Nokia selling off luxury line Vertu? (+ small rant)
I saw this on Twitter this morning on my way to Uni, and was surprised it hadn’t been posted yet. Financial Times have reported that Nokia are in talks to sell off Vertu, their luxury phones division. I can’t say it is a surprising decision. I have never really seen Vertu phones in the wild, nor have I seen them for sale, other than when I was at the airport in Dubai a few years back. Although, it is said they have an annual revenue “estimated to be between €200m and €300m.” Given the low profits of Nokia lately, this sell off could be helpful, as they endeavor to focus on the next billion (and not the next billionaire).
It is estimated that the selling of Vertu will raise approx €200m for the company. It’s not enough to completely save Nokia from doom, but if it means we will see them stay in the game longer, I say sell. There is a lot Nokia must do to turn around. Like Jay posted, Nokia is losing ground in the feature phone market. They need to cut the out-goings, refine and restructure resources, and deliver some killer devices, with announcement and release being within the month (ideally a fortnight but that won’t happen).
Some may say it’s too little too late, but whilst Nokia still exists, it can still come back.
Source: Financial Times
Michael
Category: Nokia
About the Author (Author Profile)
Hi! My name is Michael. Like the others, I'm also a Student, living here in Sydney. I have a real passion for the latest technology and I'm a real Nokia buff! My aim is to keep those of you, like myself, updated with the latest in what's going on in the Nokia World. Currently sporting N9 & Lumia 820, with other Nokia devices in my posession. Get in touch on Twitter via @MFaroTusino, Google Plus or even simply drop me an email at mike.mnb[at]outlook.com or tips[at]mynokiablog.comSubscribe
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Sites That Link to this Post
- Nokia prodaje svoj luksuzni brand Vertu | NokiaMob | April 30, 2012
it is a good move to sell vertu ,but 200 million euro is not good enough to keep sinking ship afloat.
Except that Vertu is still making profits (albeit small) and I can’t imagine Nokia getting good price for it in their current situation.
It is like selling your car to pay the rent.
No its like selling off non core business. Those employees could either be moved to core salesforce positions as with the carriers requests or. I see Microsoft is building a huge ecosystem by their new products via software and business support and their new investment in Barnes and Nobles college business. Combined with their education software and security could really spell trouble for Apple and Android via the upcoming win 8 tablets.
“I see Microsoft is building a huge ecosystem by their new products via software and business support and their new investment in Barnes and Nobles college business”
Well, good luck with the magic mirror that you are using. It would take a miracle to see your vision in flesh.
Since when bribery is called an investment? Is that the same Barnes and Noble that sued Microsoft all over the place, and requested from courts to check Microsoft-Nokia partnership agreement accusing them of antitrust violations and all other kinds of sinister play. Let us remember some of the requests from Nokia:
- Details of Microsoft’s agreement with Nokia, including rationale for it.
- The role played by former Microsoft executive and current Nokia CEO Stephen Elop in coordinating a strategy with Microsoft to compete with Android.
(more @ http://www.computerworlduk.com/news/it-business/3317373/nokia-subpoenaed-over-barnes–noble–microsoft-android-lawsuit/ )
But… if nothing else, Microsoft knows how to hush-hush companies, they have a vast experience with that, so yay, Barnes & Noble is now a good friend… Until the next one that steps in their way… And eventually some will refuse to budge, and then Microsoft will pay a copious amount of money and promise that they’ll never do it again… ’til the next time.
It’s all just a little bit of history repeating…
Computerworld is owned by the same company that owns macworld. Please do your research at better sources. i see Apple not paying taxes and leaving it for the students to pay has many trolls in panic. Thats not good pr. While you guys are here, I’m spreading the news. ..and google in court again, shame. I’ll see you guys on the other sites.
Oh, its expected the nook may drop android.
Oh, come on, you can do better than ad hominem (or however it can translate to a specific site). The reports are all over the interwebs. Here you go, far more detailed: http://www.groklaw.net/article.php?story=20111111121548972 Or are you saying that even the court documents are faked by Apple?
I find your abundance of faith in Microsoft disturbing…
pathetic opinion…
the news is based on FACT…
its like some dude around here that likes to propagate the new microsoft mantra “we used to be evil but now the real evil is google”
hey I’m not a fan off google but for google to become 1/10 of evil Microsoft is centuries have to go by…
Selling the silverware never saved anyone from bankruptcy. It just delayed the inevitable.
