The latest press release from Nokia, who has been too inactive in the devices business for the known reasons, reads the following as the first line – Nokia signs strategic brand and intellectual property licensing agreement enabling HMD global to create new generation of Nokia-branded mobile phones and tablets.
So, before we get deeper into this, here is the news in short – Nokia is returning to the market, and the smartphones and tablets from the company will run Android OS. Also, Microsoft just sold its feature phone business to Foxconn for $350 million. Now, let’s see what are the changes and transactions that are going to happen in the coming months and how will we see Nokia back into the market.
What is HMD global Oy?
This is a newly founded company based in Finland, and it is being given the exclusive global license to create and sell Nokia-branded mobile phones and tablets for the next ten years.
What will Nokia gain if HMD does the creation and sales?
Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.
When will the deal complete and what are the initial intentions of HMD global?
The transaction with Microsoft is set to complete in second half of 2016 and HMD intends to invest over USD 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.
What does FIH have to do with this deal?
FIH Mobile Limited (FIH), a subsidiary of Hon Hai Precision Industries (trading as Foxconn Technology Group) has also announced today that it will acquire Microsoft’s feature phone business assets, including manufacturing, sales and distribution. This was said to be a deal worth $350 million.
Also, HMD global and FIH have together signed an agreement with FIH to establish a framework, where the two companies would together collaborate and support the building of a global business for Nokia-branded mobile phones and tablets.
What else is in the agreement between HMD global and FIH?
- With this agreement, HMD will also be able to get full operational control of sales, marketing, and distribution of Nokia-branded mobile phones and tablets.
- There will be an exclusive access to the pre-eminent global sales and distribution network to be acquired from Microsoft by FIH.
- The deal also includes an access to FIH’s world-leading device manufacturing, supply chain, and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.
Will Nokia be an investor in HMD’s operations?
Except for getting royalty for the brand name, Nokia Technologies will have no role in the operations. In return for the royalty payments, Nokia is going to give branding rights and cellular standard-essential patent licenses to HMD global.
The board of directors of HMD will have someone from Nokia Technologies, and will keep a check on what is being offered and will set mandatory brand requirements and performance-related provisions.
Who will lead HMD global?
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.