Microsoft sold its feature phone business for $350 million as Nokia plans a return with Android phones

Feature Phones as Nokia Returns to Mobile Phones

Microsoft has decided to part ways with its featured phones business. It sold its business to FIH Mobile, a subsidiary of Foxconn Group and HMD Global, for $350 million. Both the companies expected the deal to complete in the second half of 2016.
After the deal, 4,500 employees will be transferred to FIH Mobile. Microsoft will also hand over the rights to use featured phone software and services, under Nokia’s brand name, and other supply agreements to FIH.
However, Microsoft has said that it will continue to manufacture its phones, powered by Windows 10 phone, in the future. Lumia and other Windows phones will still be supported by Acer, HP, and VAIO.


Till now, Microsoft has used Nokia’s brand to develop featured phones. It tried to end its featured phone business as Nokia series of Asha, X, and Series 40 have been under maintenance for the last two years. So far, no major upgrade or feature has been added to any of these devices.
The mobile division of Microsoft has been underperforming over the past few years. It shifted its total focus to develop its own Windows Phone, as moved away from the Symbian software. However, it failed terribly as it sold only 2.3 million Lumia phones, down 73%, on year-over-year (YoY) basis.
While Microsoft is totally dependent on Lumia phones, Nokia is just about to start its second innings. The Finnish company announced that HMD Global has secured exclusive rights to develop Nokia branded Android phones and tablets for the next 10 years. It looks like the dream of Nokia to launch its own Android smartphones will soon come into reality.
HMD Global plans to invest $500 million in Nokia over the next three years. The investment will be used for global marketing of the phones and tablets. As part of the deal, HMD has also acquired trademark “Nokia” from Microsoft that will be used on its phones and tablets.
President Nokia Technologies Ramzi Haidamus said about the deal: “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.”

As part of the deal, Nokia will have a seat on HMD’s board and can also set up performance provisions for the company. The deal will be a combination of Nokia’s expertise in design, and mobile chips from Foxconn. Last year, Foxconn was rumored to partner with Nokia for making smartphones after working together on Nokia N1 tablet. Now HMD Global has emerged out to be a key partner in both the deals. This suggests that Nokia may have wanted to get its brand name again for its mobile business. It still needs to be seen whether the deals were done just to get the brand name back or both the companies have now finally decided to move on with their respected ventures.