Nokia doesn’t have money problem, not yet at least, nor did they have money problem when they’ve gutted themselves last year and explained it with `Microsoft has money, they will give us $1B` (of which most of it we will give them back for licensing costs as the Q1 report reveals) – Nokia had in their coffers more money than Microsoft have invested in the whole of WP ’til now.
Nokia has execution problems. They do too little, too late. They over-promise and under-deliver. They get notoriously late with new releases. They don’t even know what they want to be now – a low-margin OEM or an independent mobile solutions company. That’s their problem, not the money. The way it is, they can sell all their silverware and they’ll eventually face the same fate.
And almost nothing has been fixed in the past almost 2 years since they realized that. In fact, it just went worse… And the market recognizes that, thus punishing them with low credit ratings, low stock value, low customer loyalty, low everything.
+1
The sad thing that most of this was obvious from the start of the “transition” and yet every possible bad decision was dully taken and took its tall.
I would have to disagree. At first they tried selling off NSN, but not have reorganized it with some very positive results especially in north america showing a 67% rise in business. They also came to market with the.award winning lumia line. They teamed up with Microsoft who has been working on 8 for years and the demos of windows.8 on tablets blows android and ios out of the water. This frees up nokia to design hardware of smartphone and other product lines that really doesnt hurt margins if you study costs basis. The coming 8 lineup will have an ecosystem supported by Microsofts continuing partnerships, all that Nokia could not have done but will benefit from. Nokia is looking to the present and future, not just one area of the world.
Like I said, 99% of what you said can be summed up in: “Microsoft will kick ass with WP8 soon, you will see!”. Sadly, most of the investors and observers are not sharing this optimistic view of the situation.
If/when this happens, you will be fully entitled to post “I TOLD YOU SO!” but right now the condition of Nokia proves that going with Windows Phone was the WORST decision possible. FACTS vs FATE
Then again, yours could also be filtered facts, and that’s a fact for real.
Well, sales and market share are the only recognized metrics.
The anecdotal “facts” like “all my friends like Windows Phone” or “Windows phone is the most liked operating system according to a survey of current WP users” are a joke, aren’t they?
The problem with the facts that are often cited about Nokia’s state right now and why it never should have ditched Symbian etc. etc. is that these do not say much about what is going to happen in the future. The Nokia board decided to go with WP because they believed it would allow them the best _future development_
It’s about potential, not about today. Nokia’s situation today (i.e. losing market share etc.) stems from many mistakes made in the past, but there are indications right now that the new strategy might actually be fruitful.
As I have said at another point in the forum before, the howls were loud when Apple dumped OS9 in favour of OSX, even thought the latter wasn’t really market ready back then. But it proved to be a good choice in hindsight, because it lived up to the expectations in terms of its potential.
Of course, Apple probably managed their transition better than Nokia has been managing its Symbian-WP transition, and the effect on Nokia ditching Symbian and selling of the Vertu line etc. doesn’t necessarily have to be as positive, but business often is a bet on the future. You can learn from the past, but you sometimes need to be bold and do new moves.
“This frees up nokia to design hardware of smartphone and other product lines that really doesnt hurt margins if you study costs basis.”
Yep, Nokia is going to rake in profits by competing on the exact same HW specs and the exact same OS with as many other manufacturers as MS can sway into WP camp.
you are suggesting incorrectly each company has the same costs?
Wow, Apple stock broke support and is in freefall.
No, obviously I don’t. What makes you think I do?
The problem is the Elop Effect, if any other.
Good luck selling profitable division and an Iconic Brand!
Nowadays Nokia is on Hit list of all finance sites they reports are like that Nokia is completely out from the mobile phone industry and blah blah blah.Nokia never face tough competition in past years as far compare it with today….
I’d suggest spin vertu off as a subsidiary, operate independent from Nokia and do whatever that what while contribute profit to Nokia.
They should also reconsider their retail strategy, Vertu currently occupying very expensive storefronts in Hong Kong. Should consider more retail channels without expensive rents.
Isn’t that what Vertu pretty much already is?
As for the retail strategy.. well, if you are a luxury brand, you need to be in luxury locations. Generic mall, online or catalogue sales probably would not fit that image too well.
Sell, sell, sell whatever generates profits.
Keep, keep, keep whatever doesn’t sell.
Who will write the MNB entry when Nokia sells Navtech?
I nominate the poster going by the name of “twig”. And the rest of Elop apologists will be here to give him a round of applause, of course.
