In 2014, when although Microsoft purchased Nokia it did not however buy its phone related patents. Subsequent to this acquisition, it has struggled with its phone business and in the previous year, it wrote-off the entire acquisition of Nokia worth $7.5 billion. Today Nokia is making a comeback thanks to the efforts of Jean Francois Baril and his team who are resurrecting the erstwhile phone giant with a licensing and contract manufacturing deal.
Nokia has disclosed that it has signed an exclusive 10 year licensing deal with HMD Global Oy, a Finish company, so as to re-enter the phone market. In addition, this time it will also create tablets. Both the phones and the tablets will be manufactured by contract manufacturing giant – Foxconn.
In 2014, Nokia was one of the world’s biggest manufacturers of mobile phones, had sold its entire handsets business to Microsoft. However, it had not sold its phone-related patents.
Nokia plans on using them to storm a comeback through brand-licensing, although it has to wait for the lapse of a non-compete deal with Microsoft.
Currently, most of its sales are made from its telecom network equipment. Nokia has now said, it will receive royalty payments from HMD Global Oy for the sale of Nokia-branded mobile phones, which will cover the intellectual property rights as well as the Nokia brand.
“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,” said Ramzi Haidamus, head of Nokia’s patent unit.
Incidentally, On Wednesday, Microsoft had announced the sale of its assets regarding entry level phones to FIH Mobile and HMD, a subsidiary of Foxconn, for $350 million.
A part of Microsoft’s deal with FIH and HMD includes the fact that HMD will be buying the rights to use the Nokia brand on basic phone, until 2024.
“Together, these agreements will make HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets,” said HMD in a statement.
Incidentally, HMD is owned by Smart Connect LP, a private equity fund managed by Jean Francois Baril, a former Nokia executive, and his management team.
For the moment, Nokia has not provided any timetable for its upcoming devices. HMD’s deal with Microsoft is expected to close in the second half of 2016.
Ever since it bought Nokia, it has struggled with its phone business. In fact in 2015 it wrote-off the $7.4 billion acquisition of Nokia from its books. It has however said it will continue to develop its Lumia smartphones.
With this information hitting the news circuits, Nokia’s share rose by 1.3%.
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