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Nokia was once a behemoth of the mobile-phone market, producing nearly indestructible flip-phones and other mobile devices that are now relegated to nostalgia. But as the smartphone market boomed, Nokia was slow on the uptake. The company’s near-fatal delay in releasing a viable competitor for the iPhone and Android phones cost them vital market-share in the industry. Despite a variety of smartphone features that rivaled or exceeded competitors’ products and a beneficial relationship with Microsoft, the once-dominant Nokia has now sold its handset business for billions.
Forbes reported that Microsoft bought the handset division for a “shockingly low” price, approximately $7.1 billion. It seems like Microsoft is trying to learn from Nokia’s mistakes and continued its delayed entry into the mobile-devices market with a vengeance. But maybe the low price that turned Forbes‘ stomach accounts for Nokia’s decision to keep its impressive patent portfolio despite this sale, in a move that may allow Nokia enough time and breathing room to re-enter the handset market with greater force down the road.
Nokia owns “some of the highest-quality patents in the mobile market” and has decided to maintain ownership rights and license its patents to Microsoft. The current licensing agreements are for 10 years, and Microsoft has the option to convert them to a perpetual license. While some believe Nokia maintained its patents because the company did not get high enough price bids, Nokia may be trying to reserve its option to re-enter the handset market as it continues to strengthen its patent portfolio and balance sheet. Although Nokia is best known for its handset division, that constituted only a part of the company’s business and was the weakest link on its balance sheet. Navigation, technology patents, and networking equipment are the real drivers of the company’s revenue.
I’ve been using a Nokia smartphone for about a year, switching from Blackberry, and I’m hopeful that Nokia’s decision to keep its patents will result in the future development of mobile-phone devices under the Nokia brand.
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