Nokia's annual revenue is 20 billion
Author: Bandits
Editor: Achan
Source | New Retail Business Review (ID: xinlingshou1001)
" Nokia is making money quietly, while Huawei is going in the opposite direction ? "
Good article 3644 words | 6 minutes to read
The title image comes from the movie "Spotlight"
The news of layoffs has brought Nokia back into the spotlight.
Some time ago, the media quoted people familiar with the matter as saying that Nokia has laid off nearly 2,000 employees in Greater China, accounting for one-fifth of the total number of employees in the region. At the same time, Nokia also plans to cut another 350 jobs in Europe.
This news made many netizens exclaim "Nokia is still alive" and "Nokia has not gone bankrupt". To the surprise of many people, Nokia, which was "down and out" or even "on the verge of bankruptcy" in the eyes of netizens, is not only alive, but also living a relatively comfortable life.
Nokia's third-quarter 2024 financial report showed that net sales during the period were 4.33 billion euros (about 33.32 billion yuan), and Nokia President and CEO Pekka Lundmark said that for the whole year of 2024, the company expects comparable operating profit to remain between 2.3 billion and 2.9 billion euros.
In other words, Nokia is expected to earn up to 2.9 billion euros (about 22.32 billion yuan) in comparable operating profit this year, bringing its annual revenue to 20 billion.
Are these data enough to refresh everyone’s perception of Nokia?
From "Fresh Article" to "Elegy"
When domestic consumers think of Nokia, the first thing that comes to their mind is mobile phones.
In early October, a media outlet conducted a small questionnaire with the theme "Do you have a Nokia at home?" As many as 75.23% of netizens chose "yes."
If we extend our vision overseas, we will find that there are not only a large number of Nokia mobile phone users, but also Nokia super fans.
According to the Guinness World Records, Nokia super fan Wences Palau Fernandez from Spain set the Guinness World Record for the largest mobile phone collection, with a total of 3,615 different models of mobile phones, including more than 700 different models of Nokia phones.
The super fan's collecting journey reportedly began with a grey Nokia 3210 phone he received as a gift on Christmas Day 1999.
The words "Nokia 3210" are likely to trigger the memories of many users. You know, around 1999, when mobile phones were not yet fully popular, Nokia 3210 created a sales myth of 160 million units, laying a solid foundation for the "Nokia Dynasty".
In the same year, Nokia's market value reached a staggering 203 billion euros. In the second year, as the "Finnish giant", Nokia's revenue contributed 21% of Finland's exports, and its net profit was equivalent to the total profit of all other Finnish companies.
After that, Nokia took advantage of the victory and launched Nokia 1100 in October 2003. By the end of that year, the global sales of this phone exceeded 250 million units, and "it still ranks first in the list of the world's best-selling mobile phones."
Statistics show that Nokia's global mobile phone market share reached 72.8% at its peak. In response, the media and consumers called it "street machine", which is well deserved.
If Nokia's peak period was a "happy" script, then what followed was the inevitable "elegy" script.
In 2007, the iPhone was launched, ushering in the era of smartphones. Although the threat of Apple had been a major concern during the discussions among executives, Nokia was unable to gain market share in smartphones because it embraced Microsoft in addition to Apple's iOS and Google's Android systems. Nokia continued to fall behind and was gradually left behind.
In 2016, Nokia and HMD reached a cooperation agreement and authorized the Nokia brand to the latter. Recently, "New Consumption 101" checked the official flagship store of Nokia mobile phones on Tmall and found that the manufacturer of the products was marked as "HMD".
However, don’t think that Nokia phones will completely fade away. In fact, with a number of classic models, plus the brand influence it has established in the past and the consumer mentality of “Nokia is durable”, Nokia can still attract a group of users.
Let’s not talk about the distant past. In May this year, the Nokia 3210 was re-released. Although it could not connect to WiFi and could not download apps other than the built-in apps, it was still sold out many times. Nokia’s official Weibo account responded: “We have received the urging information, and there are sparks on the factory production line.”
Of course, compared with the "Nokia Dynasty" of the past, today's Nokia phones serve more for groups such as the elderly and students. Even if they are sold out, they are just "small fry" and have long since slipped to the edge of the mobile phone world.
But looking at it from another perspective, in recent years, Nokia has not relied on mobile phones to survive, it has updated its own script.
Why do you earn 20 billion a year?
In the "King of Comedy Stand-up Season" which has already concluded, the annual champion Fu Hang said: "My brain always comes to me and asks me, Master, everyone says you are a waste, what emotion should I have now? I say passion! Let's get excited! Clap! Scream!"
This statement is very appropriate for examining Nokia. In the mobile phone market, Nokia is now considered "waste" by many people, but in the communication technology market, Nokia has shown great enthusiasm and passion, and its achievements have also made people "scream".
Looking back, Nokia's decision to switch tracks and update its script was due to its inability to catch the "express train" of smartphones.
In 2012, Nokia appointed Risto Siilasmaa as chairman. Through adjustments and explorations, he gradually positioned Nokia as a supplier and service provider of network infrastructure.
With this positioning, Nokia began to innovate through "buying" and "selling".
In July 2013, Nokia spent 1.7 billion euros to acquire the remaining 50% stake in Nokia Siemens Communications (NSN), making NSN a wholly-owned subsidiary of Nokia. Two months later, it sold most of its mobile phone business and some patents to Microsoft for 5.4 billion euros. In addition, it sold its HERE map business to the German Automobile Manufacturers Alliance for 2.55 billion euros.
