Nokia begins strategic review of Digital Health business amid hundreds of layoffs

Nokia sells a range of health and fitness tracking watches. (Image: Nokia)

Nokia said it has begun a “strategic review” of its Digital Health business, which stems from the company’s acquisition of Withings in 2016.

Separately, Reuters reported Nokia is planning to cut roughly 425 jobs this year in its home country of Finland.

Those actions come amid a larger push by Nokia to cut costs as part of its 2016 merger with Alcatel-Lucent.

“Digital Health's business portfolio includes consumer and enterprise products, and it manufactures and sells an ecosystem of hybrid smart watches, scales and digital health devices to consumers and enterprise partners,” Nokia wrote in a release. “The strategic review of the Digital Health business may or may not result in any transaction or other changes. Any further announcements about the Digital Health business will be made if and when appropriate. The Patent Business, Brand Partnerships and Technology Licensing units in Nokia Technologies are not in the scope of this review.”

Nokia announced in 2016 its $191 million agreement to purchase Withings, a French startup founded in 2008 that makes activity trackers, weighing scales, thermometers, blood pressure monitors, home and baby monitors and other health-related gadgets and services. Nokia said it would add the company to its Nokia Technologies division, which also houses the company's patent-licensing business as well as its new virtual reality camera-making effort.

But the wearables market has clearly faltered lately, as noted by TechCrunch, based on the struggles of companies like Fitbit. Indeed, IDC noted in the third quarter that the worldwide wearables market grew 7.3% year over year, but showed a clear trend toward so-called “smart wearables,” or those defined by IDC as devices capable of running third party applications.

"Basic wearableswith devices coming from Fitbit, Xiaomi, and Huaweihelped establish the wearables market,” IDC analyst Ramon T. Llamas said in a release. “But as tastes and demands have changed towards multi-purpose deviceslike smartwatches from Apple, Fossil, and Samsungvendors find themselves at a crossroads to adjust accordingly to capture growth opportunity and mindshare."

Overall in the fourth quarter Nokia reported solid results, showing 2% net sales growth in the fourth quarter of 2017, driven by IP networks/applications and its ultra broadband networks division. The company’s fourth-quarter group operating profit rose 7%.