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In 2007 Nokia and Siemens kicked out their networks businesses into a Joint Venture, Nokia Siemens Networks.   And now with the return of Nokia Solutions and Networks, out goes the mobile business to Microsoft.   Something like Newton’s Cradle I suppose. 

 

 

When it was first announced that NSN was returning to Nokia, I had just finished re-reading Richard Rumelt’s Good Strategy, Bad Strategy and decided to analyze the transaction from that perspective.  I published my results on July 1, 2013 in Nokia Can Shift, Too… but no matter how I looked at the deal, I couldn’t see the transaction as being strategic from Rumelt’s framework, which is something like this: 

 

  • Diagnosis 
  • Guiding Policy 
  • Coherent Coordination

 

There was just no way that I could see the reacquisition of NSN as fixing Nokia’s problems.  So I concluded a good tactical move - generate cash for the mobile business, and take advantage of Siemens eagerness to part ways.  And since not strategic, I considered what’s next, and one of several possibilities was:

 

 

Nokia's mobile turnaround is unsuccessful. Nokia could end up as an infrastructure business and divest the mobile line much as Motorola divested the handset business to Google. Buyers are probably few, but maybe Microsoft could make a move…

 

 

So now we see that the acquisition of NSN was indeed strategic – but not in reconnecting NSN to Nokia. But it was strategic in the sense of buying an insurance policy, or perhaps a lifeboat, as NSN was to be the landing zone for Nokia.  The reacquisition of NSN was announced two months ago, so this must have been the plan all along.

 

I think this is a good thing for NSN.     And I think it is a good thing for Nokia, and certainly shows that Microsoft is serious about the mobile business.

 

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