Nokia to make phone comeback after $350m Microsoft sale

Microsoft sells its feature phone business to Foxconn but will continue to support select phones

Tags: Mergers and acquisitionsMicrosoft CorporationNokia Corporation
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Nokia to make phone comeback after $350m Microsoft sale Microsoft has said it will continue to support and develop Windows 10 Mobile, Lumia phones and Windows Phone devices
By  Aasha Bodhani Published  May 18, 2016

Microsoft officially announced it is selling its feature phone business to FIH Mobile, a subsidiary of Foxconn and Finnish company HMD Global for $350m.

The deal will see Microsoft handing over the rights to use the Nokia brand, feature phone software services and customer contracts and supply agreements. Furthermore, 4,500 employees will be transferred from Microsoft to Foxconn, and it will also take property of Microsoft's Hanoi manufacturing facility.

Microsoft announced in a statement: "As part of the deal, Microsoft will transfer substantially all of its feature phone assets, including brands, software and services, care network and other assets, customer contracts, and critical supply agreements, subject to compliance with local law. The transaction is expected to close in the second half of 2016, subject to regulatory approvals and other closing conditions."

However, Microsoft has said it will continue to support and develop Windows 10 Mobile, Lumia phones and Windows Phone devices from partners like Acer, Alcatel, HP, Trinity and VAIO.

Nokia is expected to license its brand to HMD Global, where it will develop and sell a range of Android smartphones and tablets.

The deal is expected to be finalised in the second half of the year, after regulatory approvals and closing condition.

According to analysts from IHS Technology, Microsoft's exit from the feature phone business is not surprising and the deal highlights Microsoft's continued failings in mobile. Statistics shows that feature phones comprised of 87% of phone unit shipments in Q1 2016 and it shipped just 2.3m smartphones, down from 70% from the Q1 2015.

IHS Technology reckons the deal highlights the extent of Nokia's ambition to remain a consumer brand and its continued ability to re-invent its business with a modern mobile phone business operating structure. Nokia on the other hand has been signalling for a while its intentions to re-enter the smartphone market. It launched an Android smartphone launcher app, and the Z1 Nokia tablet, but was restricted from returning to smartphones until this year due to a non-compete agreement it struck with Microsoft when it sold its devices business to Microsoft in 2013.

 

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