Nokia Phone Brand to Iive On, But Not at Microsoft
Microsoft, undoing a portion of its 2014 acquisition of Nokia's phone business, is selling of off its low-end phone unit as part of a $350 million deal announced Wednesday that will see about 4,500 employees leave the company. The buyers are FIH Mobile, a subsidiary of Chinese manufacturing giant Foxconn, and a new Finland-based company called HMD Global.
And under a deal announced at the same time with Finland's Nokia Technologies, HMD has exclusive rights for 10 years to sell Nokia-branded phones and tablets. HMD's CEO-to-be is Arto Nummela, a former Nokia exec who now leads of Microsoft's mobile business in Asia, the Middle East and Africa and its lower-end feature phone. He's betting heavily on that brand.
"We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers," Nummela said in a statement. "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."
It's been a rough decade for Microsoft and Nokia, two tech giants that have lost much of their clout with consumers with the rise of Apple, Google, and their allies. Feature phones, lower-end models that lack the computing power and wealth of apps found on higher-end phones, still sell in large numbers to cost-conscious buyers. But few see them as the future.
Microsoft agreed to acquire Nokia's phone business in 2013 in an effort to become relevant in a phone market dominated by Apple's iPhone and companies like Samsung that embraced Google's Android software. But the move failed to turn around the business.
Microsoft's Windows-powered phones, now stripped of the Nokia brand, remain rarities. Microsoft laid off thousands of employees in its phone division in 2015 and isn't giving top priority to Windows phone software.
For higher-end phones Microsoft will continue to develop its Windows 10 Mobile software and its Lumia phones that run it. It'll also continue to work with manufacturing partners including Acer, Alcatel, HP and Vaio on Windows-powered phones, Microsoft said.
HMD's manufacturing partner will be FIH, which will take over Microsoft Mobile Vietnam and its Hanoi factory when the Microsoft deal closes in the second half of 2016. About 4,500 Microsoft employees will transfer to FIH and HMD or have the opportunity to do so, Microsoft said.