei in legal form.

The difficulty of Huawei and ZTE in European and North American markets gives Nokia and Ericsson an excellent chance to catch up.

On September 29, 2020, Nokia signed a 5G agreement with BT, making it BT's largest infrastructure partner, and the next day announced that it had been selected by Finnish operator Elisa as the national supplier of 5G RAN.

From 2019 to 2020, Nokia's net sales in Europe and North America rose by 1.88% and 2.76%, respectively.

In sharp contrast to growth, Nokia's share of net sales in the Asia-Pacific region fell by 8% from 2019 to 2021. Combined with the US sanctions against Huawei, this is not difficult to understand.

On the Chinese side of the market, according to China Mobile's procurement and bidding network, in March 2020, Huawei, ZTE, Ericsson and China Xinke (Datang) won the bid with a share of 57.25%, 28.68%, 11.45% and 2.62% respectively in the announcement of centralized procurement of 5G wireless network equipment of China Mobile in 2020.

The fact that there is no harvest is actually a very outrageous thing. Ericsson also won a 2 per cent contract for China Mobile's 700Mhz 5G available base stations against the backdrop of a total Swedish boycott of Huawei last year.

This may also sting Nokia's nerves and change the arrogance of the past. The reason for the failure of the particles in 2020 was largely due to the fact that the wireless frequency band did not meet the requirements of China, so the following year he obediently admitted and announced that "at present, Nokia has completed all the bidding tests and released a series of full-band products." especially the 5G band that China needs at present. We are thoroughly ready to serve China's 5G market. "

After all, China's 5G market is so huge that Nokia cannot be tempted.

The following year, Nokia's efforts achieved some results. On July 18, 2021, China Mobile released the collection results of 5G 700m base stations, which showed that it was no surprise that Huawei won the bid with a 60% share, while Nokia officially returned to the Chinese market with a 4% share.

It can also be seen from the results in the first quarter of this year that Nokia's net sales in the Asia-Pacific region were 676 million euros, up 1.19% from a year earlier.

But why is Nokia being antitrust again? Let's talk about its most profitable pure profit business: patent licensing.

In addition to the status of telecom equipment supplier, Nokia is also known as "patent rogue" in the industry.

To become a "patent rogue", we must first have a rich family. Nokia set up the Electronics Department as early as 1960, began to set foot in the telecommunications industry, and experienced a complete history of the telecommunications industry.

During the 2G period, Nokia was one of the main owners of patents.

During the 3G period, Nokia had a large number of WCDMA patents

During the 4G period, Nokia, which actively participated in LTE research and development, had a considerable number of LTE patents.

During the 5G period, Nokia is trying its best to catch up with 4000 5G core patent families.

These accumulations, like compound interest, produce amazing potential energy at the moment.

"Mobile phones are all in the same line, and 4G phones are also using 2G technology." Wang Yanhui, secretary-general of the Mobile China Alliance, has said that it has been difficult for global mobile phone manufacturers to completely circumvent Nokia's patent "fence".

Past patents have a profound impact on the emergence of new technologies, as long as in the number of years of patent protection, those patents that seem to be eliminated by the times are still insurmountable.

The accumulation of history and continuous research and development have led to Nokia's patent monopoly.

Generally speaking, I have a patent, and it is only natural for you to use my technology to pay the patent fee, especially the standard patent in the field of communication, which is core and cannot be bypassed.

The amount of patent fee generally follows the principle of "FRND", that is, fair, reasonable and non-discriminatory.

But Nokia charges surprisingly high royalties. Take 5G patent fees, for example, Nokia announced in 2018 5G patent fees, each 5G mobile phone using its patent, should pay 3 euros to Nokia royalty. Huawei, by contrast, is much more conscientious, charging just $2.50, or 2.36 euros, each.

What is the concept of 3 euros per station?

According to the Global 5G Patent activity report (2022) of China Information and Communication Institute, Nokia's patent family (a patent family includes multiple patents applied for and enjoyed common priority in different countries) accounts for 7.6%. Then the total 5G patent cost of the whole device is as high as 40 euros, equivalent to 283 yuan. A low-end phone with 5G costs only about 2000 yuan, which is obviously difficult for major mobile phone manufacturers to accept.

