Nokia’s patents are not limited to domestic manufacturers, and Apple cannot bypass it.
2013 is a very special year for Nokia and Huawei .
This year, Nokia, which produced the first mobile phone as early as 1982, announced that it would package and sell its mobile phone business to Microsoft . After that, Nokia basically bid farewell to the to C business and focused on the to B business, which is communication equipment. field. Companies that do to B business are basically not paid attention to by the media. Therefore, there is less and less news about Nokia.
This year, Huawei, which started as a communications equipment, will honor itself as a sub-brand of Huawei. Although Huawei established its mobile phone business department in 2003, it was not until 2011 that Huawei began to launch its own branded mobile phones. Since then, Huawei has begun to focus on to C business. As the consumer business gets better and better, Huawei has gradually become the focus of media pursuit.
A few years later, the status of Nokia and Huawei is no longer the same. Especially after entering the 5G era, Nokia’s market share in China is almost negligible.
Recently, China Mobile Procurement and Bidding Network announced the announcement of candidates for the successful bidding of 5G 700M wireless network main equipment, and 5 manufacturers including Huawei and ZTE won the bid. Among them, Huawei’s share is about 60%, ZTE’s share is about 31%, Nokia’s share is about 4%, Datang Mobile’s share is about 3%, and Ericsson’s share is about 2%. This is the first time that Nokia has won the bid for a 5G communication device.
In March 2020, according to China Mobile Procurement and Bidding Network, in the announcement of China Mobile’s 2020 5G Phase II wireless network equipment centralized procurement announcement, Nokia won the bid. In contrast, Huawei, ZTE, Ericsson, and China Information Technology (Datang) won the bids with 57.25%, 28.68%, 11.45%, and 2.62% respectively.
According to Reuters, not only is China Mobile, the 5G rounds of bidding the project in 2020, Nokia Asia are not there to win was China’s three major operators (Mobile, China Telecom, China Unicom) any 5G radio contract.
At the end of March, Shanghai Nokia Bell Co., Ltd. sent a letter to China Unicom stating that the bid was lost because “yours have drastically cut prices when it is known that most mobile provincial companies are unwilling to accept 5G services provided by them based on their historical performance. Diving has caused our passive situation.”
In other words, Nokia believes that competitors are bidding at low prices, disrupting the market order and leading to its defeat in the Chinese market. Subsequently, many media reported that Nokia had withdrawn from China’s 5G wireless market.
Ran Caijing verified the matter with Nokia officials. The other party did not comment on the grounds that “the current time node is sensitive and is in the next stage of 5G tendering”.
Many employees of China Mobile told Ran Caijing that in the 5G era, Nokia rarely won bids in China, and operators seldom use Nokia’s equipment, so that they do not have a deep impression of Nokia. An industry insider told Ran Caijing that Nokia only has a very small share in the core network field, and almost no share in the wireless network and bearer network.
“Ultimately, Nokia produced goods route charts and domestic business acquisition rhythm, out of step, and the initial 5G technology options incorrectly. Misjudged including technology, products uncompetitive, do not pay attention to the special needs of the Chinese market.” The Insiders add.
A person close to Nokia believes that Nokia missed the Chinese market for two reasons. First, due to the Sino-US trade frictions, Huawei and ZTE’s overseas markets are trapped, and domestic companies will also allocate a smaller share to foreign manufacturers. In the 2.6G frequency band, Nokia did not pay much attention to the Chinese market.
Telecom analyst Xiang Ligang told Ran Caijing that China’s 5G market is a very large market. Data shows that by the end of 2020, the number of 5G base stations in China has reached 916,000, accounting for about 70% of the total number of 5G base stations in the world; in addition, my country The number of 5G network users exceeds 160 million, accounting for about 89% of the total number of 5G users in the world.
