So the big news tonight was Microsoft acquiring Nokia’s device business. There is plenty written on this already. So far the focus has been on Microsoft, but what about Nokia after the deal?

Microsoft is just buying Nokia’s handset business. That only contributed about half of Nokia’s revenue in the last quarter, but the other half contributed all of the company’s profit. That half includes Nokia Solutions and Networks (aka NSN, formerly Nokia Simens) the company’s network infrastructure business and Nokia HERE the company’s location based services unit (formerly Navteq).

Those are two very different businesses, with a different set of customers, neither of which has a clear future.

First NSN. Nokia’s network business has a venerable history having built much of the world’s cellular infrastructure. But those glory days are well in the past. Today, the company is struggling to find its identity. Networks have changed a lot and are going to change a lot more in coming years. The wireless base station business has been suffering from collapsing pricing and growth for years. NSN is now a distant third or fourth in the wireless infrastructure business, supplanted by Huawei and ZTE with their low costs of capital and fierce pricing. More importantly, the future of networking is changing rapidly as Software Defined Networking (SDN) and Network Function Virtualization (NFV) are looking to drastically change the way the telecom operators build their networks.

We are not going to wade into the SDN debate (at least not right now), but is clear that incumbent equipment vendors need to radically alter their product strategies. It is not clear that NSN has the pieces to do that, or the vision. At least one well-regarded commentator thinks that NSN is at least a step or two behind.

We are not predicting doom and gloom for NSN, but they have a lot of work cut out for them. True, they will now have an extra €5.4 billion to work with. But money cannot buy time, and they do not have much of that before they need to come up with some big new vision. Also, as we noted in our previous post, there should be real questions as to the financial health of a company that needs a €1.5 billion loan from the people to whom they are selling half their business.

The company’s location business HERE also merits some attention. It is still profitable and we certainly think that location services are an important asset for future Internet businesses.

Nonetheless, it stands out starkly that these two businesses do not fit that well together. In today’s announcement, Microsoft went out of their to highlight that they are to become a “Strategic Licensee” of HERE. This would have seemed a natural fit inside Microsoft, so it is unclear why Nokia held on to it. Our best guess is that since Nokia paid around $8 billion for Navteq six years ago, that the two could not agree on a price that did not involve a major write-down for Nokia.

Piecing all of this together, we get the sense that this story is not over yet.