Microsoft acquired Nokia’s mobile business in 2014 in a deal worth $5.4bn. At the time, Nokia was acquainted with Microsoft’s Windows Phone operating system. Nokia was instrumental to Windows Phone’s 2010 launch but the platform failed to gain widespread appeal. Amid falling handset sales, Nokia sold its devices group to Microsoft. The company has since announced a $7.6bn write-down on the acquisition and effectively pulled out of smartphone hardware.
As part of the deal, Microsoft placed restrictions on Nokia’s use of its name. It banned it from creating Nokia-branded smartphones for a period of two years. That time is now up though and Nokia is readying a return to the industry that it helped to pioneer. It has previously confirmed it’s creating four devices designed to appeal to former Nokia fans.
Although Nokia will have effectively returned, the new phones won’t actually be built by the company. It has signed a deal with a Chinese company, HMD Global, that will see HMD exclusively manufacture smartphones under the Nokia brand for a period of 10 years. The new company will be able to start selling handsets under one of the most established names in the business. It will be highly beneficial to HMD while enabling Nokia to return to smartphones without taking responsibility for building them.
The Nokia name gives HMD an “instant on-ramp,” one analyst said to The Guardian. Because it’s so difficult for new Android phone makers to gain attention, emerging companies need something to differentiate themselves with. For HMD, the key component will be the logo on the back.
“What HMD has is the Nokia brand and management experience,” Ben Wood, of analysts CCS Insight, said to The Guardian. “The key to its success will be driving scale.”
Nokia is planning to return to smartphones in early 2017. Today, it restored the “Phones” section of its website, adding back a link that has redirected to Microsoft’s mobile homepage for months. While Nokia has confirmed its intentions in the past, this is the first sign to the public that the company is preparing to launch itself back into the industry.
“Elegant simplicity. Trusted reliability. Lasting quality. We are unlocking new and extraordinary possibilities for billions of people,” reads a teaser message on Nokia’s website. “And we’re just getting started, with new smartphones coming in 2017.”
The page features a selection of Nokia-branded feature phones launched by Microsoft in the past few months. There’s also the option to enter an email address and receive notifications when there’s news about “Nokia smartphones running Android.”
When the phones arrive, they’ll be accompanied by a major promotional campaign to let the world know that Nokia has returned to doing what it’s best known for. HMD has already committed $500 million of spending to three years of worldwide advertising, aiming to attract people away from the leading smartphone brands. It will need to simultaneously separate Nokia’s name from its association with the ill-fated Windows Phone platform.
HMD believes the time is right to bring Nokia back though, noting people are looking for something new but familiar in the market.
“We believe that the time is right for renewal in the mobile industry,” ZDNet reports HMD Global president Florian Seiche said. “The market is fatigued and flooded with undifferentiated products.”