The cartographic patent fee of the China Academy of Information and Communications is too high for a group of manufacturers to follow, so Nokia began to file lawsuits all over the world.

In 2019, a lawsuit was filed against Lenovo, alleging that it infringed 20 patents on video compression technology.

In 2011, Nokia sued Apple, and eventually Apple paid Nokia an one-time compensation of about 420 million euros, and sued again in 14 years, claiming that Apple was suspected of infringing more than 30 patented technologies.

In 2012, the established handset maker BlackBerry also lost the patent war to Nokia, agreed to settle and pay royalties to Nokia.

In 2012, Nokia sued HTC, alleging that HTC infringed 45 of its patents worldwide

Nokia has sued other manufacturers such as Huawei, vivo and Samsung, and even automakers Daimler, Toyota, Honda and Nissan have been sued by Nokia for royalties for connected parts.

What is worth digging into here is, what patents does Nokia have to make it so rampant?

Take Nokia's lawsuit against Apple, for example.

Nokia believes that since Apple first launched the iPhone in 2007, all models of the iPhone have infringed 10 patents. There are several interesting patents, such as data transmission over mobile phone networks (US6359904) and data transmission over wireless telephone networks (US5802465).

After that, Nokia sued Apple for patent infringement, and almost all Apple products, including Apple's iPod portable music players, iPhone phones, Mac computers and other products, involved seven patent infringements, including tactile screen communication devices (US6518957) and user interface devices (US6924789).

Nokia sued Apple again in May 2010, alleging that Apple infringed five patents, including Radio Frequency Antenna (US6348894) and location determination methods and Devices (US7558696)

In March 2011, Nokia again sued Apple for patent infringement in the United States, filing seven patent infringements, including the date range database synchronization device (US6141664).

In addition to these, there is an even more hilarious.

In December 2010, Nokia sued Huaqin in 8 patent infringement cases involving mobile phone basic technology patents such as "mobile communication device with camera", "communication terminal", "selective data transmission method", "user equipment, cellular wireless network and location update method" and "selective data transmission method".

Even the mobile phone with a camera is the monopoly of Nokia! This is enough for each major manufacturer to drink a pot.

In the era of Nokia's mobile phone business, the value of patents was often partially offset by the fact that Nokia had to pay to use patented technology from other mobile phone manufacturers.

But now that Nokia has lost its mobile phone business, this value offset is crossed off from the side of the equation, and the value of the patent can be realized directly.

How does Nokia come back from the dead? From the world's third-largest telecom equipment supplier to "patent hooligans" suing around the world. There is still a lot of controversy about Nokia today, but it is no longer the old age we remember.

Having experienced a "freefall", Nokia's resurrection is one of the most exciting transitions in modern business history.

In fact, for more than 100 years of history, transformation has been a common occurrence for Nokia, from paper to chemical and rubber, from cables and pharmaceuticals to natural gas, oil and military.... Exposure to consumer electronics has been around since 1960.

Since setting foot in the telecommunications field in 1960, Nokia has experienced three huge crises and countless minor crises.

In 1973, the global oil crisis broke out, oil prices skyrocketed, the purchasing power of Finnish companies fell sharply, and Nokia fell into crisis. Kari Kelamo, then CEO of Nokia, weathered the first crisis by weakening traditional heavy industry and focusing on electronics and telecommunications.

In the late 1980s, with fierce competition in the consumer electronics market, Motorola entered cellular mobile communications, Nokia's profits fell sharply, and chairman Kari Kelamo chose to commit suicide. After the new chairman, Simo S. Volleto, took office, he spun off the floor and other departments, focusing only on telecommunications, consumer electronics and other areas to tide over the crisis again.

After Nokia sold its mobile phone business to Microsoft in 2013, there were only three left: HERE Maps, Nokia Communications and Nokia Technology.

Awkwardly, the three businesses are different and the only thing they have in common is that they are part of Nokia.

HERE Communications is the basic network provider; Nokia Technology is the research, incubation and licensing platform, which is now the patent licensing business; and Nokia Maps is a cloud-based business that answers "where are you going", which is map navigation.

