Microsoft sells Nokia feature phone division to Foxconn for $350M
Microsoft's steady decline in the mobile phone business continues, as the Redmond, Wash., company announced on Wednesday that it will sell the feature phone division it acquired from Nokia to a subsidiary of manufacturer Foxconn for $350 million.
Foxconn's purchase was made in partnership with HMD Global, a new Finnish company that's been granted an "exclusive global license" to build Nokia-branded phones and tablets for the next 10 years. In short, the $350 million deal means that Nokia devices will once again return to the market.
Manufacturing, sales and distribution from Microsoft's feature phone business will be acquired by FIH Mobile Limited, a subsidiary of Foxconn. HMD and Nokia Technologies, then, will establish a "collaboration framework" for building new Nokia phones and tablets.
The sale -- and subsequent plans for rebirth -- of Nokia's feature phone business are the latest chapter in Microsoft's $7.2 billion purchase of Nokia's mobile phone operations from 2013. Microsoft had hoped the acquisition of Nokia could allow it to improve sales for its floundering Windows Phone division, but in the years since, market dominance by Apple's iPhone and devices running Google's Android has only grown.
Of course, Microsoft had little-to-no interest in the low-margin, shrinking feature phone business, so the sale of that division should come as no surprise. The company had announced internally in 2014 that it was planning to wind down the feature phone business over the course of the following 18 months.
As Windows Phone has floundered, Microsoft has focused on bringing its software and services to rival platforms, like Apple's iOS. For example, Microsoft's own Word Flow keyboard debuted on the iOS App Store last month, allowing for easier one-handed typing.
HMD said on Wednesday that the new agreement with Foxconn and Microsoft includes the right to use the Nokia brand on feature phones, as well as certain design-related rights. HMD plans to invest over $500 million over the next three years to support its Nokia-branded feature phones and tablets.
Foxconn's purchase was made in partnership with HMD Global, a new Finnish company that's been granted an "exclusive global license" to build Nokia-branded phones and tablets for the next 10 years. In short, the $350 million deal means that Nokia devices will once again return to the market.
Manufacturing, sales and distribution from Microsoft's feature phone business will be acquired by FIH Mobile Limited, a subsidiary of Foxconn. HMD and Nokia Technologies, then, will establish a "collaboration framework" for building new Nokia phones and tablets.
The sale -- and subsequent plans for rebirth -- of Nokia's feature phone business are the latest chapter in Microsoft's $7.2 billion purchase of Nokia's mobile phone operations from 2013. Microsoft had hoped the acquisition of Nokia could allow it to improve sales for its floundering Windows Phone division, but in the years since, market dominance by Apple's iPhone and devices running Google's Android has only grown.
Of course, Microsoft had little-to-no interest in the low-margin, shrinking feature phone business, so the sale of that division should come as no surprise. The company had announced internally in 2014 that it was planning to wind down the feature phone business over the course of the following 18 months.
As Windows Phone has floundered, Microsoft has focused on bringing its software and services to rival platforms, like Apple's iOS. For example, Microsoft's own Word Flow keyboard debuted on the iOS App Store last month, allowing for easier one-handed typing.
HMD said on Wednesday that the new agreement with Foxconn and Microsoft includes the right to use the Nokia brand on feature phones, as well as certain design-related rights. HMD plans to invest over $500 million over the next three years to support its Nokia-branded feature phones and tablets.
Comments
Or is it like the Samsung relationship: cooperate in one area (assembly) and compete in another area (finished products)? Or maybe it's not a COI because feature-phone are a different category than Apple's smartphones?
I was thinking the same thing they could be creeping into an Apple competitor. I also noticed the article mentioned "tablets".
there is only an issue if it conflicts with a supplier contract. otherwise there is no such thing as a conflict of interest.
http://www.wsj.com/articles/foxconn-aims-to-fashion-its-own-brands-1403907564
While Apple is obviously a large client they don't own Hon-Hai nor has it gone unnoticed by them IMHO that Apple is transitioning to other manufacturers for some Apple products, even ones that once upon a time were built exclusively by them. So FoxConn is smart not to be putting all their eggs in the same basket as Apple could pivot further away at any time if (when) better offers come along. It's business, not friends.
Yes, it's true I'm down on MS, but what ever did they actually do for the computer industry except hold it back, steal from it, copy from it, act unethically (in ways prosecuted and not) and pretty much hold the entire industry to a standard so low in quality that things like "BSOD" and the "three-finger salute" became synonymous with computing, but hey, MS was making billions at the time, and no one is ever supposed to attack such striking examples of heroism in the business world, where it's all about making money, and nothing else at all.
This latest move on their part is hardly surprising, cutting their losses as they try and take some of their vast wealth and buy their way into inspiration - they certainly aren't ever going to come up with it on their own. Another failure, ho hum, seems very MS to me.
You're not suggesting that companies in China operate under the same rules and regs as in the US, are you? A little off topic, but seems like a lot of people still don't get the doing business in China is different than the US. It's like the wild west over there.
Foxconn/HMD get to use the Nokia name on feature phones but Microsoft's smartphone business is floundering so is there even a smartphone that will use the Nokia name (Nokia Lumia?) or for all intents will Microsoft be leaving the smartphone business altogether (like the article is suggesting). If so, then Microsoft did take a huge hit on their original purchase and shows yet another failed product category. If Microsoft is still in the smartphone business will they continue to use the Nokia brand? If so, how can two companies use the same brand name? (Has Microsoft dropped the Nokia brand, keeping Lumia?)