And then Mark and migo will chime in with how selling Vertu was a great move, because diamonds suck and cheap plastic is actually better and Nokia should have gotten rid if it years ago.
Yep yep, history goes full circle.
“how buying maps from third party is actually better and how Navtec was a waste of money to begin with”
Fixed to fit into the original request.
Aaaand, you once again prove you’re an idiot. Look at my post lower down that’s chronologically before yours.
So, the asset stripping is on its way… Vertu to be followed shortly by NSN & Navteq..
And the Mobile Phones division. And the Research Center. And the Smartphone Division. And Elop’s back to Microsoft. And Nokia’s gone.
Don’t think the Research Center & the Phone divisions (Smartphone & Mobile phone) will be divided.. I don’t think those 3 divisions can survive alone..
Yeah and how do you think NSN will survive separately without the backing of new network technologies from Nokia Research.
This stripping of has nothing to do with any kind of logic. They just try to make as much money as possible as fast as possible long term business logic be damned.
Vertu should be on Nokia Symbian exclusive, but don’t tell the sheep! Then Nokia will have gotten rid of the “Elop Effect” stigma inflicted upon its brand by releasing Nokia Symbian as “Vertu” instead of “Nokia”.
yes Nokia is soo fucked by this dumb fuck of a ceo they HAVE to sell off as much as they can to get and much back over time
elop put Nokia is the weakest state I’ve ever seen Nokia in the 7 years i’ve been using and introduced too
this guy really fucked up for the sake of Microsoft and now they are suffering hard for their stupidity over the years and with this dumb ass ceo at the helm ONLY tending to aid the
Microsoft just got the Barnes and Nobles college business to help support windows phone makers. When in 7 years has nokia had a partner smart enough to create this kind of support? Android security rates on the bottom by Kaspersky. They say windows is ten years ahead of Apple. Not my words, in black and white. The 900 is selling well in the u.s. On zerohedge the windows activations chart is looking good.
Apple stock in plunge. Good hedge funds switched to Microsoft stock.
Yeah, Apple stock is back to its levels from about 6 months ago but still 4 times more valuable than 5 years ago. Microsoft stock is the same as 5 years ago (inflation, anyone?). So, poor, poor Apple, eh?
Nokia has been disposing of, selling off or trying to sell off all sorts of underperforming and non-core assets since Elop joined.
They’ve sold various small companies acquired over the past few years. They sold 2000 patents to Mosaid and 450 to the patent troll Sisvel. They paid to send Symbian development to Accenture. They tried to sell NSN last year but couldn’t agree on a price. Their reward for waiting when they try again, and they will try again, will be a price that’s half or less than they thought it was worth at the time. Oops.
But they must eventually get rid of all the bit pieces regardless of price because they’re an anchor to Nokia’s two key forward strategies.
The explicit strategy for Nokia as a corporate entity since Elop joined has been to cut the company into a “leaner” one that’s more concentrated on profitably running their new core business of OEM hardware manufacture. OEM hardware margins don’t leave a lot of room for non-performing assets that suck up money or for large R&D teams.
The strategy specifically with respect to Windows Phone was to see how it goes and sell out to Microsoft if it turns out to be bad.
Selling off non-core assets plays directly into both of these strategies. Microsoft doesn’t want to buy NSN or Symbian assets or anything like that and Nokia can’t afford to subsidize ongoing losses or counterproductive investment, the way it has been doing for ages now. Vertu might make some money, which is a rarity at Nokia these days, but it’s a niche market and Microsoft doesn’t want that either. They want mass-market.
Expect to see Nokia shed more assets. What will be left is a straight-up hardware OEM that’s 100% dependent on Microsoft for its bread and butter and that will be easily absorbed into Microsoft if it can no longer survive on its own.
And that would include the mobile phones division?
No, I doubt that, actually. First and foremost, I think it would be extremely difficult to chunk out mobile phones. It’s an integral part of Nokia. Besides, Nokia today is worth 40% of what it was worth at this time last year. Back then, you might have wanted to excise only the parts of interest to you to spend less money, but now you get all of it for a fraction of the price. It’s complementary to the smartphone business so it might just be worth a venture at this price because…
Secondly, I think Microsoft could possibly look at mobile phones as a foot in the door with customers that they would ultimately want to capture with their smartphone offerings. You’d have a full, global Microsoft upgrade path at all price points. Smartphones might be where you make money and the rest could be like one giant sales ramp.