The loss of the Chinese market has a great impact on Nokia. It is understood that since 2018, Nokia has laid off 11,000 employees. At the beginning of this year, Nokia once again announced that it would lay off between 5,000 and 10,000 employees in the next two years, freeing up about US$715 million for R&D investment. After losing weight, Nokia will have 80,000 to 85,000 employees worldwide.
Ran Caijing inquired about various online recruitment apps and found that Nokia Bell is still hiring various R&D personnel in China, including RF software, communications R&D, 5G software test engineers, and Asia Pacific trade compliance managers.
In September 2020, Pekka Lundmark officially took over as President and CEO of Nokia. After taking office, he admitted that “Compared with 3G and 4G, Nokia’s share of China’s 5G market is very small. The reason is not Not actively participating, but because of the lack of competitiveness of Nokia’s products”, and made a series of adjustments to Nokia’s 5G route, including the elimination of low cost-effective FPGA chips.
According to Xiang Ligang, generally speaking, the Chinese market reserves 10-15% market share for foreign brands. But whether this belongs to Nokia or Ericsson, it depends on the competitiveness of their products.
Whether it is mobile phone business or communication equipment, it seems that Nokia has lost the right to speak. However, as an established company that has focused its business on mobile communication since 1981, it has various patents in its hands. , Still has a strong restriction on the industry.
Mobile communications have always been the main market for global intellectual property licensing. As China’s mobile communications industry started late, a large part of 2G, 3G, and 4G standard essential patents (SEP) are concentrated in the hands of European and American companies such as Qualcomm, Ericsson, and Nokia. In terms of 5G standard essential patents, domestic companies such as Huawei and ZTE are catching up. According to reports, over the past 30 years, Nokia has invested more than 130 billion euros in research and development and has about 20,000 patent families, of which more than 3,500 patent families have been identified as critical to 5G.
According to industry insiders, Nokia has too many mobile phone patents, not only for domestic manufacturers, but also for Apple.
Recently, it was reported that Nokia initiated patent infringement lawsuits against OPPO in the United Kingdom, France, India and other countries. It is said that the licensing agreement between Nokia and OPPO expired in June of this year. Nokia tried to update the agreement to cover 5G applications, but was rejected by OPPO. According to ” China Business News “, OPPO said that Nokia advocated extremely unreasonable licensing fees and tried to make OPPO concessions in licensing negotiations through litigation.
It is understood that in recent years, patent licensing fees have become an important source of income for Nokia. According to Nokia’s 2020 financial report, its patent fee income reached 1.402 billion euros.
Patent litigation is one of the ways to generate income. Since 2011, Nokia has successively initiated patent infringement lawsuits against Apple, HTC, Samsung and other companies, all of which have won and received compensation.
Domestic manufacturers, OPPO is not the first defendant company. As early as 2016, Nokia initiated a total of 4 lawsuits against Huawei. In 2019, Nokia sued Lenovo again , and it was not until April 2021 that the two parties reached a settlement.
“Patents are a roadblock to internationalization, and they are also a problem that domestic manufacturers must solve.” Insiders said that if patents cannot be circumvented, Nokia cannot circumvent them. In 2017, Xiaomi signed a multi-year patent license agreement with Nokia before fully internationalizing, including cross-licensing of standard essential patents for mobile networks. The transaction also includes Xiaomi’s acquisition of some of Nokia’s patent assets.
According to the financial report, Nokia’s net sales in 2020 will be 21.9 billion euros. The market estimates that OPPO’s revenue is around US$40 billion, which is much larger than Nokia. But Nokia has patents in hand, and OPPO has to be small.
01 Used to be a mobile phone overlord
Nokia was founded in 1865, but it started as a wood pulp factory. In 1960, Nokia established the Telecommunications Department to vigorously develop the communications business. Later, Nokia, which became widely known, started from this time.
