Nokia’s rebirth

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Wanted by many and also expected by many, as the business strategy was announced nearly three years ago, just to be confirmed at the end of 2014. On the 18th of May 2016, the iconic brand came back to life. The new owner of the Nokia phones and tablets brand will be HMD global Oy, while FIH Mobile Ltd. acquires the supply chain and services network along with a production facility.

 

Will the legendary Nokia 3310 have its worthy successor?                    Image source : Wikipedia

A deal worth US$350 million will transfer the already former Nokia Devices and Services from the Microsoft Mobile division in the hands of a Foxconn subsidiary and the newly formed Finnish company. Microsoft will keep control over the Lumia brand and the Windows Mobile OS, but FIH Mobile Ltd. will acquire the production unit Microsoft Mobile Vietnam, a global device sales and distribution network, while HMD will acquire the rights over tablets and all other basic mobile phones’ brands, software products and related services. The new firm also obtained the cellular standard essential patent licenses from Nokia Technologies, the right to use the “Nokia” trademark on all future mobile phones in the next 8 years, and along with them, the rights related to Microsoft’s feature mobile phone business. There’s an agreement between FIH Mobile Limited and HMD global Oy, which ensures a collaboration framework in order to support the global business strategy for the new mobile phones and tablets. It is expected that the acquisition is completed in the second half of 2016, after the approval of all regulatory authorities. Once the transaction is sealed, approximately 4500 employees will be able to join either FIH Mobile Ltd. or HMD global Oy. This entirely depends on the local legislation.

Such a deal allowed all parties to gain something. In first place, Microsoft managed to finally sell this division. The American company was able to use the Nokia brand only in certain cases and at the end, failed to make any substantial impacts from the acquisition. For instance, in Q1 2016, Microsoft sold 73% less Lumia devices compared to the same period in 2015. In their statement about the sale, there’s no commitment to continue the Lumia brand’s development. The California giant ensured only, that the Windows 10 Mobile platform will be further developed in order to support the last Lumia phones – 650, 950 and 950XL, as well the OEM partners’ phones like Acer, Alcatel, HP, Trinity and VAIO. There is a distinct possibility that Microsoft abandons completely the Lumia development and focuses only on the Surface brand development.

Hon Hai Precision Industries, also known as Foxconn Technology Group is the owner of FIH Mobile Ltd. The deal will greatly improve Foxconn’s chances to become a company, which not only produces a large portion of digital devices as a sub-contractor, but also develops such on its own. However, this wouldn’t be an easy step. Moreover, the portion of the former Microsoft Mobile employees, who chose Foxconn as their next employer, will have to face the cruel truth. Over the years the Taiwanese company was accused on numerous occasions for mistreating its personnel and recently announced that nearly 60000 jobs will be automated in one of its factories.

Probably Nokia Corporation will be the big winner from this deal. Were the Finns clever enough to toss the hot potato of mobile telephones manufacturing to Microsoft, when Apple and Samsung were in its prime and now they get it back as the market is calm enough? It appears so, as HMD obtained the necessary licenses from Nokia Technologies in order to be the only provider of Nokia branded mobile phones and tablets over the next ten years. According to the official information, the new Finnish firm will invest approximately US$500 million over the next three years in order to develop new, attractive, Android based tablets and mobile telephones. While Nokia is reborn as a brand for such devices, the original company Nokia Corporation will have almost nothing to do with the actual production. This task will be managed only by HMD global Oy and Foxconn. Ramzi Haidamus, president of Nokia Technologies confirmed this, stating the following: “Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets.” It is interesting to note that the new company is owned by a private equity fund, partly managed by Jean-François Baril, a former Senior Vice President of Nokia. The actual CEO of the firm is Arto Nummela, another former Nokia employee, who held senior roles within the company. Along with him, president-designate is Florian Seiche, who also previously worked for Nokia. A. Nummela stated that HMD global will focus on “…creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers.” It is very probable, that the recent Nokia Corporation’s breakthroughs in the 5G technology will affect the new Nokia phones and tablets, ensuring them a comfortable position when the 5G networks are deployed and operational.

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