Earlier today, we reported that Microsoft has just sold its feature phone division to FIH Mobile Ltd., a subsidiary of Hon Hai/Foxconn Technology Group, and HMD Global, Oy for $350 million. However, this deal wasn't the whole story as Nokia has since announced in a press release that it has signed a strategic brand and intellectual property licensing agreement with the newly founded company HMD Global to create a new generation of Nokia-branded feature phones, smartphones and tablets. The Foxconn subsidiary FIH Mobile is not involved in this rights deal.
Under the 10-years agreement, the Finland-based HMD Global will be able to use the Nokia brand on a new smartphone and tablet portfolio based on Android, "uniting one of the world's iconic mobile brands with the leading mobile operating system and app development community." However, Nokia will be limiting risks by only having a limited role in the new devices manufacturing and distribution:
Nokia will provide HMD with branding rights and cellular standard essential patent licenses in return for royalty payments, but will not be making a financial investment or holding equity in HMD. Nokia Technologies will take a seat on the Board of Directors of HMD and set mandatory brand requirements and performance related provisions to ensure that all Nokia-branded products exemplify consumer expectations of Nokia devices, including quality, design and consumer focused innovation.
So in the end, that's a rather complicated deal where HMD Global will take care of the design, sales, marketing and distribution of Nokia-branded mobile while the Foxconn subsidiary FIH Mobile will take care of the manufacturing. If the deal is completed as expected at the end of the year, HMD Global will then be lead by Arto Nummela, a previous Nokia senior executive and currently head of Microsoft's Mobile Devices business for Greater Asia, Middle East and Africa, as well as Microsoft's global Feature Phones business. The future CEO shared in the press release:
"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 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. We will work with world class providers in manufacturing and distribution to move quickly and deliver what customers want."
Last, HMD intends to invest over USD 500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business. However, the new company has yet to share an ETA for the upcoming Nokia branded Android smartphones and tablets.
In the end, it's not so surprising to see that new Nokia-branded devices running Android are in the pipeline. As a reminder, Nokia first experimented with Android with the Nokia X Android-based smartphones that the company released in 2014 (an initiative that Microsoft quickly shut down after it acquired the company), then allowed Foxconn to license the Nokia brand to build the Android-based N1 tablet, a device that only enjoyed limited success in the Asian market in 2015. However, as many traditional Android OEMs such as HTC, Sony and LG are currently struggling against Samsung to get a decent share of the Android market, is the Nokia brand still relevant in the market in 2016 after the Finnish company obviously missed the smartphone bandwagon? We would love to know what do you think of the Nokia brand's future in the comments.