Nokia phones find a new champion, with Android at its side

Microsoft will sell its low-end phone business for $350 million, and a new Finnish company called HMD will sell Nokia-branded, Android-powered phones and tablets.

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Nokia, the Finnish company that embodied the mobile phone revolution until Silicon Valley giants pushed it aside, will live on again as phone brand.

Undoing a portion of its 2014 acquisition of Nokia's phone business, Microsoft is selling off its low-end phone unit as part of a $350 million deal announced Wednesday that will see about 4,500 employees leave the company. The buyers are FIH Mobile, a subsidiary of Taiwan-based manufacturing giant Foxconn, and a new Finland-based company called HMD Global.

HMD will make Nokia-branded phones using Google's Android software, "uniting one of the world's iconic mobile brands with the leading mobile operating system and app development community," Finland's Nokia Technologies said in a statement.

Arto Nummela, currently head of Microsoft's feature phone​ business, will become CEO of HMD.

Arto Nummela, currently head of Microsoft's feature phone business, will become chief executive of HMD.


The deal gives HMD exclusive rights for 10 years to sell Nokia-branded phones and tablets. Its CEO-to-be is Arto Nummela, a former Nokia exec who now leads Microsoft's mobile business in Asia, the Middle East and Africa and its lower-end feature phone business, which includes Asha and Nokia-branded phones. He's betting heavily on that brand.

"We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers," Nummela said in a statement. "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."

It's been a rough decade for Microsoft and Nokia, two tech giants that have lost much of their clout among consumers with the rise of Apple, Google and their allies. Feature phones, lower-end models that lack the computing power and wealth of apps found on higher-end phones, still sell in large numbers to cost-conscious buyers. But few see them as the future.

HMD will pay Microsoft about $20 million for feature-phone brand and design rights, a Nokia representative said. FIH will pay about $330 million for the manufacturing facility and the sales and distribution network.

Microsoft agreed to acquire Nokia's phone business in 2013 in an effort to become relevant in a phone market dominated by Apple's iPhone and by companies such as Samsung that embraced Google's Android software. But the move failed to turn around the business.

Microsoft's own Windows-powered phones, now stripped of the Nokia brand, remain rarities. Microsoft laid off thousands of employees in its phone division in 2015 and isn't giving top priority to its Windows phone software.

For higher-end phones, Microsoft will continue to develop its Windows 10 Mobile software and the Lumia phones that run it. It'll also continue to work with manufacturing partners including Acer, Alcatel, HP and Vaio on Windows-powered phones, Microsoft said.

HMD's manufacturing partner will be FIH, which will take over Microsoft Mobile Vietnam and its Hanoi factory when the Microsoft deal closes in the second half of 2016. About 4,500 Microsoft employees will transfer to FIH and HMD or have the opportunity to do so, Microsoft said.

Editors' note: The photo at top shows an array of historic Nokia phones, from the company's then-headquarters in Espoo, Finland, several years before the Microsoft acquisition.

Update, 3:50 a.m. PT: Adds details on the $350 million in payments.
Correction, 9:19 a.m. PT: Foxconn's headquarters are in Taiwan.