Nokia is all set to make a comeback in the mobile and tablet business thanks to a new agreement reached between the Finnish company and Microsoft.
However, Nokia themselves would not be involved in the actual manufacturing or marketing process per se. Instead, that would be done by HMD Global Oy with Nokia just lending the rights to the use of its brand name.
The above has been made possible thanks to a new deal as per which Microsoft will be selling off Nokia’s feature phone business to a subsidiary of Foxconn and the young Finnish firm HMD Global Oy. HMD, in turn, will be developing new phones and tablets based on Android carrying the iconic Nokia branding. The entire deal values at $350 million.
The Redmond based company though stated they will continue to focus on the Windows 10 Mobile platform as well as the Lumia brand. It will just let go of Nokia’s feature phone assets which include the branding rights, ‘software and services, care network and other assets, customer contracts, and critical supply agreements.’
HMD will have the right to the use of the Nokia branding for ten years. It will also engage in the actual manufacturing, sales, and service of the devices. Nokia will be receiving royalty towards the use of its brand by HMD. Nokia will also have a representative in the HMD Board of Directors but won’t make any financial investments or hold equity in the new company.
The deal, which is expected to be finalized later in the year will affect 4,500 employees, who, Microsoft said will be given the option to join HMD or FIH, the Foxconn subsidiary.
Once the deal is closed, Arto Nummela, a former Nokia executive will be the Chief Executive of HMD. Nummela right now takes care of Microsoft’s entire feature phones business besides serving as the head of the Mobile Devices business overseeing the entire Greater Asia, Middle East, and African regions.
“We 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 cell phones, which is why our business model is centred 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” said Arto Nummela.
Florian Seiche, who right now is the Senior Vice President at Microsoft Mobile overseeing sales and marketing for Europe will be joining HMD as its president.