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  • Why Am I Bullish About Nokia... 6 comments
    Nov 11, 2012 4:48 PM | about stocks: NOK

    I wrote this in response to a comment made by @eldaedhel which I believe captures what Nokia has done since the letter sent out by Elop about their burning platform.

    I am not sure if you will agree with me but, IMO, the very day Nokia decided to burn their Symbian platform implicitly they signed themselves up to a tiered market for their products. In a way Windows Phone 8 platform is very similar to Android in that a device manufacturer can only make good margins if they can clearly differentiate themselves from their peers on the quality of their individual offerings and how they are able to effectively build and augment the base eco system to help create a niche offering and differentiation in the minds of their customers and partners - in this case, Nokia is creating its niche augmentation to the new windows 8 eco system (from the hardware and above) by offering their own home grown best in class Camera, Sensors (GPS, etc.), NFC, highly touch sensitive user experience; to platform level services like Maps, High data compression ratio; to application software - Nokia Drive+, Augmented Reality/City Lens, Free Nokia Music, etc. - so when one buys a Nokia product they are really getting a Windows Eco System++ which no other competitor within that system is able to offer.

    The majority of the reviews that I have been hearing is how Nokia is better than or weaker than iPhone or a Android and not its own peers within the Windows 8 eco system. In my opinion, this in and by itself is an excellent foot holding that Nokia will monetize eventually. A companies financials definitely has its place and a smart investor should have a keen eye on it; but, when a company like Nokia is pulling itself out of a situation like they are in right now one also has to consider if they are creating a product pipeline that will carry them through over the next 5 to 10 year window. In this respect, I think Nokia is doing an excellent job. All the other portfolios (NSN, Patents, NAVTEQ) are now profitable the only thing that is lagging right now is their D&S business portfolio and that should turn corner in the next quarter or two. It won't be wrong to say that Nokia is turning itself into a full service enterprise addressing the entire length of the network.

    Another slant to the above argument could also be that when you are trying to get a patient in critical state back to normal you as a doctor would see the health parameters swing in different areas, a doctor has to choose which of them should be watched at and which of them will come back to normal once the vitals are back. I think Elop's call in this major restructuring phase is to let the COGS be high in the interim because as the sales pickup Nokia will have created a market for itself within this eco system (like: through patents; platform services like: Maps, Imaging, etc.; and, application level offerings like: Nokia Drive+ and, others to come, available on other peer platforms, etc. If that is not all it will also allow the application developers to augment Nokia's offering like: Camera, NFC, etc. through their own extensions - not sure if Nokia will be able to monetize anything on this front).

    The reason I listed all the above was to show you that there are a number of fronts which have a potential to help study the financial aspects of Nokia.

    Personally, I am betting on Nokia's augmentation and innovation capability as being far, far superior to its peers and I am hopeful that this will lay a solid foundation for its future. It is the only company that, I think, is silently making a foray into the enterprise market and if I am not mistaken with the buyout of imaging company Scaladon, will be able to offer products for the enterprise verticals like health care, printing, etc and supply chain in general. So, in due course probably time for Xerox, HP and others to watch out as well.

    Nokia is not going to go bust anytime soon this eco system and its augmentation is going to take 2+ years to take create deep roots so until then the stock will get trashed around, for those who stick with it may have a wholesome return in the end.

    My only concern is that AT&Ts sales rep are not presenting the above clear differentiators to a potential buyer. In a way, when you carry a Nokia its "weight" of innovation shows in every way and can make you feel comfortable that you, as the user, are not getting short chained and are covered on all fronts as far as the user experience goes :)

    Disclosure: I am long NOK.

    Stocks: NOK
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Comments (6)
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  • +1

     

    NOK also has a deep bench in engineering going decades back. The company is over 100 years old, and has weathered several crisis already over its history. Finns are in survival mode, and do not budge easily.

     

    Nokia's biggest problem is that it is an engineer driven company, the mentality is to build best HW and SW devices on the market and people will come. And they deliver. Just hold any old Nokia phone or the new Lumia 920, and you immediately know that this is a solid high-quality device, not a toy that needs replacing in 2 years.

     

    Now, if Nokia would just get the marketing right, and see that consumers do not automatically buy the best products on the market place. I think that the new collaboration with MSFT is a huge positive for Nokia from marketing perspective, as MSFT knows marketing and has the wherewithal, so that all W8 marketing directly or indirectly benefits NOK (even if NOK failed to get its marketing act together)

     

    Long NOK.
    12 Nov 2012, 09:58 AM Reply Like
  • Author’s reply » I saw this video by Marko Ahtisaari and was very impressed. This guy seems to be at ease and confident and very lucid in his talk - personally, I was inspired by his 20+ minute talk - if you haven't seen it already it is well worth watching:

     

    http://bit.ly/XxZFot

     

    Overall, even though others have been bashing Elop, I think he is doing a decent job. He has brought everything under one "banner" and he has simplified the product line a lot and the inbound marketing at Nokia has done a good job at clearly delineating and defining the interfaces from ground up - they have neatly layered all their technologies (from the hardware up) to build on each others synergies - usually it is so difficult to get this right and organizations waste a lot of organizational "calories" in getting this done correctly (and most of them fail). They have created their own eco system which will be very conducive to their partners and, as I alluded in my instablog, will provide a consistent user experience; just look at Nokia Maps as an example or the Camera, I think NFC will be making inroads next in a big way.

     

    All in all, I am definitely impressed by the seeds sown thus far. I am convinced that the harvest will be good.
    12 Nov 2012, 10:34 AM Reply Like
  • Nokia and Microsoft will have the last word. I own a cyan Lumia 900 and have gone to the store to see the L920. Hands down it's the best hardware and software. Granted people get used to their phones and find it difficult to switch, but I talked to many iphone users who are going to switch. The employees at at&t are also divided. Many who are windows followers have bought their own Lumia 920s and overall at&t have done a decent job of signage in their stores.The product will sell.
    12 Nov 2012, 12:09 PM Reply Like
  • I agree RAJU, speaking from an ex iPhone user. I filled for divorce this past Saturday and ran off with a girl named Lumia with my son MacBook pro. Lol. Call me a slut if you want, i just can't seem to put this baby down. Ms. Apple will find another sucker to gold dig on, but this sucker has found someone better.

     

    This is such an amazing phone. Endless features to tinker with. A gift that keeps on giving I say and I'm not talking about the one with sores. The one with a candy of an app store and specs.
    13 Nov 2012, 02:33 PM Reply Like
  • Author’s reply » I have to say that you have way with words! hilarious...
    14 Nov 2012, 01:52 AM Reply Like
  • Author’s reply » BTW: If you have a Lumia 900 AT&T is allowing you to upgrade to Lumia 920, just call in and talk to them. Just tell them that Nokia Lumia 900 cannot be upgraded to Windows 8 so will you allow me to upgrade to Lumia 920 and refer them to the following URL (where in user comment a number of users have testified that they got their Lumia 900 upgraded to Lumia 920) and then upgraded my phone by applying a $30 upgrade fee (+ no free charging plate, but I heard you can walk over to an AT&T store and get a free plate).

     

    http://bit.ly/TvCqXe
    12 Nov 2012, 02:25 PM Reply Like
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