The Strategist

Nokia to resume smartphone business

05/18/2016 - 17:07

Nokia is giving a 10 years-long right of production of devices under the brand to the Finnish company HMD Global. The latter, in partnership with Foxconn’s subsidiary, buys the business of manufacturing push-button telephones for $ 350 million from Microsoft.

Nokia’s mobile production revival became possible thanks to a deal between HMD Global, FIH Mobile Ltd of Foxconn Technology Group, and American Microsoft, which acquired the mobile division of Nokia in September 2013 for € 5,4 billion.

As noted in Microsoft’s statement, HMD Global and FIH Mobile are giving $ 350 million for the division producing "entry-level phones," (no-app required phones without access to the Internet). The deal also implies purchasing Microsoft Mobile’s Vietnamese division. The deal should be closed in the second half of 2016 after the approval of regulators. Once it’s done, up to 4.5 thousand Microsoft’s employees can be transferred to HMD Global and FIH Mobile.

Nokia explains that HMD Global will receive a global license to manufacture Nokia smartphones and tablets for 10 years. Under the agreement, Nokia Technologies will be receiveing royalties from HMD Global. Within three years, HMD Global will also invest $ 500 million in marketing promotion of the production. Nokia and HMD will also conclude a partnership agreement with FIH Mobile. 

Microsoft will continue to develop its own mobile operating system Windows 10 Mobile, and support smart phones of its private brand Lumia (Lumia 650, Lumia 950 and Lumia 950XL) along with devices of partners - electronics manufacturers Acer, Alcatel, HP, Trinity and Vaio.

At the same time, the corporation will give to HMD Global FIH Mobile all assets related to the entry-level phones, including brand names, software and services, service network, partners’ contacts and key supply contracts.