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Nokia Brand Returning To Smartphones

The Nokia brand will reappear on smartphones in a series of deals that will also reunite the marketing of Nokia smartphones, tablets and feature phones under one company.

Finland-based start-up HMD Global will be the sole global licensee for all three types of products.

In one deal, communications-infrastructure supplier Nokia signed a 10-year exclusive agreement licensing its brand and cellular standard-essential patents to HMD to create and market Nokia-brand smartphones and tablets on a global basis. The smartphones and tablets will be Android-based.

Separately, Microsoft will sell off its Nokia feature-phone business, with HMD conditionally agreeing to acquire the rights to use the Nokia brand on feature phones until 2024. HMD also gets select design rights. The Microsoft transaction is expected to close in the second half.

In a related transaction, contract manufacturer Foxconn will buy the rest of Microsoft’s feature-phone business, including a Vietnam factory and global distribution, fulfilment and supply-chain networks.

Under the agreements, HMD “gets full operational control of sales, marketing and distribution of Nokia-branded mobile phones and tablets,” exclusive access to the global sales and distribution network that Foxconn will acquire from Microsoft , and access to Foxconn’s device manufacturing, supply chain and engineering capabilities, Nokia said.

HMD will invest more than $500 million over the next three years to market Nokia devices using investor funds and the profits from the acquired feature-phone business, Nokia said.

Nokia will get royalty payments from HMD but will not make a financial investment or hold an equity stake in the company. Nokia will also take a seat on the board of directors and “set mandatory brand requirements and performance-related provisions to ensure that all Nokia-branded products exemplify consumer expectations of Nokia devices, including quality, design and consumer-focused innovation,” Nokia said.

HMD was unavailable for comment on its plans for the U.S. market.

Microsoft exit: With the deal, Microsoft is leaving the feature-phone business, which it acquired in 2013 from Nokia along with Nokia’s smartphone business. Microsoft later dropped the Nokia brand from its Windows Mobile-based smartphones to promote the Microsoft Lumia brand instead.

Nokia was prevented from returning to the smartphone market until this year because of a non-compete agreement it had struck with Microsoft.

Nokia goals: The deals “highlight the extent of Nokia’s ambition to remain a consumer brand,” IHS Technology said. In 2014, Nokia entered a brand-license agreement to an OEM partner to launch the Nokia-brand Z1 tablet, and in April Nokia announced plans to acquire connected-health company Withings and its portfolio of activity trackers, weighing scales, thermometers, blood pressure monitors, home and baby monitors and other products.

“Nokia’s goal with a return to the handset business is through a substantially less capital-intensive and lower-risk fashion than how it previously structured its handsets business.”

HMD’s complicated arrangement with Foxconn “gives HMD the capabilities to quickly become a significant player in both the smartphone and feature phone,” IHS also said.

Reunifying feature phones and smartphones under the Nokia brand “will make it easier for HMD to up-sell consumers from feature phones to smartphones in countries where Nokia feature phones are still in usage,” IHS added.

“Feature phones were never a core part of Microsoft’s strategic aim behind the purchase of Nokia’s devices business,” IHS noted.