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Microsoft sells feature phone business, Nokia starts second mobile innings

Nokia has announced plans that will see its brand return to the mobile phone and tablet market

By: Tech Desk |
May 18, 2016 4:56:40 pm
nokia, microsoft, foxconn, hmd Nokia has announced plans that will see its brand return to the mobile phone and tablet market (Source: Reuters)

The smartphone world has come full circle. On a day Foxconn subsidiary FIH Mobile Limited (FIH) decided to acquire the remainder of Microsoft’s feature phone business assets, Nokia announced plans that will see its brand return to the mobile phone and tablet market.

“Under a strategic agreement covering branding rights and intellectual property licensing, Nokia Technologies will grant HMD global Oy (HMD), a newly-founded company based in Finland, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years,” a release from Nokia said.

Ramzi Haidamus, president of Nokia Technologies, said instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets. Working with HMD and FIH will let us participate in one of the largest consumer electronics markets in the world while staying true to our licensing business model.”

Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.

HMD announced that it has conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights. The Microsoft transaction is expected to close in H2 2016. Together these agreements would make HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets. HMD intends to invest over $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business, the release said.

Arto Nummela, CEO-designate of HMD, said they 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 mobile phones, which is why our business model is centered 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.”

HMD and Nokia Technologies have signed an agreement giving HMD full operational control of sales, marketing and distribution of Nokia-branded mobile phones and tablets, with exclusive access to the pre-eminent global sales and distribution network to be acquired from Microsoft by FIH, access to FIH’s world-leading device manufacturing, supply chain and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.

The Nokia brand, especially feature phones, is still very popular across the world, especially in markets like India. HMD will continue to market them as part of an integrated portfolio alongside a new range of Android smartphones and tablets.

Nokia will provide HMD with branding rights and cellular patent licenses in return for royalty payments, but will not be making a financial investment or holding equity in HMD.

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