In 1979, Nokia established a joint venture with color TV manufacturer Salora to establish a wireless phone company Mobira Oy. A few years later, the world’s first cellular network system, the Nordic mobile phone network, was launched, which could connect Sweden, Denmark, Norway, and Finland at that time. In 1981, Nokia acquired the mobile phone company Mobira before entering the mobile phone market in a real sense. In 1982, Nokia launched the first mobile phone, weighing 10 kilograms, and it was a mobile communication device that could only be used in cars.
In 1984, Nokia introduced a portable phone weighing 5 kilograms. Three years later, Nokia launched its first handheld mobile phone, weighing about 800 grams and priced at US$5,456. A series of telephone products helped Nokia lay an early user base in the mobile phone market.
In 1992, Joma Ollila took the charge of Nokia. He firmly believed that the future belongs to the era of communications. He proposed a professional development path centered on mobile phones and invested 90% of funds and manpower in mobile communications equipment and multimedia. Technology research and development. As the GSM communication standard became popular around the world, Nokia realized that mobile phones must be convenient for users to carry, and began to miniaturize.
Since then, Nokia mobile phones have continued to introduce new ones. From the 1011 model, which can only make 90-minute calls and store 99 phone contacts, to the 9000 Communicator model, it not only makes calls, but also provides text and table functions, allowing users to send and receive emails, faxes, and browse. Web page.
In 1998, the Nokia 6100 series pre-installed with the snake game sold 41 million units in one fell swoop, and Nokia surpassed Motorola to become the world’s largest mobile phone manufacturer.
The earliest history of Nokia in the Chinese market can be traced back to its China office in 1985. For people who have experienced the era of feature phones, especially those born in the 70s and 80s, Nokia is a common memory point.
Li Yaren, a senior fan of digital products, still remembers the first mobile phone Nokia 3110c bought 14 years ago with the support of his parents’ budget of 1,000 yuan. After owning the first mobile phone, Li Yaren, like the other boys in the class, was obsessed with sending and receiving text messages and making voice calls. This black-and-white screen, a non-smart phone without any high-tech products, has accompanied Li Yaren through the entire high school career.
After graduating from university, Li Yaren’s mobile phone should also be replaced and upgraded. “After the internship, I bought a Nokia smartphone 5230 with the saved salary, Symbian s60V5 system, and able to use QQ.” Li Yaren described the feeling of buying a mobile phone at the time, “I have used a non-smart phone, and then use Nokia first. This touch-screen mobile phone is like opening the door to a new world.”
Li Yaren admitted that at that time there was a cult of Nokia’s international manufacturers, and that Nokia occupied a considerable market share. At that time, there were not many mobile phone brands to choose from, and buying Nokia became the “only item”. Today, Li Yaren’s feelings for Nokia are nothing but feelings and nostalgia. “The Nokia 5230 stores a lot of photos and chat records of my girlfriend and me, which is of special significance to me.”
When Nokia was brilliant, its status far exceeded that of today’s Apple. In Q4 2007, Nokia accounted for 50.9% of the global mobile phone market. In the Chinese market, Nokia was once the dominant player, occupying nearly half of the market share. Nokia has almost become an “arcade” with one hand.
However, with the commercialization of 3G, especially the birth of Apple’s mobile phone , Nokia has gradually fallen behind when the ” tornado ” of smartphones blew up in the global mobile phone market . Driven by the surrounding people and market trends, Li Yaren also replaced the feature phone with a smart phone.
“I still remember the first time I saw and touched the iPhone 4, it was so shocking and shocking. At that time, I felt that the iPhone 4 surpassed other mobile phones by several dimensions, and the mobile phone can be so beautiful and exquisite. The operating system is also very smooth. And my Nokia 5230 resistive screen still needs to be pricked with a nail.” Li Yaren recalled.
Before 2007, Nokia was the “top stream” in the mobile phone market. In 2007, Nokia recalled 46 million mobile phone batteries due to short-circuit and overheating. One year later, Nokia’s business profits plummeted, with a 69% drop in Q4 that year.
