Microsoft has agreed a deal to sell its feature phone division to Foxconn subsidiary FIH Mobile and HMD Global for just $350 million (£240 million).
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Microsoft, however, says it intends to continue developing Windows 10 Mobile and support to Lumia phones and devices from partners like Acer, Alcatel, HP, Trinity, and Vaio.
A new company has been established to revive the Nokia handset and tablet brand.
Once the Microsoft transaction is closed, HMD will be led by Arto Nummela as CEO, who previously held senior positions at Nokia and is now the head of Microsoft’s mobile devices business for Greater Asia, Middle-East and Africa as well as Microsoft’s global feature phones business.
Nokia, which now makes most of its sales by telecom network equipment, said on Wednesday it will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.
Nokia was once a major force in the mobile phone market, before the rise of smartphones and subsequent selloff to Microsoft, which never made good use of the transaction. Ramzi Haidamus, president of Nokia Technologies, said the deals will let his company stay true to its licensing business model while once again seeing its name on products that will be offered to consumers and business users.
HMD, a newly-established firm, is owned by Smart Connect LP, a private equity fund managed by former Nokia executive Jean-Francois Baril, and its management. Under the terms of its sale to Microsoft in 2013, it would be again able to use its brand name for mobile devices this year. And it could enable Nokia to tap emerging markets where its brand is still respected but where cheap Android phones dominate.
This announcement does not affect Microsoft’s existing Windows 10 mobile devices, including its Lumia range.
Microsoft is expected to position the Surface Phone based on the productivity of the Windows 10 platform.
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“The feature phone unit never sat comfortably within the Microsoft organisation and CCS Insight believes Microsoft will be relieved to offload a non-strategic asset while it still has some value”, according to the analysis. Nokia will take no direct financial interest in HMD, but will instead provide standard essential patents (SEP) and ensure all devices carrying the iconic Finnish brand meet certain quality standards. One that cost thousands and thousands of people their jobs?
