Luxury phone brand Vertu is to be sold to EQT VI, a Northern European private equity group, as Nokia continues to sell off its assets. The sale is joined by talk of a new round of job cuts, and that Nokia’s second quarter results will include further losses.
News of Vertu’s impending sale came at the end of last year, when Goldman Sachs was appointed to court potential buyers, and at the time the sale was expected to raise between $250 million and $400 million.
A press release issued this morning says Nokia has “agreed terms” with EQT VI, but adds that the terms are confidential, and therefore doesn’t talk about the money. A Bloomberg report, which appeared shortly before the official release, put the figure at $250 million. Nokia will retain shares of 10-percent, and the deal is expected to be completed later this year.
While the sale of its luxury arm could be seen as a double-edged sword — Vertu is profitable, but the sale provides Nokia with an injection of cash — there’s nothing positive about Nokia preparing to cut a further 10,000 jobs around the world by the end of next year.
Nokia CEO Stephen Elop said the reductions are “a difficult consequence” of the companies extensive restructuring, and warned that when the second quarter’s figures are released, the losses could be greater than feared.
The accompanying statement said Nokia would continue investing in its Lumia smartphone range, along with location-based services, and improving its Series 40 feature phones.
Luxury phones are a niche market, but it’s one which Vertu has made its own, and has reportedly seen “high double digit sales growth” in the last two years. Some may think the Galaxy S3 and the iPhone 4S are luxury phones, but they don’t come close to Vertu’s offerings, which concentrate on luxury materials and services rather than high tech features.
So what could change now Vertu is effectively out from under Nokia’s umbrella? As Vertu uses Symbian on its phones, an operating system which in a few years time will cease to be, a new OS would breathe new life into those flashy phones.
There are several choices, some obvious, one not so much. On the surface, Android looks to be the obvious successor. It’s well-supported, can be customized and will be familiar to more people — but it’s not very “exclusive.”
As a connection to Nokia will remain, Windows Phone may find its way onto future Vertu devices. It’s more “exclusive” than Android (although not in a good way), and isn’t as fiddly or geeky either.
This may be the direction Vertu takes, as a set of images supposedly showing a prototype Vertu-branded device running Windows Phone 8 have recently appeared, although there’s no indication it has gone beyond this early stage.
How about, instead of going for any of these, Vertu gets together with RIM and licenses BlackBerry OS? It’s no more awkward or unattractive than Symbian, and the legendary email system and BlackBerry Messenger could be attractive to Vertu’s rich clientele. After all, it was good enough for Porsche Design, and RIM will probably be glad of the business.