Foxconn acquires Microsoft’s feature phones biz as Nokia comes to life

Miss holding a Nokia phone in your palm? The iconic handset-maker which was synonymous with mobile phones is all set to re-enter the handset and tablets business.

Nokia Technologies has said that it has granted HMD global, a newly founded company based in Finland, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years.

While HMD will focus on new devices that will carry the Nokia brand name and run on Google's Android OS, Foxconn's subsidiary FIH Mobile Limited will manufacture, sale and distribute Microsoft's feature phones. Microsoft is believed to have sold the portfolio to Foxconn after the last quarter alone saw a 46 percent drop in phone revenue, slightly better than the 49 percent drop in the quarter before that.

"We are looking forward to fostering a strong and long-term collaboration with HMD global and Nokia. We are impressed by the experience and expertise of the HMD management team and are committed to supporting them with our manufacturing, technology and supply chain capabilities, to capture market opportunities together in the future," Vincent Tong, chairman of FIH, said.

Under the agreement with HMD global, Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.

"HMD has been founded to provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets. To complete its portfolio of Nokia branding rights, HMD announced today 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 company said in a statement.

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.

In addition, HMD also said that it 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.

Earlier in November 2014, Nokia had released the N1 tablet, which ran Android, to show their willingness to come back to the phones and tablets business. The Nokia brand had fizzled out when smartphones hit the Indian market and the company was too late to release one in the market. Microsoft, which took over its handset business then, has been trying to make a comeback with little or no success yet.

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.

Commenting about the future of HMD, Arto Nummela said: "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 centered on the unique asset of the Nokia brand and our extensive experience in sales and marketing."

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.