Nokia Branded Phones, Tablets Returning to Market in Licensing Deal

HMD Global will build and sell the phones for 10 years. In a related deal, HMD is getting entry-level phone branding rights from Microsoft.

Nokia, Windows Phone, Microsoft, licensing, smartphones, feature phones, HMD Global, Foxconn, Lumia, mobile phones

Nokia mobile phones, smartphones and tablets will be headed back to markets around the globe now that the company has reached a 10-year licensing deal to have its mobile phone designs developed, built, distributed and marketed by a newly formed Finnish company, HMD Global.

In a related deal, Microsoft's remaining feature phone manufacturing, sales and distribution assets are being acquired by Foxconn Technology Group's FIH Mobile Ltd. (FIH), which has signed a deal with HMD and Nokia Technologies to use the Nokia brand on feature phones while building a global business for Nokia-branded mobile phones and tablets, according to the companies. FIH is acquiring the feature phone assets from Microsoft for $350 million under the deal. None of Microsoft's existing Windows 10 Mobile smartphone technologies and products are included in the transaction.

The separate deals were announced on May 18 by the parties, which include HMD, founded to spearhead the new branding, design, marketing and sales initiatives for Nokia mobile phones, smartphones and tablets. All of the new Nokia-branded devices will run on the Android operating system, rather than on Nokia's own operating system, which was used on its earlier phones.

HMD said the Microsoft transaction will close in the second half of 2016 and that the company plans to invest more than $500 million over the next three years to market the new products around the world. No timeline was announced for when the new devices will become available.

"We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers," Arto Nummela, CEO-designate of HMD, said in a statement. "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."

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.

"Today marks the beginning of an exciting new chapter for the Nokia brand in an industry where Nokia remains a truly iconic name," Haidamus said in a statement. "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 analysts who spoke with eWEEK had a range of opinions about the moves by Nokia and its partners.

"Nokia's brand is both aspirational and deeply utilitarian in parts of Africa and Asia," Avi Greengart, an analyst with Current Analysis, told eWEEK. "It is harder to understand how the Nokia brand can be profitably applied to Android smartphones. Nokia's brand has no relevance to those choosing among Apple, Samsung, Huawei or Xiaomi, and the competition is absolutely brutal at every price point today."

On the other hand, "assuming that they can be built profitably and that the distribution network has not been lost, there should still be opportunity in rural emerging markets for Nokia feature phones," he wrote.

Rob Enderle, principal analyst at Enderle Group, said Nokia still has a well-recognized brand name, but its more recent connections to the Windows Phone effort would have to be shed for it to be more successful. "So there is a path to success here; it just won't be an easy one."

Meanwhile, Nokia's push for new feature phones could be good timing because "this is one of the segments that actually appears to be growing at the moment and the Nokia brand is still solidly connected to this class of phone," he wrote. "Smartphones will be more problematic, however; so I expect those efforts to struggle more."

At the same time, in markets around the world where smartphones dominate sales, users "likely won’t care very much unless [HMD] can come up with a blended combination of good marketing and well-differentiated phones," he said.

Dan Olds, an analyst at Gabriel Consulting Group, said he's not sure that Nokia's moves now will be successful at this point in the mobile phone wars. "We have Apple on the high end and a huge number of Android variants filling all of the niches down to the feature phone level, so will a new phone from Nokia really make a difference? I don’t think so," wrote Olds. "I also don't think that Microsoft's giving up its feature phone technology to FIH makes much of a ripple in the market."