When Microsoft inked the deal to acquire Nokia back in April 2014, majority didn’t really know what would happen with Nokia, not until Microsoft decided to right off the $7.6 billion dollars it had used to buy out Nokia, fired 7,800 employees most of whom were original Nokia employees, and stopped producing Nokia branded phones despite having acquired the rights to use the Nokia brand on its phones.
Microsoft’s mistreatment of the beloved Nokia brand came to an end earlier today when Microsoft announced that it will sell the rights to use Nokia brand on feature phones to FIH Mobile, a subsidiary of Foxconn, for $350 million. In addition to acquiring the rights for producing Nokia branded feature phones, FIH will also bring on board some 4,500 employees who have been instrumental in making Nokia devices.
At the time Microsoft announced that it had reached an agreement with FIH on the use of Nokia brand on feature phones, Nokia also announced that it had licensed a newly created company, HMD Global, to produce and sell a portfolio of Android smartphones and tablets. The relationship between HMD Global that will produce the Nokia Android devices and Foxconn that owns FIH which will work on the Nokia branded feature phones is also interesting. The two companies have a collaborative agreement “to support the building of a global business for Nokia-branded mobile phones and tablets” meaning the two will work hand in hand to revive the Nokia brand.
To ensure that the quality unique only to Nokia is maintained, Nokia will be part of HMD Global’s board of directors with a mandate to “set mandatory brand requirements and performance related provisions.” Further, Arto Nummela, a long time Nokia Executive who moved to Microsoft and left after Microsoft shelved off Nokia, will be the CEO of HMD Global once the deal between Nokia and HMD Global has been finalized.
The demise of Nokia was caused by two factors – failure by Nokia to adopt an iPhone competitor earlier on the same way Samsung did, and the failure by Nokia to opt for Android ecosystem and instead opted for Windows with the Lumia range of handsets, even when Nokia fans hoped for a perfect Nokia Android smartphone. The new deal with HMD is probably what will take Nokia back to limelight, but it won’t be so easy since at the top end people have already bought Samsung and iPhone devices, and at the mid and low end the Chinese makers like Xiaomi have already taken up the market. The smartphone market is also saturated where no phone maker is experiencing growth in sales – not even Apple.