At the same time, the sales of Apple mobile phones that are not seen by Nokia because of their fragility and keyboardlessness have soared by 330%. Samsung, HTC, LG, Motorola and other mobile phone manufacturers abandon the Symbian system and join the newly established Android (Android) mobile phone camp. . 2009 became a watershed for Nokia mobile phones. In the following years, Nokia’s mobile phone share fell like a “free fall”.
Source / Screenshot of Ran Caijing, a research company of Statista
The launch of the iPhone redefines smart phones. Mobile phones are no longer just synonymous with making calls and texting. People are more willing to pay for Apple’s closed ecosystem and touch screens. Nokia is also aware of the changing trend of the market and launched the Nokia 7710 with function buttons combined with a touch screen. For the mobile Internet, it launched the Ovi store and acquired the digital map Navteq. However, these changes are still slow compared with the annual updates and upgrades of iOS and Android. The magic of the Symbian system has faded and is completely obsolete.
In 2011, Nokia and Microsoft formed a strategic partnership, and Nokia switched to Microsoft Windows Phone. The alliance with Microsoft did not save Nokia. Nokia continued to lose money and continued to lay off employees. In 2013, Nokia announced that it would package and sell its mobile phone business to Microsoft for US$7.2 billion.
“Two turkeys alliance can not become an eagle.” 2016, Microsoft could not handle smart phones, Nokia sold resale put Foxconn Fu Chi Kang and Finland HMD Global, Nokia is now available in the market can also be seen Mobile phones are all produced by HMD.
02 It was also a major communications equipment manufacturer
After Nokia gave up the mobile phone business and faded out of the C-end user’s vision, it focused more on the B-end market, that is, communication network equipment. Although this field does not sound as “sexy” as the mobile phone business, its profitability should not be underestimated.
According to Wired, in 2013, the year before Nokia sold its mobile phone business to Microsoft, Nokia had net revenue of 14.3 billion U.S. dollars. In 2015, after Nokia divested its mobile phone business, the communications network equipment business brought Nokia over US$14 billion in net revenue.
In 2016, Nokia still has a strong voice in the field of communications equipment. An entrepreneur recalled that at a bidding review conference in Guangzhou, an operator assembled many top-notch big data management companies in China to start a PK, and the winner would become the operator’s supplier. The cause of this PK is a difficult problem encountered by the operator: the original traditional Oracle architecture can no longer handle the existing data scale efficiently and at low cost. There are no shortage of large enterprises and star start-up companies such as Nokia, Huawei, and Transwarp at this powerful conference.
The entrepreneur said that Nokia is a strong partner, with more than 100 audit regulations when auditing suppliers. “Before the cooperation, we accepted a series of review by Nokia, from finance to technology, everything is fine. To become a Nokia supplier, we ultimately rely on the professionalism, stability and reliability of technical services.”
It is worth noting that Nokia’s communications equipment business is integrated by a number of communications companies.
In 2010, the joint venture Nokia Siemens Networks acquired Motorola’s wireless business. Since then, Nokia has begun to accelerate the transformation of its communications business and has successively acquired the entire Alcatel- Lucent, one third of Siemens and Motorola. But these are the communication giants that had a reputation in the world in the 1990s.
Huawei has suddenly emerged in China and surpassed Ericsson in 2013 to become the world’s largest communications equipment manufacturer. After a series of “big fish eat small fish” mergers and acquisitions, in 2016, Nokia surpassed Ericsson to become the world’s second largest communications equipment manufacturer.
However, after the arrival of the 5G era, Nokia’s advantages began to disappear. For a long time, Ericsson and Nokia have comparable market shares and similar business types. 70% of their business comes from selling telecommunications equipment to operators in the European and American markets. Around 2016, affected by factors such as the reduction in global 4G deployment and the close to saturation of the wireless access network market, the revenue of the two equipment vendors continued to be sluggish, their growth was weak, and losses were incurred to varying degrees. When the 4G market dividends are exhausted and the communication network technology is switched to 5G, both equipment vendors are facing the business transformation of “improving profitability”.
