This is a significant deal for both companies. For Nokia, the company today is not a direct, major player in mobile phones and subsequent consumer services: it lost market share years ago for its own handset business and ultimately ended up selling it off (it now licenses the name to HMD, and has many other licensing deals for hardware and software patents with other handset makers); it then it sold off its Here maps business; and it most recently pulled out of its efforts in health-related hardware and services.
China has so far proven to be a very lucrative market for building new tech services. Not only does its massive population (and subsequently large number of people using tech services) mean that you have a lot of scale, which is important for, say, training AI services or battle-testing new technologies; but also, the country is known for more relaxed policies when it comes to how user data is collected and stored, which can also be a significant attribute when working on new technologies. (Note: that last part might be changing down the line.) Tencent — as the owner of two of the world’s biggest messaging services — is an especially key partner in this regard.
The financial terms of the deal have not been disclosed but we have contacted Nokia to see if it can provide more detail. The two note in their announcement that the deal will include a lab in Shenzhen, and that apps will be created targeting sectors including transportation, finance, energy, intelligent manufacturing and entertainment. Technologies that will tested include Edge Computing, “Cellular Vehicle-to-Everything” and delivering cloud-based gaming and entertainment — areas that touch on what many think will define the next generation of hardware (connected cars) and architecture (cloud-based services becoming even more ubiquitous and therefore straining networks further).
The world is still years away from wide-scale 5G networks — which proponents say will bring a new generation of services connecting people and objects in the Internet of Things — but those hoping to have a role in that economy are getting themselves in place now to capitalise on them for when they do arrive. Today comes the latest development on that front: Nokia and internet giant Tencent announced that they will work together on 5G R&D and applications, including leveraging Tencent’s billions of users — among other things, it owns messaging networks WeChat and QQ, which alone account for over 1 billion users — to test and roll out its services.