Microsoft selling feature phone business as Nokia plans a comeback through licensing
Microsoft has announced it is selling the feature phone business it acquired from Nokia to FIH Mobile, a subsidiary of Foxconn, and the newly-established Finnish company HMD Global for $350 million. The transaction is expected to close in the second half of 2016 and will see around 4,500 employees leave the company.
Nokia marked the end of an era when it closed the sale of its devices and services division to Microsoft back in 2014. The once dominant mobile phone player had been left to bite the dust as Apple and Google changed the game. But Nokia is still a mobile phone company at heart, and it has previously hinted at a comeback, only this time around it would focus solely on designing products and then license the designs and Nokia brand to someone that can handle manufacturing, sales and distribution.
This is where FIH Mobile and HMD Global come into play. HMD Global is a recently-founded company headquartered in Helsinki, Finland, to be run by former Nokia and Microsoft executive Arto Numella. The company has signed a licensing agreement with Nokia Technologies that gives it the sole use of the Nokia brand on mobile phones and tablets worldwide for the next decade, as well as key cellular patents.
HMD will make Nokia-branded phones using Google’s Android and will invest $500 million over the next three years “to support the global marketing of Nokia-branded mobile phones and tablets.” It will also have access to FIH’s manufacturing and engineering capabilities, mobile technology, and distribution network.
Microsoft for itspart says it will continue to support Windows 10 Mobile and devices like the Lumia 950. But the announcement marks a further pullback from its struggling mobile phone business, which it bought for $7.2 billion in 2014 and grabbed just 2.2% of the market globally in 2015 according to IDC. Some rumors say Microsoft may be focusing on a Surface Phone launch next year and it’s unlikely we’ll see another Lumia this year.