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When Nokia sold its smartphone division to Microsoft in April 2014 for $7.1 billion, the company left a business where it had been a major player for more than a decade. It looked like Nokia was done with smartphones.
Then rumors began in April that Nokia was getting back into the smartphone game, with reports circulating that the company was considering plans to design and then license some new smartphone models in the future, leaving the actual manufacturing, sales and marketing to third-party companies. Initially, Nokia denied the rumors, but the company’s CEO, Rajeev Suri, gave an interview to the c in June, where he laid out the design and licensing plans as part of Nokia’s new strategy.
Now, another Nokia spokesman, Robert Morlino, wants to be sure that everyone completely understands Nokia’s position, as described in a July 13 post on the Nokia Blog.
“For 14 years Nokia was the biggest cell phone maker in the world, and the brand became a household name—one that evoked quality, innovation and human connection” and that’s still recognized by millions of people, wrote Morlino. “So it’s not surprising that today, the question comes up all the time: will Nokia return to mobile devices? The answer is: it’s complicated.”
Because Nokia sold its manufacturing, marketing and channel distribution capabilities to Microsoft last year, it doesn’t have the infrastructure today to again start building and selling phones on its own, he wrote. Today’s Nokia is in the business of mobile network infrastructure, location and mapping services, and technology development and licensing.
At the same time, design continues to be a big part of the company, Morlino wrote. “We also aim to continue bringing our iconic design capabilities and technology innovation to the mobile space, and in the form of amazing products people can someday hold in their hands. However, we’ll do it in a completely different way from before.”
That means that when Nokia again approaches the smartphone market, it will be via a brand-licensing model with a partner company that will be “responsible for all of the manufacturing, sales, marketing and customer support for a product,” wrote Morlino.
This would not be the first time that Nokia looked at designing devices but leaving their manufacturing and distribution up to someone else. In November 2014, Nokia announced its first-ever Android tablet computer, the N1, which is built under license by a third-party device manufacturer, according to an earlier eWEEK report. The N1is being manufactured, distributed and sold by Taiwan’s Foxconn.
“That’s the only way the bar would be met for a mobile device we’d be proud to have bear the Nokia brand, and that people will love to buy,” wrote Morlino. “To summarize, we will look for the right partner who can take on the heavy lifting and work closely with us to deliver a great product.”
The sale to Microsoft included a clause that prevents Nokia from re-entering the smartphone market until Q4 2016, “so it’s safe to say Nokia won’t be back (at least in phone form …) before then,” wrote Morlino.
Before the Microsoft deal, Nokia was a Microsoft premier Windows Phone partner. Microsoft previously said it purchased Nokia’s smartphone division to help the company narrow the gap between it and its rivals by offering affordable, entry-level mobile devices to customers. In October 2014, Microsoft announced that it was rebranding its Nokia nameplate as Microsoft Lumia, while moving away from the Nokia nameplate.
Since the acquisition, Microsoft’s Lumia line has been having problems. The Lumia line of Windows-based phones, despite being generally well-received, has barely made a dent in unseating Android- and iOS-based smartphones from the top of the smartphone market.
On July 8, Microsoft announced that it is laying off 7,800 employees, mostly from its mobile phone business, after laying off some 18,000 workers last year. It will take a $7.6 billion impairment charge for the layoffs and a restructuring charge of up to $850 million related to the acquisition of Nokia’s Devices and Services businesses.