“The communications equipment market has different customer needs and market changes at different stages. For example, Huawei only provided services to operators a long time ago. Now it needs to provide 5G technology to cloud vendors, terminal vendors, and industry users. Market demand, adjust the business direction.” Telecom analyst Liu Qicheng told Ran Caijing.
Ericsson and Nokia reduced operating costs through layoffs and other methods, and continued to invest in research and development to reduce TCO (total cost of ownership) for operators. Gartner, a global research organization, once believed that Ericsson’s 5G products and technical solutions are in a leading position, including improvements in dynamic spectrum sharing (DSS) and uplink enhancement technologies. Radio access network (RAN) equipment can only be upgraded through software. Update to 5G NR (New Radio), which is more flexible and faster than competitors deploying 5G networks. In 2020, Ericsson will return to second place in the world, and Nokia will return to third place.
“We want to be the leader of the 5G market.” A Nokia China employee once told Ran Caijing. It is a pity that Nokia’s transformation has not gone smoothly.
In 2013, after a series of mergers and acquisitions, Nokia has 98,000 employees, making it a huge organization with bloated departments and poor coordination. At the same time, because of the acquisition, Nokia made a mistake in betting on the 5G route when integrating Alcatel-Lucent technology, resulting in higher equipment manufacturing costs. Compared with competitors, Nokia’s 5G equipment has no price advantage and weakened the profitability of the business sector. .
Although, Nokia has proposed several different routes of virtual radio access network (vRAN), cloud RAN, and open RAN in the process of transformation, which is different from other communication equipment manufacturers. But Gartner believes that Nokia’s 5G products and services, including performance, responsiveness, product quality, software stability, error repair services, and progress, are inferior to competitors.
“Nokia has merged several companies. After the merger, it still needs transformation. All of these require processes.” Liu Qicheng said.
03 Patent is the trump card
Many industry figures told Ran Caijing, “Nokia will return to the Chinese market.”
From the perspective of 5G equipment market share distribution rules, senior practitioners in the communications industry believe that the domestic market will take care of domestic manufacturers, but they need to give foreign investors a certain share. Therefore, Nokia will definitely come back.
Nokia’s advantage lies in the fact that “Compared with Huawei, it is a European company. Compared with Ericsson, it has a background as a joint venture company of central enterprises.” The old commentator said. Facts have proved to be the case. On July 18, China Mobile announced the 5G 700M base station collection results, which showed that in addition to Huawei winning 60% of the bid, Nokia officially returned to the Chinese market with 4%, and Ericsson received the smallest share of 2%.
So far, Nokia has won a total of 166 5G commercial contracts worldwide, while Ericsson has won 143. According to foreign media, Nokia is the only telecommunications equipment supplier in the world that provides 5G network technology to the four major US operators, the three major Japanese operators, and the three major South Korean operators. Nokia has more than 350 customers in the 4G field, and the top 63 customers account for two-thirds of the global wireless access network business. Nokia is also the only equipment manufacturer that covers all elements of 5G networks, including radio, core network, cloud, management, automation and other end-to-end product portfolios.
On the one hand, Nokia took advantage of Huawei’s business difficulties, stabilized the US and European markets, and rushed to return to the Chinese market.
Since 2019, the United States has included Huawei and other Chinese companies in the entity list on the grounds of national security, and has blocked Huawei three times. It involves multiple links such as operating system, chip foundry, and supply from third-party chip manufacturers, which has a profound impact on Huawei’s terminal business. At the same time, Huawei’s operator business has also been affected to varying degrees. The North American market has so far been closed to Huawei, while the European market has been “half open and half closed.”
For example, according to the BBC report, under pressure from the United States, the British government has promoted the complete removal of equipment from “high-risk suppliers” such as Huawei from the 5G network. After the end of 2020, it will prohibit the purchase of new Huawei 5G equipment and remove it before 2027. All Huawei 5G equipment kits. Countries such as Spain, Portugal, Luxembourg, Austria and the Netherlands are more neutral and have not explicitly banned Huawei in legal form.
