We live in a very different time in terms of innovation and research. It is funny how small, start-up companies can become market leaders and change the structure of industries within a matter of days with a breakthrough technology or process. We live in a day of age where there is no such thing as static market power in the electronics industry, because almost anything and everything may be imitated with the current manpower and technological know-how, whereas the products that are valuable and inimitable are the ones which make money.
It has been a while since Nokia, the handset device leader of the late 1990’s, left the handheld communication device industry and switched to the telecommunications industry. Nokia started manufacturing equipment …show more content…
For years Economists dealt with the ideal market structure for the most efficient Research and Development environments. By examining the Nokia-Alcatel Lucent merger, I believe that we may see a pattern on R&D expenses and innovation incentives that come with consolidation across industries.
Telecommunications industry is known for its high fixed costs, which is why economies of scale and scope are relatively important to maximize profits. Minimum Efficient Scale, which is the range of outputs needed to optimize the long run cost curve is technically where each firm should produce and it is easier to spend on R&D when there is a large fixed cost base to spread it …show more content…
In the press release it is clearly stated that this merger will enable a new wave of technological change and an easier transition to the cloud based computing. Alcatel-Lucent has Bell Labs, which have been around since Theodore Vail and the introduction of the Bell telephones. Bell Labs is definitely a VRIO platform and it may be the strongest hand for the Nokia Corporation due to its history and technical expertise. In addition, it is also stated that the formed company will have 40,000 R&D workers and a $4.7 billion budget for the innovation teams overall. The new R&D team will have another advantage, having labs in three different continents. The diversity of lab locations will help developers continue the research done in the previous time zone. For example, the division in the U.S team can carry on the work done by the European R&D labs, thus there will be a 24-hour, constant innovative process. Nokia Corporation (new company name) will enhance the development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging
It has been a while since Nokia, the handset device leader of the late 1990’s, left the handheld communication device industry and switched to the telecommunications industry. Nokia started manufacturing equipment …show more content…
For years Economists dealt with the ideal market structure for the most efficient Research and Development environments. By examining the Nokia-Alcatel Lucent merger, I believe that we may see a pattern on R&D expenses and innovation incentives that come with consolidation across industries.
Telecommunications industry is known for its high fixed costs, which is why economies of scale and scope are relatively important to maximize profits. Minimum Efficient Scale, which is the range of outputs needed to optimize the long run cost curve is technically where each firm should produce and it is easier to spend on R&D when there is a large fixed cost base to spread it …show more content…
In the press release it is clearly stated that this merger will enable a new wave of technological change and an easier transition to the cloud based computing. Alcatel-Lucent has Bell Labs, which have been around since Theodore Vail and the introduction of the Bell telephones. Bell Labs is definitely a VRIO platform and it may be the strongest hand for the Nokia Corporation due to its history and technical expertise. In addition, it is also stated that the formed company will have 40,000 R&D workers and a $4.7 billion budget for the innovation teams overall. The new R&D team will have another advantage, having labs in three different continents. The diversity of lab locations will help developers continue the research done in the previous time zone. For example, the division in the U.S team can carry on the work done by the European R&D labs, thus there will be a 24-hour, constant innovative process. Nokia Corporation (new company name) will enhance the development of future technologies including 5G, IP and software-defined networking, cloud, analytics as well as sensors and imaging