Nokia is all set to make a comeback in the mobile and tablet
business thanks to a new agreement reached between the Finnish
company and Microsoft. However, Nokia themselves would not be
involved in the actual manufacturing or marketing process per se.
Instead, that would be done by HMD Global Oy with Nokia just lending
the rights to the use of its brand name.
This has been made possible via a new deal as per which Microsoft
will be selling off Nokia’s feature phone business to a subsidiary
of Foxconn and the young Finnish firm HMD Global Oy. HMD, in turn,
will be developing new phones and tablets based on Android carrying
the iconic Nokia branding. The entire deal values at $350 million.
Few technology companies evoke the same feelings of warm, fuzzy
nostalgia as Nokia. Just mentioning the name brings back memories of
a time when mobile phones were mainly just that – devices for
making phone calls, rather than portable supercomputers that demand
every other minute of our time for emails or social media.
Back then, mobile phones were liberators and if you owned one it
was almost certainly a Nokia: the company made the bestselling mobile
in every year from 1998 to 2007 – the year the iPhone was released.
Defined by its near-unbreakable handsets, its (often too) stylish
designs and the gaming sensation that was Snake – the company was
once Europe’s biggest, with a market cap of $300bn (£205bn), and a
revenue equal to a fifth of Finland’s GDP.
So the news recently that the company is set to re-enter the
mobile market was naturally greeted with rose-tinted excitement. A
newly founded Finnish company, HMD, led by a former Nokian, has
licensed the Nokia name from what remains of the old company;
primarily a telecoms and networking business.
Microsoft however stated they will continue to focus on the
Windows 10 Mobile platform as well as the Lumia brand. It will just
let go of Nokia’s feature phone assets which include the branding
rights, ‘software and services, care network and other assets,
customer contracts, and critical supply agreements.’ HMD will have
the right to the use of the Nokia branding for ten years. It will
also engage in the actual manufacturing, sales, and service of the
devices. Nokia will be receiving royalty towards the use of its brand
by HMD. Nokia will also have a representative in the HMD Board of
Directors but won’t make any financial investments or hold equity
in the new company. The deal, which is expected to be finalized later
in the year will affect 4,500 employees, who, Microsoft said will be
given the option to join HMD or FIH, the Foxconn subsidiary.
Once the deal is closed, Arto Nummela, a former Nokia executive
will be the Chief Executive of HMD. Nummela right now takes care of
Microsoft’s entire feature phones business besides serving as the
head of the Mobile Devices business overseeing the entire Greater
Asia, Middle East, and African regions.
“We will be completely
focused on creating a unified range of Nokia-branded mobile phones
and tablets, which we know will resonate with consumers. Branding has
become a critical differentiator in cell phones, which is why our
business model is centred on the unique asset of the Nokia brand and
our extensive experience in sales and marketing. We will work with
world class providers in manufacturing and distribution to move
quickly and deliver what customers want”
said Arto Nummela.
Florian Seiche, who right now is the Senior Vice President at
Microsoft Mobile overseeing sales and marketing for Europe will be
joining HMD as its president.
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