If the mobile phone ecosystem can be structured to overlap with Microsoft’s smartphone ecosystem, like for example with common content and services offerings, then those are user conversions they could make in the future.
The issue, I guess, is that Nokia’s brand is no longer as valuable as it used to be in mobile phones – it’s playing out not altogether differently from smartphones in this respect. By the time Microsoft could leverage Nokia’s mobile phone assets, they’d be worth much less than they are now. While Nokia idles away, Samsung and local OEMs are eating Nokia alive in mobile phones.
I honestly doubt MS would be interested in buying the mobile phones part (if even any hardware part of Nokia, actually).
Not to say Nokia’s mobile phones division is not facing significant challenges.. to put it mildly.
How interested they are or aren’t really just depends on how much traction WP7 gains… Or doesn’t.
If WP7 is dead, Nokia probably isn’t going to stand around waiting to die next to it. They’ll want to explore other options, regardless of what financial position they are left in. They could go back to making pulp and paper. No matter how late in the game, they can always try something else if it’s better than the alternatives WP7 offers. Stephen Elop likes to talk about how there’s no plan B, but there is. And even if there isn’t, one can be formulated.
Microsoft, on the other hand, has no other options. They really only have Plan A – WP7. It’s not like they can go Android or something, and it’s not like they can skip out on mobile either.
They need vendors to sell Windows Phone devices and they will buy them if that’s the only way they can hang on to them.
Yaaaaawn….
How about they get their strategy 100% bang on for once.
Buying extra time to push something, even once it’s past the point of having had plenty of time to prove itself.
Is merely a sign of madness, & is delaying the inevitable.
*that time hasn’t been reached yet, but it will have by the end of Q1 2012.
They have no excuses by that point, there must be a substantial shift if things haven’t improved hugely by then.
Yaaaaawn…..
How about they get their strategy 100% bang on for once?
Buying extra time to push something…
Even once it’s past the point of having had plenty of time to prove itself.*
Is merely a sign of madness, & is delaying the inevitable.
*That point hasn’t been reached yet, but it will have by the end of Q1 2012.
They have no excuse by that point, there must be a substantial shift if things haven’t improved hugely by then.
What I want to know is, who is crazy enough to buy Vertu from Nokia?
I mean come on…
There is quite of many companies actually. Vertu has it’s own manufacturing plant, it’s own HQ in London and profitable business.
According to the rumors by wsj there are 4 luxury brands and two investor groups.
Honestly, if they can sell it, go for it. It’s not like Nokia is putting WP into Vertu.
There is quite of many companies actually. Vertu has it’s own manufacturing plant, it’s own HQ in London and profitable business.
According to the rumors by wsj there are 4 luxury brands and two investor groups.
Honestly, if they can sell it, go for it. It’s not like Nokia is putting WP into Vertu
I was always thinking they should move the N9 UI to Vertu. Probably not too late to do it either (until they sell it). The type of person who buys a Vertu would be happy to have an OS that (almost) nobody else has, it would add to the exclusivity. The lack of apps would similarly be accepted as a side effect of having an exclusive platform. The UI is familiar and elegant – Vertu customers have probably used an iPhone before, so the iOS similarities are a good thing, and the Swipe/buttonless UI fits with the kind of luxury item a Vertu is. A Vertu coustomer doesn’t care if they’re late getttling a dual-core CPU compared to the Androids of the unwashed masses.
It’s the perfect match, and if Vertu is making money, why not keep it around? I understand selling off the division to make the company a bit more agile, but using Vertu as a Maemo incubator has its advantages too.
I thought the same. Plus I don’t really get why would you sell something which is making profit?
Harmattan would be a good addition to Vertu. The UI itself is good and you don’t have to worry hardware development too much. Just making cool looking phones with expensive materials. That’s what people who buy Vertu want.
Plus people could make “premium apps” for this kind of platform with higher price tag.
I like the idea. Exclusive os on an exclusive device. High app price for a high priced device. Don’t know how well it would work for Nokia if they chose to keep it, and follow that strategy but one can always dream
“Harmattan would be a good addition to Vertu. ”
Very interesting idea, someone should pitch that to them!
But make it quite a bit cheaper
Yeah. The thing Nokia could do with an exclusive Vertu app store is curate all the software. If you want your software available for sale on a Vertu (at higher prices) it needs to be damn good. So you literally have an app store with no shovelware. Would pretty much guarantee banking apps on Qt too. What bank wouldn’t provide an app for the type of client who buys a Vertu?
