Microsoft offloads Nokia attribute mobile phone business enterprise to Foxconn for $350M

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Microsoft is advertising the attribute mobile phone business enterprise it acquired from Nokia back in 2013 to a subsidiary of Chinese company Foxconn for $350 million, it introduced right now.

At the similar time former owner Nokia said it has inked a deal to license its manufacturer to HMD World, a new Finnish firm run by ex-Nokia and Microsoft products staff, to “create a new era of Nokia-branded cell telephones and tablets”.

So, er, the Nokia mobile phone is lifeless, prolonged are living the Nokia phone…

Entry level challenges

Attribute telephones — aka a lot more simple cell products that are not regarded to be thoroughly fledged smartphones — never ever appeared like a relaxed fit for Microsoft, which shelled out some $7.2 billion to obtain Nokia’s total cell products business enterprise around three a long time ago in the hopes of firing up the fortunes of its smartphone OS platform, then called Home windows Cell phone.

That tactic has also faltered, with Microsoft failing to carve out a important share for Home windows Cell phone in a market place dominated by Android (in volume terms) and iOS (for premium/gains). While it reiterated today that it will continue to produce its Home windows ten Mobile platform, and to assist Lumia-branded smartphones (these as the Lumia 650, Lumia 950 and Lumia 950 XL) alongside with telephones from OEM associates these as Acer, Alcatel, HP, Trinity and VAIO.

Holding on to a diminishing attribute telephones business enterprise obviously did not hold a lot attractiveness for Redmond which — despite its talk of ongoing progress of its own smartphone platform — has been focusing its attempts on developing up a services supplying via applications built for Android and iOS products. Past thirty day period, for illustration, it introduced its Term Movement keyboard app, at first created, for Home windows more than to iOS as an app.

With its focus shifting to rivals’ smartphone platforms, the place the buyers are, there was obviously minimal incentive for the firm to manage Nokia’s aged attribute telephones business enterprise, especially as the market place for so-called dumb telephones carries on to shrink as Android additional squeezes the price tag of entry level smartphones.

In prior a long time Microsoft had suggested feature telephones may well be able to act as an on-boarding ramp for mobile phone buyers to come upon its services and be inspired to improve to a Home windows primarily based smartphone. Even so that notion never ever appeared possible to fly. And certainly, even the very modest income of Home windows smartphones have additional collapsed this calendar year. And the company’s mobile phone earnings declined 49 for each cent in its Q2 2016 final results back in January.

Microsoft has also precisely been winding down the attribute telephones business enterprise for pretty much two a long time. Back again in July 2014 an inside memo attained by the media mentioned that all mobile telephones-related services would be immediately moved into “maintenance mode”, and — more than an eighteen months period — shut down.

As it turns out Microsoft has taken the choice to provide the attribute telephones division in its place of closing it, clawing back a minimal of the dollars it handed more than to purchase Nokia.

When Nokia receives to re-enter the cell phones market as a manufacturer licensee.

Nokia branded telephones and tablets 

The agreement Microsoft has arrived at will see the attribute telephones unit and belongings marketed to FIH Mobile, a subsidiary of the Foxconn Engineering Group. When HMD world — the recently fashioned Finnish firm which is bringing the Nokia manufacturer back to cell devices — is acquiring the correct to use the Nokia manufacturer on attribute telephones, and “certain related design and style rights”, with the purpose of turning into the sole world licensee for all forms of Nokia-branded cell telephones and tablets, it explained right now.

When Nokia marketed its cell division to Microsoft it gave up the correct to use its manufacturer name on products, but only till this year when that clause in the deal expired. It is now evidently formulated its tactic to return to the products market place, obtaining earlier signaled it was on the lookout for the correct associate to do so.

Asked about this back in February Nokia CEO Rajeev Suri informed TechCrunch: “We imagine it is a very good business enterprise product mainly because the Nokia manufacturer has fantastic retention — the recognition of the manufacturer is nonetheless very significant in all the big marketplaces. We also imagine that if there will be a product or service with the Nokia manufacturer on it there is an possibility for premium on that product or service – clear price tag premium” — suggesting HMD will be supplying significant close handsets and tablets, as nicely as attribute telephones.

Nokia couched its agreement with HMD right now as a strategic deal. The deal presents HMD an exclusive world license (excluding Japan) to generate Nokia-branded cell telephones and tablets for the upcoming ten a long time. Nokia Technologies will acquire royalty payments from HMD for income of Nokia-branded cell merchandise, covering each manufacturer and mental property legal rights.

The company had already been tests a brand licensing tactic in cell products, working with Foxconn on an Android primarily based pill, the N1, for the Asian market place back in 2015. The HMD deal obviously puts its licensing tactic on a a lot more formal and sustained footing.

For its element HMD explained it intends to spend a lot more than $500 million more than the upcoming three a long time to assist the world marketing of Nokia-branded cell telephones and tablets, funded via its buyers and (what it hopes are) gains from the acquired attribute mobile phone business enterprise.

HMD — a further Android OEM

As nicely as scheduling to provide Nokia-branded attribute telephones, HMD explained right now that it will also have a smartphone and pill portfolio primarily based on Android — returning the Nokia manufacturer to Android handsets (a tactic Nokia had begun just prior to the closing of its acquisition by Microsoft, and which Microsoft subsequently shuttered… Really, all that is aged is new all over again. And again… ).

Nokia mentioned right now that is not making a economical investment decision or keeping fairness in HMD but its Nokia Technologies division will just take a seat on the HMD Board of Administrators, as nicely as environment mandatory manufacturer needs and overall performance related provisions — to guarantee that all Nokia-branded merchandise are living up to its quality and design and style expectations. Following all, the manufacturer is the only cell asset for Nokia at this stage so it requirements to guarantee no a single (else) poisons the nicely.

As element of the Microsoft attribute mobile phone sale deal, Microsoft mentioned that some 4,500 employees will transfer to, or have the possibility to join, FIH Mobile or HMD World — shedding what is possible the remaining rump of Nokia staff Microsoft at first acquired (right after prior work cuts as it was unable to move the needle on cell device sales). FIH Mobile will also obtain Microsoft Mobile Vietnam — the company’s Hanoi, Vietnam, production facility, Microsoft added.

The transaction is expected to near in the next fifty percent of 2016, issue to regulatory approvals and other closing circumstances.

Once the Microsoft transaction closes HMD will be led by Arto Nummela, who earlier held senior positions at Nokia and is now the head of Microsoft’s Mobile Devices business for Better Asia, Middle East and Africa, as nicely as its global Attribute Telephones business enterprise.

HMD’s president on closing would be Florian Seiche, now Senior Vice President for Europe Revenue and Internet marketing at Microsoft Mobile, and who earlier held vital roles at Nokia, HTC and other world makes.

Commenting on the impending return of the Nokia manufacturer to the cell market place, Ramzi Haidamus, president of Nokia Technologies, dubbed it an “exciting new chapter”, introducing in a statement: “Instead of Nokia returning to production cell telephones itself, HMD plans to generate cell telephones and tablets that can leverage and increase the worth of the Nokia manufacturer in world marketplaces. Doing work with HMD and FIH will let us participate in a single of the biggest client electronics marketplaces in the planet when staying genuine to our licensing business enterprise product.”

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Microsoft offloads Nokia attribute mobile phone business enterprise to Foxconn for $350M
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