Nokia signs strategic brand and intellectual property licensing agreement enabling HMD global to create new generation of Nokia-branded mobile phones and tablets
Microsoft has announced it is selling off its mobile phone division, that was previously owned by Nokia, to HMD Global (HMD), a newly founded company based in Finland, while Nokia has announced it is starting up the Nokia brand of smartphones once again through HMD.
Microsoft Windows phones and the Lumia brand have failed to thrive against the dominant Android-based competition globally, and popular Apple iOS operating system. As such, Microsoft announced on Wednesday that it has reached an agreement to sell the company’s entry level feature phone assets to FIH Mobile, a subsidiary of Hon Hai/Foxconn Technology Group, and HMD Global, for $350 million (Euro 312.5 million). Microsoft acquired Nokia’s Devices & Services business, plus the ability to license Nokia’s patents, and license and use Nokia’s mapping services, in September 2013 for Euro 5.44 billion.
Meanwhile, Nokia has announced plans that will see the Nokia brand return to the mobile phone and tablet markets on a global basis. Under a strategic agreement covering branding rights and intellectual property licensing, Nokia Technologies will grant HMD, which has been founded to provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years. HMD’s new smartphone and tablet portfolio will be based on Android.
Under the agreement, Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights, but will not be making a financial investment or holding equity in HMD.
To complete its portfolio of Nokia branding rights, HMD announced that it has conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights. The Microsoft transaction is expected to close in the second half of 2016.
Together these agreements would make HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets. HMD intends to invest over $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business.
The remainder of Microsoft’s feature phone business assets, including manufacturing, sales and distribution, would be acquired by FIH. HMD and Nokia Technologies have signed an agreement with FIH to establish a collaboration framework to support the building of a global business for Nokia-branded mobile phones and tablets.
This agreement will give HMD full operational control of sales, marketing and distribution of Nokia-branded mobile phones and tablets, with exclusive access to the pre-eminent global sales and distribution network to be acquired from Microsoft by FIH, access to FIH’s device manufacturing, supply chain and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.
As part of the Microsoft deal, FIH Mobile will also acquire Microsoft Mobile Vietnam, the company’s Hanoi, Vietnam, manufacturing facility. Upon close of this deal, approximately 4,500 employees will transfer to, or have the opportunity to join, FIH Mobile or HMD Global, subject to compliance with local law.
Microsoft will continue to develop Windows 10 Mobile and support Lumia phones such as the Lumia 650, Lumia 950 and Lumia 950 XL, and phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO.
Nokia Technologies will take a seat on the Board of Directors of HMD and set mandatory brand requirements and performance related provisions to ensure that all Nokia-branded products exemplify consumer expectations of Nokia devices, including quality, design and consumer focused innovation.
HMD would be led, once the Microsoft transaction closes, by Arto Nummela as CEO, who previously held senior positions at Nokia and is currently the head of Microsoft’s Mobile Devices business for Greater Asia, Middle East and Africa, as well as Microsoft’s global Feature Phones business. HMD’s president on closing would be Florian Seiche, who is currently Senior Vice President for Europe Sales and Marketing at Microsoft Mobile, and previously held key roles at Nokia, HTC and other global brands.
Ramzi Haidamus, president of Nokia Technologies, said: “Today marks the beginning of an exciting new chapter for the Nokia brand in an industry where Nokia remains a truly iconic name. 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. Working with HMD and FIH will let us participate in one of the largest consumer electronics markets in the world while staying true to our licensing business model.”
Arto Nummela, CEO-designate of HMD, added: “We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers. Branding has become a critical differentiator in mobile phones, which is why our business model is centred 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.”