The Nokia brand will return to the mobile phone and tablet markets on a global basis. This is the result of a new strategic agreement covering branding rights and intellectual property licensing, where Nokia Technologies will grant HMD global Oy (HMD), a newly founded company based in Finland, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years.
HMD has been founded to provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets. According to Finnish media several experienced executives with Nokia background are involved in the new HMD.
The CEO of the company is Arto Nummela 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 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 H2 2016, making HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets. 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.
Licensing the Nokia brand to a new producer became possible following the expiry of the restrictions set in the deal between Nokia and Microsoft in 2013. Nokia remained the owner of the Nokia brand after it sold its handset business to Microsoft for 5.4 billion euros, but was forbidden to license it to outsiders until the end of 2015.
The agreement with Microsoft has some conditions and only covers the use of the Nokia name in basic phones. Microsoft continues the production of the high-end Lumia smart phones, which will use Windows platforms.
Nokia-branded feature phones remain one of the most popular choices of mobile phone in many markets around the world today, and HMD will continue to market them as part of an integrated portfolio alongside a new range of smartphones and tablets. HMD’s new smartphone and tablet portfolio will be based on Android, uniting one of the world’s iconic mobile brands with the leading mobile operating system and app development community.
Also announced, FIH Mobile Limited (FIH), a subsidiary of Hon Hai Precision Industries (trading as Foxconn Technology Group), 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 world-leading device manufacturing, supply chain and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.
Nokia will provide HMD with branding rights and cellular standard essential patent licenses in return for royalty payments from sales of Nokia-branded mobile products, covering both brand and intellectual property rights. Nokia will not be making a financial investment or holding equity in HMD. 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.
Florian Seiche is intended as HMD’s president. He is currently Senior Vice President for Europe Sales and Marketing at Microsoft Mobile, and has previously held key roles at Nokia, HTC and other global brands.
“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,” said Ramzi Haidamus, president of Nokia Technologies.
“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,” said Arto Nummela, CEO-designate of HMD.
“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,” added Vincent Tong, Chairman of FIH.
Nokia Technologies (TECH) is Nokia’s advanced technology and licensing business. Formed in 2014, TECH builds upon Nokia’s solid foundation of industry-leading licensing and technology R&D capabilities. By focusing on Digital Health, Digital Media, Brand Licensing, and Patent Licensing, TECH is expanding the human possibilities of the ever-evolving world of technology. In 2015, Nokia Technologies launched OZO, the world’s first virtual reality (VR) camera designed for professionals.