Microsoft sells feature-phone business for $350M as Nokia returns to mobile devices

Microsoft said it will sell its feature-phone business to a Foxconn subsidiary in a $350 million deal that will also see Nokia return to the mobile-devices business it once dominated.

Microsoft is selling "substantially all of its feature phone assets" to FIH Mobile Ltd., which is owned by the Taiwan-based electronics giant Foxconn, and to a HMD Global Oy, a newly founded Finnish corporation. Roughly 4,500 Microsoft employees will have the opportunity to transfer to FIH, and the agreement includes Microsoft's manufacturing plant in Vietnam.

The Redmond, Wash.-based software giant said it will continue to develop Windows 10 Mobile and support the Lumia line and Windows Phone devices from its manufacturing partners.

Perhaps the most intriguing aspect of the deal, though, is Nokia's exclusive global branding and licensing deal with HMD, which includes phones and tablets.

"HMD has been founded to provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets," Nokia said in a press release. "To complete its portfolio of Nokia branding rights, HMD announced today that is has conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights."

HMD's device portfolio will be based on Android, Nokia said.

The move allows Nokia to return to the hardware segment without having to endure the razor-thin margins that most device manufacturers tolerate in an increasingly competitive worldwide smartphone market. And it could enable Nokia to tap emerging markets where its brand is still respected but where cheap Android phones dominate.

"We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers," said Arto Nummela, CEO-designate of HMD, in a press release. "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. We will work with world-class providers in manufacturing and distribution to move quickly and deliver what our customers want."

Nummela is a former Nokia executive and is currently head of Microsoft's Mobile Devices business for Greater Asia, the Middle East and Africa, as well as Microsoft's feature phones business. He will lead HMD once the deal closes, which is expected to occur in the second half of 2016.

For more:
- see this Microsoft press release
- read this Nokia press release

Related articles:
Nokia enters digital health market with $191M purchase of France's Withings
Microsoft receives brutal criticism for Nokia device acquisition writedown
Microsoft to shutter former Nokia plant in Salo, Finland, and axe 2,300 jobs in the country
Microsoft sees drop in phone revenue as Nadella pledges more efficiency for entry-level smartphones
Microsoft's Nadella pledges to stick with smartphones, yet sees mobile strategy as broader than phones

Suggested Articles

CNBC reports that it’s coming down to “decision days” and next week may indeed be the make-or-break week for the $26.5 billion T-Mobile/Sprint tie-up.

Crown Castle boosted its yearly guidance after experiencing more tower activity than expected in the second quarter, but delays at burdened municipalities…

Verizon is charging Unlimited plan customers $30 per month for 50GB of 5G data and 15GB of 4G LTE data on the new 5G Inseego MiFi hotspot, with device-only…