Nokia to Design Mobile Phones Again, Despite Earlier Denials

Nokia's CEO says the move will come in 2016 after a non-compete agreement with Microsoft expires, according to a report.

Nokia, Microsoft, Lumia, Foxconn, smartphones, mobile phones

Nokia will again create and license mobile phone designs—but not manufacture the devices—starting sometime in 2016, some two years after selling its once-market-leading mobile phone line to Microsoft as it worked to shed shrinking operations.

The move, which will offer the phone designs to third-party manufacturers for production and distribution, was revealed by Nokia CEO Rajeev Suri in an interview with German publication Manager Magazin, according to a June 18 report by Reuters.

"We will look for suitable partners," Suri said in the interview. "Microsoft makes mobile phones. We would simply design them and then make the brand name available to license."

Suri's comments come just two months after Nokia sharply denied news reports back in April that it was again contemplating getting back into the mobile phone market, according to an earlier eWEEK story. Those reports at the time cited a former Nokia executive who said that the company was working on such products and could introduce them in the future.

"Nokia notes recent news reports claiming the company communicated an intention to manufacture consumer handsets out of a R&D facility in China," the company said in an April 26 statement on its Website. "These reports are false, and include comments incorrectly attributed to a Nokia Networks executive. Nokia reiterates it currently has no plans to manufacture or sell consumer handsets."

In hindsight, though, that denial points specifically to manufacturing and distributing phones, which Nokia would not be doing under its potential design and licensing moves with third parties that are being described by Suri.

This is not the first time that Nokia has 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.

Nokia sold its mobile handset business to Microsoft on Sept. 3, 2013, for $7.1 billion, but has continued to operate its telecommunications equipment and navigational software units under the Nokia brand. The Microsoft-Nokia deal was completed in April 2014.

Nokia will not be eligible to make or sell smartphones again until sometime in 2016 under the terms of the sale due to a non-compete agreement that remains in effect until that time.

Before the acquisition, Nokia was a Microsoft premier Windows Phone partner. Microsoft previously said it purchased Nokia 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.

In April, Nokia announced that it will buy Alcatel-Lucent in a $16.6 billion deal that is expected to create a significant player in a rapidly evolving networking market dealing with such fast-moving trends as mobile computing, the cloud, the Internet of things and software-defined networking. Talk about Nokia's possibly acquiring Alcatel-Lucent began at least two years ago, after Nokia bought out Siemens' half of the companies' joint venture and had agreed to sell its struggling handset business to Microsoft.

The melding of the two vendors is expected to create a company that in 2014 had a combined $27.5 billion in sales and $2.45 billion in profit, more than $5 billion in R&D and net cash of almost $7.9 billion. Nokia will see its addressable market increase by 50 percent, to more than $138 billion, officials said.