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After Microsoft Deal, What’s Left of Nokia Will Bet on Internet of Things

With the devices business gone, Nokia’s CTO says he’ll try to capitalize on innovations in sensors, materials, and cloud software.

Despite losing its perch atop the mobile-phone business, Nokia still could significantly influence the future of communications.

After Microsoft closes its purchase of Nokia’s devices and services businesses in the coming weeks, Nokia’s chief technology officer, Henry Tirri, will be part of a new organization. The new outfit, known as Nokia Advanced Technologies, will be expected to take better advantage of Nokia’s vast patent portfolio and its richly financed R&D organization (see “Can This Man Work Magic?”).

Nokia’s intellectual property includes more than 30,000 patents, including many fundamental to wireless communications—as well as others in materials, nanoscience, and software. With the devices division gone, the Advanced Technologies business will cut licensing deals and perform advanced R&D with partners, with around 600 people around the globe, mainly in Silicon Valley and Finland.

In a conversation at Mobile World Congress in Barcelona, Spain, with David Talbot, chief correspondent of MIT Technology Review, Tirri said he sees opportunity in the Internet of Things as the once-dominant Finnish mobile phone giant tries to reinvent itself yet again.

On what technology areas will Nokia’s Advanced Technologies business focus?

First you need to have a vision—a point of view about the future—otherwise things don’t make sense. We are now talking about the idea of a programmable world. We are not just talking about a computing revolution as in the past; to me it reflects much more what will happen in your home, your connected car, with your wearable devices, and so on. No device now works alone. You use the same things from your laptop, your tablet, smartphone or whatever. Many of your smartphone apps already lose their value when they are not cloud connected. The same thing will be true in the future for other everyday objects.

If you believe in such a vision, as I do, then a lot of our technological assets will help in the future evolution of this world: global connectivity, our expertise in radio connectivity, materials, imaging and sensing technologies.

What are some examples of such technologies?

Bluetooth low-energy technology. Any modern sensing app which is connected to a smartphone will be using Bluetooth LE, a low-powered technology compatible with Bluetooth, for which much of the development was done in our labs. Other domains will be wearable sensors, such as e-Skin—nanosensing various kinds of biological measurements that can be used for monitoring your health and wellness. And particularly graphene—we were one of the founders of the EU’s Graphene Flagship program—will help in new kinds of computing and sensing devices. And of course, there is a software dimension to all of these.

Why not build some new products? Nokia has reinvented itself before.

We will explore new product areas, either to develop ourselves or potentially for technology licensing to others, as Advanced Technologies will also be a licensing business. We have an existing portfolio, developed ourselves, built from more than 50 billion euros of R&D investment over the last 20 years, as well as experience in building products. Beyond simply licensing IP, we expect to be developing technologies and products together with customers, in the way you see others such as Qualcomm or ARM doing. We have technologies in our portfolio that we have not broadly licensed because we reserved them for differentiating our products. But as we divest our devices business, we could, for example, look to license imaging technology to camera manufacturers; or take connectivity technologies and license them for use in wearable devices.

What are you going to get rid of?

It’s too early to be certain, but there may be some technologies, perhaps including mobile phone user interface-related work, that won’t make sense for us to continue, but we need to look at this in more depth once the transaction with Microsoft has closed.

It’s no secret that Nokia’s huge research efforts over the years did not help it avoid being outflanked by the iPhone and go from a mobile phone pioneer to a minor player in the smartphone business. 

That was not purely an R&D question, but a platform business question, and the steps we then took to adopt Windows Phone to address this have been well documented. In the future, Advanced Technologies will itself be a business, which is quite a fundamental change from being a corporate function to becoming a business in its own right. Technology licensing and advanced R&D will be intertwined within the business, as opposed to being a separate corporate research team and IP business.

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