Nokia Smart Device Evolution
psylent,
<< 'll defer to Eric to provide the authoritative answer to this, but here's my stab at it. Up until recently, Nokia separated their smartphone sales into a consumer oriented "Multimedia" division, and the business oriented "Enterprise" division. Multimedia (where N-series devices resided) have always generated high margins (higher than the blended device average). In contrast, I believe this past quarter is the first one in which the Enterprise division showed profitability (and how-- they had 18 % operating margins). >>
That's essentially correct. Nokia split NMP (Mobile Phones) into three divisions effective January 1 2004.
The new split off Multimedia and Enterprise Solutions divisions were chartered to operate at a loss initially. What share holders and analysts got as a result was great financial granularity.
Multimedia not only pioneered S60 smartphones, but they pioneered and developed Nokia's mass market WCDMA (WEDGE) and then HSDPA (HEDGE) devices. They absorbed a huge R&D spend and a huge SG&A marketing spend on relatively small volume products at first, but they quickly reached profitability and have experienced exponential volume growth in 3rd generation smartphones while bringing smartphones mainstream.
Enterprise Solutions was a pure start up and it took longer to get it profitable, longer than anticipated, but some plans for the division were changed mid-stream -- e.g. the S80 Communicator (their principle mobile device product) was going to morph into a Communicator based on a new software development platform (S90). S60 became so powerful, scaleable, customizable, and successful that they decided to base the evolved Communicator (E90) on the evolved S60 3rd Edition platform. Along the way they acquired Intellisync and had to fold that in.
These focused divisions were extremely forward looking and ultimately highly successful hardware/software incubators. Now that they are mature and have developed scale they'll both fold back into the mass market mobile phones division 4 years after their inception on January 1, 2008.
Best,
- Eric - |