The three businesses have different business models, different customer groups, and different marketing models. How to put them together has become a difficult problem.

Finally, in the context of the Internet of everything, the three services are unified: Noxi Communications negatively provides the basis of the Internet of things, HERE map business is the main application scenario; Nokia technology has a huge patent portfolio, responsible for technology research and development.

As a result, the organizational structure of two independent departments, Nokia Technology and HERE Map, was formally formed with Noxi Communications as the center.

Later, Nokia spun off its mapping business and sold it to German carmakers Audi, BMW and Daimler. Alcatel-Lucent was acquired at a low price of $16.6 billion in 2015 to further integrate its communications industry chain.

Previously, Nordson had only "one skill" and was the best mobile broadband provider in the world, but hardly involved in other businesses, while Alcatel-Lucent had the entire industry chain of communications infrastructure, and the wireless network business was a disadvantage. The two complement each other.

After winning Alcatel-Lucent, Nokia realized an end-to-end business portfolio and built a complete communications business map, increasing its market share from 8% to 30%, making it the second largest communications service provider in the world.

Finally, the most important thing was that Nokia used it to win Bell Laboratories, the largest industrial laboratory in the world at that time. This laboratory invented many basic technologies, supported all the digital equipment and systems of the entire information and communication network, and won 9 Nobel Prizes, 16 American highest Technology Awards and 4 Turing Prizes. C language, one of the most popular programming languages in the world, was invented.

Including the 2010 acquisition of Motorola's wireless business, Nokia is now a super combination of Motorola, Alcatel-Lucent, Bell Labs, NSN Communications and the former Nokia.

Although today, Nokia's development is still full of unknowns, facing fierce competition in the 5G field, and there are many problems in the integration with Alcatel-Lucent. But what we can see is that such an "elephant" is constantly adjusted in critical strikes and can "dance" again and again, which is the power of enterprise evolution.

Jim Collins believes in Evergreen:

"of course all companies evolve to some degree. Evolution will" happen "whether we stimulate it or not. The real world is full of unexpected events that affect the trajectory of life, which happens to individuals and organizations, but the point is that forward-looking companies can apply the power of evolution more actively."

The transition was driven by Li Situo, the chairman who took over in 2012, who promoted a kind of "paranoid optimism" that helped Nokia evolve in a mood of failure.

Paranoid optimism means that you have to be vigilant, have a little awe of reality, and think based on the situation, thus showing a positive attitude towards life.

"paranoia means constantly questioning, and in this way, you and your team can hone your sharpness, but constant paranoia can also be demoralizing and bad for your body and mind, unless you can stay optimistic. actively explore other alternatives."

Each positive evolution will also make Nokia more "anti-fragile". The so-called anti-vulnerability is the characteristic that benefits from uncertainty and keeps pace with the times.

Such as resource redundancy. As mentioned earlier, Nokia has worked hard in the telecommunications field for more than 60 years, has a large number of patents in 2G to 4G, and even formed a monopoly position for a time. The 5G era is also trying its best to catch up and has already begun to lay out 6G.

It is the redundancy of technical resources that has kept the Nokia technology business, which can not only make money from patents, but also quickly transform and gain a firm foothold in the field of telecommunications equipment.

Or, for example, overcompensation. Nasim Nicholas Taleb's "anti-vulnerability" is explained in this way, which means that in order to make up for the deficiency or deal with the pressure, not only the normal compensation is achieved in a reasonable and effective way, but also the extra great advantage is formed.

The vernacular is, "whoever can't kill me will make me stronger."

Statistics show that there are about 15 crises every 100 years, an average of once every seven years. It is in such ups and downs, Nokia, as well as IBM and other giants are actually very resilient, they may not be able to come up with any bright tricks in each crisis, but they can definitely come up with ways that will not completely collapse, even in the face of freefall.

As long as you survive, there will be a chance to get back on your feet, which is especially important for every company at a time when it is uncertain and difficult to see future trends.

This article comes from the official account of Wechat: ID:shangyinshecj, author: second Life, Editor: Qima

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