By buying and selling at the same time, Nokia not only brought in a lot of cash, but also continued to increase its investment in the network infrastructure business. Nokia successfully updated the script.
It is worth mentioning that in the new script, Nokia acquired Alcatel-Lucent, a powerful multinational giant in telecommunications software and hardware equipment and services. However, it was pushed to the brink of bankruptcy due to competition, which created conditions for Nokia to take action.
In 2016, Nokia spent 16.6 billion euros to strengthen its capabilities in IP networks, cloud and optical networks. For example, Bell Labs, which once dominated the industry, was previously part of Alcatel-Lucent and is now part of Nokia, so its technology is naturally used by Nokia.
Through a series of acquisitions and long-term research and development, Nokia has become a technology "big shot". Nokia's official website states that Nokia currently has about 20,000 patent families (each family can contain multiple individual patents), covering a series of technologies such as high-pixel large bottom, super sampling technology, and optical image stabilization.
Taking the popular 5G technology as an example, Nokia’s official website stated that it has more than 6,000 patents declared as patent families necessary for 5G.
Data from the China Academy of Information and Communications Technology show that as of April 2019, Nokia had declared more than 1,471 5G standard essential patents, ranking second among global communications manufacturers, accounting for 13%, second only to Huawei's 17%.
These patents and technologies constitute Nokia's new source of income. The media directly said: "This huge patent group allows a company that was once the king of feature phones to make money without doing anything in the era of smartphones!"
It is not difficult to see that the new source of income is the basis for Nokia's annual revenue of 20 billion. The patent litigation and settlement with Chinese mobile phone brands such as OPPO and vivo have further strengthened Nokia's revenue confidence.
When talking about Nokia's development in the third quarter of 2024, Long Peikai specifically mentioned that "Nokia Technology Business Group continues to benefit from the stable situation after the end of the smartphone update cycle."
Perhaps, when we talk about Nokia again, we should not focus on its mobile phone business, but pay more attention to its communication technology.
After all, Nokia has taken on a new look. As the self-media "Business Figures" said: "The collapse of the mobile phone business is like cutting out Nokia's heart. The current Nokia is another host after rebirth. Fortunately, Nokia still has communication technology. It is still the Finnish giant after turning the ship around."
" Huawei " in the opposite direction ?
By shifting from mobile phone business to communications technology, Nokia has, to some extent, achieved a "reversal of destiny".
If we put aside the company's own characteristics and changes in the international situation and look at the development path alone, "New Consumption 101" believes that Huawei first focused on communication technology and products, and later entered into mobile phone and other businesses. Nokia's path is the opposite.
That is to say, in terms of business transformation, Nokia and Huawei have certain similarities, and Nokia can be said to be the "Huawei" in the opposite direction.
Judging from recent progress, Nokia, which has already tasted success in the communications technology sector, will continue to increase its investment.
For example, regarding acquisitions, Long Peikai said that in order to increase its market share in the optical network field, Nokia "will complete the acquisition of Infinera."
He also mentioned that Nokia is increasing its investment to expand its IP network product portfolio to better seize opportunities in the rapidly growing data center market.
At the same time, challenges also come one after another.
In terms of business challenges, Long Peikai admitted: "The market is changing, but the pace of change is slow. We see encouraging signs of recovery in the fixed network and IP network markets, but it is slower than we expected earlier this year. Optical networks and mobile networks are still weak."
Looking at the revenue challenges, the third-quarter 2024 financial report showed that net sales were 4.33 billion euros, a year-on-year decrease of 8%, lower than the 4.73 billion euros generally expected by analysts.
The same day Nokia announced that its third-quarter net sales fell short of analysts’ expectations, it publicly disclosed the layoffs mentioned at the beginning of this article.
An industry insider said: "The reason for the layoffs is simple. Business and expectations are not good, so we have to tighten our belts to get through this difficult time."
Specifically, a key factor is that this year, Indian customer demand has declined significantly, resulting in a significant reduction in Nokia's sales to India.
In China, the strength of local brands such as Huawei and ZTE has continued to increase, while Nokia has been declining.
In September this year, the China Academy of Information and Communications Technology released the "Global 5G Standard Essential Patents and Standard Proposals Research Report (2024)", which showed that in the global ranking of valid 5G patent families, Huawei ranked first, ZTE ranked fifth, Nokia has been squeezed to seventh, and Xiaomi, OPPO and other pursuers are following closely behind.
In addition, changes in the leadership team, such as the division of the original corporate affairs department into the geopolitical and government relations department and the communications department, and the departure of several group executives such as the president of the technology department, have an impact that cannot be underestimated.
The above factors indirectly show that behind Nokia's annual revenue of 20 billion, there are still many risks and challenges. This is a "tough battle" with no end in sight after focusing on communication technology.
On its official website, Nokia calls itself a technology leader committed to driving the next evolution of the network. Obviously, this is an ambitious goal, and Nokia needs to keep moving forward.
References:
1.
"Nokia lays off nearly 2,000 employees in Greater China", Jiemian News
2. "Nokia releases third quarter financial report for 2024", Nokia Bell
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"Nokia's global downsizing to cope with the sluggish market and implement a large-scale cost-cutting plan", China Business News
4. "Nokia, which you thought was dead, is winning in unexpected places", this company is not simple
5. "Nokia, faked its death", Business People
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