Nokia is Returning to the Phone Market
As announced today, Nokia Corporation is returning to the mobile phone and tablets market on a global basis. However, the company isn’t planning on manufacturing smartphones, but it will instead provide branding rights and intellectual property licensing.
Microsoft’s acquisition of Nokia also meant that the Finish company was obliged to transfer its trademark to the U.S.-based company. However, this deal has ended, marking a new era for Nokia.
A new owner of these rights is a newly founded company also based in Finland, called HMD Global Oy. This company is majority-owned by a private-equity fund managed by Jean-Francois Baril, who is a former Nokia executive.
Once the transaction closes, this company would be led by Arturo Nummela as CEO, who is also a former Nokia executive.
Nokia Corporation had its 14-year-run as one of the world’s largest makers of cellphones.
However, its decline happened right after the industry shifted to smartphones with capacitive touchscreens. Even though the worldwide marketshare is now taken by Apple and Samsung, even having a small portion of that marketshare could mean big revenues. This is exactly where HMD is looking to invest.
HMD Global Oy is planning to enter the smartphone market in developing countries. This will happen by offering a range of entry-level smartphones, even though there are plans to offer high-end phones and tablets later on.
These markets, which could be found in Asia, Latin America, and India, are already well-aware of Nokia.
This kind of strong brand recognition will help the newly founded company reach millions of potential buyers. In addition, new Nokia-branded smartphones and tablets will run on Google’s Android platform, which is the world’s most popular mobile operating system.
As announced today, Microsoft also agreed to sell Nokia’s former entry-level phone business to FIH Mobile Limited, closely connected to HMD Global Oy. This is the remainder of Microsoft’s phone business assets, which includes manufacturing, sales, and distribution. It is a framework HMD needs in order to support its future plans.
The agreement says that Nokia will provide HMD with branding rights in return for royalty payments, without making a financial investment or holding equity in HMD. However, Nokia Technologies will take a set on the Board of Directors.
As expected, branding rights also include requirements that should be addressed by newly released Nokia devices, including quality, design, and innovation.
This is the second time this year that Nokia has reentered the consumer market. Just a couple of weeks ago, this company announced plans to acquire the well-regarded fitness tracker manufacturer Withings. According to Nokia President Ramzi Haidamus, this company has been developing a digital health strategy called WellCare.