Feature Article

June 13, 2012

Nokia & EQT to Close Agreement on Sale of Vertu Label

Nokia has been actively trying to restructure itself to better compete in the mobile phone market for some time now, and one of the biggest moves it's been trying to make is to divest its luxury phone division, Vertu. The sale of said group may be in the works, as reports emerged today saying that Nokia was close to an agreement with the private equity group EQT.

Vertu is famous--or infamous, depending on stance--for producing mobile phones that almost force the user to redefine their concept of luxury. Vertu phones aren't necessarily the top of the line in technology, but what they lack in features they more than make up for in sheer quality of the materials used. Vertu phones regularly feature Swarovski crystals, and from there go on to include a wide array of other top-drawer materials, like crystal in the displays, sapphire and ruby in the keys, and a variety of materials used in the casing itself, like hand-tooled leather, gold, or platinum. The London Symphony Orchestra reportedly records all their ring tones, and the company also offers a 24 / 7 concierge service as well as exclusive tech support and other services.

The problem in selling off the Vertu unit, at last report, is separating Vertu from Nokia's operations, though a deal on the matter could come by the end of this week and represent around 200 million Euros--about $249 million US--assuming all goes as planned. Another private equity group, Permira, had previously made a play for Vertu but no agreement had been reached.

Nokia's own reasoning behind selling Vertu--part of a plan to sell "non-core assets"--is at once a perfect explanation for the move and a summation of Nokia's overall path. Nokia, which has seen its market share fall off in recent years with the rise of Apple's iPhone and the growing array of Android devices, has been looking to change the way it does business. A greater focus on features as seen in devices like the PureView 808 and the Lumia 900, a growing alliance with Microsoft and its Windows Phone operating system instead of its own Symbian operating system, and the like are all prime examples of Nokia's attempt to recover its lost market share from a time when Nokia was the big name in mobile phones. Getting out of the likely niche market that is luxury phones, especially in a down economy, is a sign that Nokia wants to make big changes, and is willing to do what's necessary to turn itself around.

Hopefully, Nokia's gamble will pay off. Hopefully, Nokia's plans will see them on a comeback trail to at least make them a viable competitor. The more competition in a market, the better the result for consumers, and with more firms in the market, it ensures plenty of competition for some time to come.

Edited by Amanda Ciccatelli

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