“Huawei and ZTE are subject to some restrictions in the European and American markets. These markets do not have too many choices. They can only choose between Nokia and Ericsson. Therefore, in fact, it is relatively beneficial to the development of Nokia and Ericsson.” Xiang Ligang said.
On the other hand, in order to obtain better revenue, Nokia has regained its patent stick to mobile phone manufacturers that have not accumulated deep patents.
In 2020, Nokia’s annual revenue is 25.807 billion U.S. dollars. Although domestic mobile phone manufacturers OPPO and vivo have not disclosed revenue data, the estimated annual mobile phone shipments may be similar to Xiaomi’s revenue. In 2020, Xiaomi’s total revenue is 37.938 billion U.S. dollars.
Although Nokia’s revenue is lower than that of mobile phone manufacturers OPPO, vivo, and Xiaomi, from the perspective of global 5G patent rankings, IPlytics statistics show that Nokia ranks second only to Samsung in terms of 5G essential patents. In principle, as long as Nokia does not give up this revenue, mobile phone manufacturers cannot bypass Nokia.
“Oppo, vivo, millet and other manufacturers have no way to cross-license patents with Nokia, and patent authorization also has an authorization cycle, which mainly depends on whether communication companies ask for mobile phone manufacturers. For example, even if Huawei has a lot of patent accumulation, it has never asked mobile phone manufacturers for patent fees before. “Huang Haifeng, an analyst in the communications industry, said.
Source/ Screenshot of IPLytics
Of course, it is different from Qualcomm’s patent-licensed business model, including communications vendors such as Nokia, Ericsson, and Huawei. Patent-licensed revenue only accounts for a small share of total revenue. In 2020, Nokia’s patent revenue accounts for 6% of total revenue, while Ericsson’s only There are 4%. But this money is all profit.
For Nokia, 2021 is still a difficult year.
“From the perspective of the global 5G market, Nokia’s technical level is slightly worse than that of Ericsson, and it is also a certain distance from Huawei.” Xiang Ligang said.
India’s “Economic Times” predicts that the absence of China’s wireless network market, the “counter-cyclical” global currency, and the low prices of competitors’ equipment will further lead to a decline in Nokia’s market share and equipment sales in 2021. Normally, the price of Nokia’s equipment in North America is higher than that in other parts of the world. “Without the competition from Chinese manufacturers, the price of Nokia’s equipment is three times the price in the European market.” An overseas industry insider told Ran Caijing that once the market is in North America Decreased shipments, lower prices, and reduced market share will also cause Nokia to struggle in the telecommunications market.
Lao Jie said that Nokia’s problem is mainly due to the failure of the merger with Alcatel, including the integration of 5G R&D and so on, so its competitiveness is affected. Liu Qicheng said, “The communications giants Nortel and Motorola are dead because they are slow in their transformation and can’t keep up with the market’s development needs. Now Nokia is facing the same problem.”
“What happened to Nokia? The Rise and Fall of Giants, Source: Helsinki Times
“Nokia Downfall Timeline”, source: TECH2
“Ericsson beats Huawei and Nokia in Gartner’s ranking of 5G suppliers”, source: sdxcentral
“Missed 5G large orders and removed from the list of central enterprises, Nokia Bell will be managed by China Poly Group”, source: Daily Economic News
“One Hundred Years of Nokia: From One Hand to “Nobody Cares””, source: Baguo Finance
“Nokia VS OPPO Global Patent “Lawsuit” Enters the Deepwater Zone”, source: China Business News
* Title figure in the source @ microblogging Nokia, the paper Zhang Wei, Li Yaren, Wang Xin Chen pseudonym
*Disclaimer: In any case, the information or opinions expressed in this article do not constitute investment advice to anyone.
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