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Nokia Spends Almost $4 Billion On Research

David Gilbert

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Nokia Spends Almost $4 Billion On Research

2010 was a hell of a year for Nokia. It barely maintained its position as the largest producer of mobile phones in the world; lost out to Android as the largest smartphone OS; had a mixed reaction to its flagship N8; installed its first non-Finnish CEO; saw its Q4 pre-tax profits fell by 22 percent and today we have learned that the Finnish company has spent almost $4 billion in research and development in 2010.

Research results by Bernstein Research has revealed that in 2010 Nokia’s Devices & Services department spent $3.9 billion on R&D which is around three times the average spent by its rivals such as HTC, RIM, Microsoft and Apple. When you look at the chart (below) visualising the spending on R&D it becomes clear how much more the Finnish company is spending on new and emerging technology.

The first question you must ask is: “Where is all the money going?” Well that’s a pretty hard question to answer, though another chart provided by Bernstein Research gives us some indication. It shows that a sizeable chunk was spent on Symbian and a lot more spent on hardware, design and test and integration. MeeGo is also mentioned as are Nokia Research Centres. Despite this break down it is hard to know in what direction Nokia is headed and how this massive spend on R&D will help it in the future.

It is safe to say that Nokia has been left standing as others around them dominated the smartphone market in the past two years. However with MeeGo a possible saviour in 2011, this spend on R&D could point to Nokia attempting to re-establish itself at the top of the mobile phone market. Nokia currently holds a number of valuable patents in relation to GSM, CDMA and LTE and with this type of spending we could be seeing as revolutionary technology coming our way in the coming years. We may also learn more at Nokia's Strategy Briefing for 2011 next Friday, 11 February.

Source: All Things D

Arctic Fox

February 3, 2011, 11:35 pm

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A perfectly legitimate question. Interesting that Engadget's take on it was VERY snide:





(http://www.engadget.com/2011/0...





My only comment other than that is that I await what Nokia will be announcing in the next few weeks.

ILoveGagdets

February 4, 2011, 1:13 am

This is pretty comforting to the users out there who have (wisely or not) aligned themselves to Nokia despite the media generally backing the alternatives. Above all it shows that the company is investing in the future, and why shouldn't it. They have for many years pretty much ruled the roost in terms of hardware but have made some poor decisions on the software side, so now that damage needs to be repaired. It's always going to be difficult to be best at everything and it's very hard to see where the next game-changer is going to come from, but if they can gain some of the lost credibility on the software front then who's to say they won't once again rise to the top of the smartphone market. Spending that amount on R&D is a sure sign that the intention is there and they are not so worried about profits for the moment. Good for them.

James Reckitt

February 4, 2011, 4:18 am

I think the cash is being spent like it is so that Symbian can be a realistic competitor in the smartphone marketplace. Think about it - you rarely get people praising it, whereas Android and iOS both get loads of positive comments.

Gk.pm

February 4, 2011, 4:20 am

The trouble with Nokia is that, due to operator subsidies and market approach, their customers have been the phone companies. All that energy has been channelled at pleasing the companies and not the actual people using the phones.





Even Apple suffered a similar fate when they launched the Motorola ROCKR phone, but they learnt from it and went on their separate way. The first iPhone wasn't even subsidised, an almost insane idea at the time.





I suspect even with these 4 billion, Nokia will struggle to think outside the box they've been building for years. A shame really because I think on the phone side Nokia is still the leader, unfortunately being a phone is almost an afterthought these days.

SpiderJacek

February 4, 2011, 4:34 am

I hope that they'll use that money to launch MeeGo as a Symbian replacement and they will create some nice hardware to run it on.

piesforyou

February 4, 2011, 6:01 am

I coulda done their R&D for a lot less.





Are we going to rival Android? No.


What should we do to survive? Make Android handsets.


What should our handsets be like? HTC.





Done. Can I have my $4 billion now kthxbi

Ikillgiants

February 4, 2011, 11:52 am

Having developed or contributed to the development of many of the hardware standards used in mobiles and having a large range of phones, I'd expect Nokia to spend a lot on hardware. The symbian costs are not surprising either really. Nokia's strength (although perhaps it's becoming a source of frustration) is the variety of phones that all need hardware/software tailored to them to ensure they work smoothly.





Perhaps Apple should spend a bit more then it wouldn't have antennae issues (dives for cover).

BOFH UK

February 4, 2011, 2:21 pm

Sorry but I don't see how you come up with Nokia spending what it does as pointing to an effort to re-establish itself at the top of the pile when you have the actual breakdown of spending listed in the article. Let's see here:





20% of their R&D budget went on Symbian which is basically a legacy product at this point.





21% went on Mobile Phones, Hardware, Design, Test and Integration. While Nokia has proven it can produce very nice hardware this covers a VAST range of handsets and hardware alone isn't going to keep them in the game.





Only 6% of that R&D budget went on MeeGo, their next gen product. At a cost of $300 Million that's roughly what you'd expect to see, nothing spectacular there at all.





The sad fact (and I say this as a long-time Nokia user) is that Nokia is bleeding R&D funds because they're making not one but two mobile OS's, one of which isn't really what the market wants (but makes very good sales as it's on a LOT of low end smartphones) and the other isn't out yet. I really do hope MeeGo pays off for them but this level of spending shouldn't be taken as proof positive that they're hurling unheard of figures behind it, this is more-or-less business as usual for Nokia.

Ikillgiants

February 4, 2011, 4:51 pm

BOFH UK: I see where you&#8217re coming from, and in many ways I agree. If there isn't a shift from Symbian to Meego in the near future, how can any investor or buyer be sure that Nokia is truly preparing for a Meego centric future?





I guess the question these analysts should be asking is "Has Nokia's strength of a wide and diverse product range become a problem?" Personally, I think so. I look at their product range and I'm relatively overwhelmed with choice. Other than price, what differentiates their mid-range phones? (Also what happened to the decent flip phones?)

HarryGlass

February 4, 2011, 7:04 pm

What scares me are the head counts in those offices. 5,000 people in the Symbian UI team? I think 10 should do the job. Talk about too many cooks. How can anything be agreed, how can they catch up and overtake the competition with so many people moving in different directions. They've become a dinousaur. Too big and slow to adapt. They should look at the restructuring at Microsoft as a basis for change, perhaps with the new CEO they'll manage that. Right now it looks like they are just throwing their money away.





Cut the workforce, simplify the handset range and put out a couple of Android handsets just to get a cut of that pie as well cos their hardware is lovely.

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