Microsoft is marketing the function cellphone organization it acquired from Nokia back in 2013 to a subsidiary of Chinese manufacturer Foxconn for $350 million, it declared now.
At the similar time former operator Nokia said it has inked a offer to license its model to HMD World, a new Finnish business run by ex-Nokia and Microsoft units team, to “create a new technology of Nokia-branded mobile telephones and tablets”.
So, er, the Nokia cellphone is dead, prolonged are living the Nokia phone…
Entry level issues
Feature telephones — aka far more primary mobile units that are not thought of to be totally fledged smartphones — hardly ever looked like a cozy in shape for Microsoft, which shelled out some $7.2 billion to obtain Nokia’s total mobile units organization around three yrs in the past in the hopes of firing up the fortunes of its smartphone OS platform, then identified as Home windows Cellular phone.
That tactic has also faltered, with Microsoft failing to carve out a important share for Home windows Cellular phone in a market place dominated by Android (in volume terms) and iOS (for high quality/income). While it reiterated today that it will continue to build its Home windows 10 Cellular system, and to support Lumia-branded smartphones (this sort of as the Lumia 650, Lumia 950 and Lumia 950 XL) along with telephones from OEM companions this sort of as Acer, Alcatel, HP, Trinity and VAIO.
Holding onto a diminishing function telephones organization plainly did not hold a great deal attractiveness for Redmond which — regardless of its converse of continued enhancement of its have smartphone system — has been focusing its endeavours on building up a services featuring through applications created for Android and iOS units. Last thirty day period, for instance, it brought its Word Circulation keyboard application, at first designed, for Home windows around to iOS as an application.
With its focus shifting to rivals’ smartphone platforms, exactly where the buyers are, there was plainly small incentive for the business to keep Nokia’s old function telephones organization, especially as the market place for so-identified as dumb telephones proceeds to shrink as Android even further squeezes the value of entry level smartphones.
In prior yrs Microsoft had suggested feature telephones could possibly be equipped to act as an on-boarding ramp for cellphone buyers to encounter its services and be encouraged to upgrade to a Home windows dependent smartphone. However that idea hardly ever looked probable to fly. And without a doubt, even the incredibly modest income of Home windows smartphones have even further collapsed this calendar year. And the company’s cellphone profits declined forty nine per cent in its Q2 2016 final results back in January.
Microsoft has also precisely been winding down the function telephones organization for pretty much two yrs. Again in July 2014 an inner memo received by the media pointed out that all mobile telephones-linked expert services would be immediately moved into “maintenance mode”, and — around an eighteen months period of time — shut down.
As it turns out Microsoft has taken the alternative to market the function telephones division rather of closing it, clawing back a small of the hard cash it handed around to purchase Nokia.
Although Nokia will get to re-enter the mobile phones market as a model licensee.
Nokia branded telephones and tablets
The agreement Microsoft has reached will see the function telephones unit and property offered to FIH Cellular, a subsidiary of the Foxconn Technology Team. Although HMD world-wide — the freshly shaped Finnish business which is bringing the Nokia model back to mobile devices — is getting the correct to use the Nokia model on function telephones, and “certain linked style rights”, with the goal of starting to be the sole world-wide licensee for all forms of Nokia-branded mobile telephones and tablets, it reported now.
When Nokia offered its mobile division to Microsoft it gave up the correct to use its model name on units, but only until eventually this year when that clause in the offer expired. It is now evidently formulated its tactic to return to the units market place, possessing beforehand signaled it was on the lookout for the correct spouse to do so.
Asked about this back in February Nokia CEO Rajeev Suri explained to TechCrunch: “We think it’s a good organization model mainly because the Nokia model has good retention — the recognition of the model is nonetheless incredibly high in all the main markets. We also think that if there will be a merchandise with the Nokia model on it there is an possibility for high quality on that merchandise – distinct value premium” — suggesting HMD will be featuring high conclusion handsets and tablets, as nicely as function telephones.
Nokia couched its agreement with HMD now as a strategic offer. The offer offers HMD an unique world-wide license (excluding Japan) to generate Nokia-branded mobile telephones and tablets for the subsequent ten yrs. Nokia Systems will obtain royalty payments from HMD for income of Nokia-branded mobile items, masking both model and intellectual home rights.
Nokia had already been screening a brand licensing tactic in mobile units, performing with Foxconn on an Android dependent pill, the N1, for the Asian market place back in 2015. The HMD offer plainly puts its licensing tactic on a far more official and sustained footing. A Nokia spokesperson verified it will no be involved in the style of HMD Nokia-branded units, telling TechCrunch: “HMD will be dependable for merchandise development, including style.”
For its component HMD reported it intends to invest far more than $500 million around the subsequent a few yrs to support the world-wide advertising of Nokia-branded mobile telephones and tablets, funded through its investors and (what it hopes are) income from the acquired function cellphone organization.
HMD — yet another Android OEM
As nicely as organizing to market Nokia-branded function telephones, HMD reported now that it will also have a smartphone and pill portfolio dependent on Android — returning the Nokia model to Android handsets (a tactic Nokia had begun just prior to the closing of its acquisition by Microsoft, and which Microsoft subsequently shuttered… Certainly, all that is old is new all over again. And again… ).
Nokia pointed out now that is not generating a fiscal investment or holding fairness in HMD but its Nokia Systems division will take a seat on the HMD Board of Administrators, as nicely as placing necessary model requirements and functionality linked provisions — to ensure that all Nokia-branded items are living up to its quality and style expectations. Soon after all, the model is the only mobile asset for Nokia at this issue so it demands to ensure no just one (else) poisons the nicely.
As component of the Microsoft function cellphone sale offer, Microsoft pointed out that some 4,500 workers will transfer to, or have the possibility to be part of, FIH Cellular or HMD World — shedding what is probable the remaining rump of Nokia team Microsoft at first acquired (right after prior work cuts as it was not able to transfer the needle on mobile device sales). FIH Cellular will also obtain Microsoft Cellular Vietnam — the company’s Hanoi, Vietnam, manufacturing facility, Microsoft added.
The transaction is anticipated to near in the next 50 % of 2016, topic to regulatory approvals and other closing ailments.
After the Microsoft transaction closes HMD will be led by Arto Nummela, who beforehand held senior positions at Nokia and is at present the head of Microsoft’s Mobile Devices business for Greater Asia, Middle East and Africa, as nicely as its global Feature Telephones organization.
HMD’s president on closing would be Florian Seiche, at present Senior Vice President for Europe Gross sales and Internet marketing at Microsoft Cellular, and who beforehand held critical roles at Nokia, HTC and other world-wide manufacturers.
Commenting on the impending return of the Nokia model to the mobile market place, Ramzi Haidamus, president of Nokia Systems, dubbed it an “exciting new chapter”, incorporating in a assertion: “Instead of Nokia returning to manufacturing mobile telephones alone, HMD strategies to produce mobile telephones and tablets that can leverage and increase the worth of the Nokia model in world-wide markets. Operating with HMD and FIH will let us participate in just one of the premier consumer electronics markets in the earth whilst keeping true to our licensing organization model.”