The only reason MS will buy Nokia is to get hold of some valuable patents. They will not buy Nokia as other OEM will balk at having to compete with MS in the hardware arena as well.
Nokia can asset strip as much as it likes that will only delay the ineviatble. It’s windows 8 or die for Nokia. Windows 7 was half baked when compared to todays iterations of ios and Android. It’s not enough for windows 8 to catchup to the next iterations of ios and Android it needs to beat them.
Can someone please explain me what makes Android or iOS better than WP7? Other than the amount apps they have in their stores.
There are plenty of things you cant do with WP but that you can do on Android.
Just try search “Windows Phone limits” on google.
About iOS: many more apps and more “standard UI” (I dont like iOS UI, but it’s simple so usually people, if dont fall in love with it, also dont dislike it. WP Metro UI is more unique and “strange”, that means many will like it, many wont).
Also, about WP Metro UI: that’s why lack of customization is more felt in WP than iOS.
C’mon guys,
Rappers and Sheikhs want diamond encrusted iPhones.
They don’t care about crystal blackberry knock-offs or whatever 2001 style button phone Vertu is selling now. Vertu has one touchscreen phone now, yet no blinged-out wrapper knows what the hell “screen” it’s running.
Sorry.
Not very relevant to the post, but regarding Nokia income. That deal they did with Apple to stop all litigation, didn’t that include money from every future iPhone sale? I heard £5 per phone sold as a conservative estimate. If that is right, doesn’t that earn roughly £150 million a quarter, based on last quarter sales? That would surely help keep the wolf from the door.
I’m pretty sure it was the antenna design that they sued for, and the iPhone 4 and later antenna certainly isn’t copying Nokia.
if you take off the numbers (accounting) all the layoffs, assets that were sold, patents sold and the microsoft bribe for winpho, the nokia numbers will be incredibly bad, don’t you think?
The speech
Although widely regarded as “tacky” [2], the shops and their wares were nevertheless extremely popular with the public, until Ratner made a speech at the Institute of Directors on April 23, 1991.[3] During the speech, he commented:
“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?”, I say, “because it’s total crap.”[4]
He compounded this by going on to remark that some of the earrings were “cheaper than an M&S prawn sandwich but probably wouldn’t last as long.” After the speech, the value of the Ratners’ group plummeted by around £500 million, which very nearly resulted in the firm’s collapse.[5] Ratner resigned in November 1992 and the group changed its name to Signet Group in September 1993.
Today, Ratner’s speech is still famous in the corporate world as an example of the value of branding and image over quality. Such gaffes are now sometimes called “Doing a Ratner”,[6] and Ratner himself has acquired the sobriquet “The Sultan of Bling”.[7] Ratner has said in his defence that it was a private function which he did not expect to be reported, and that his remarks were not meant to be taken seriously.
http://en.wikipedia.org/wiki/Gerald_Ratner
Sounds familiar?
Never sell your crown jewels. in other news, they say the low end phones aren’t selling. small wonder! people always look for who’s the market leader in technology and buy stuff from that company – intel/ amd/ nvidia are always out to prove they have the fastest tech. nevermind the fact that 95% of the people don’t go for the latest and the greatest, they buy budget product from the company that makes the “fastest/ latest greatest”. Intel is supposed to be “fast” conveniently forgetting that AMD products are always cheaper and better in price/ performance.
nokia’s move to sell vertu and other crown jewels or the fact that they do not have class leading products will hurt the selling of low end phones. that will be a regular feature for sometime to come now.
Selling/shutting down your non-core businesses to make yourself look less embarrassing on your corporate result report card – any dumbass can do it. Look at Carol Bartz when she was in charge of Yahoo. Closed Geocities and other non-core businesses, slashed jobs. She’s still a crappy CEO who’s out of ideas.
At least the Yahoo board has the balls to sack Carol Bartz. Not so sure about the Nokia board when it comes to Stephen Elop.
If you want to rescue Nokia, sack Elop asap.
If you wait till WP8, it may be way too late.
You can still make Windows phones (like Samsung and HTC), just don’t bet the farm on them. Most consumers are consciously staying away from Windows phones.
How much more money and market share do you want to bleed, Nokia? Do you want to get a ‘junk’ status rating and then be sold for pennies to Microsoft?
Stephen Elop’s CV isn’t even that good anyway. His stint at Macromedia and Microsoft was modest. How and why he was appointed as Nokia’s CEO I’ll never know.
Sack Elop now.