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Nokia’s Brand Goes to Startup With $500 Million Plan

A startup called HMD Global Oy (Helsinki, Finland) has been formed to takeover the Nokia brand for mobile phones and tablet computers and has said it intends to spend $500 million marketing Nokia as an Android-based mobile device over the next three years.

HMD has signed a license agreement with Nokia Technologies, the licensing unit of Nokia Corp., giving HMD sole use of the Nokia brand on mobile phones and tablets worldwide for a decade as well as licenses to patents essential to cellular communications standards. The company has conditionally agreed to acquire from Microsoft Corp. the rights to use the Nokia trademark on feature phones until 2024, and design rights relating to Microsoft's feature phone nusiness. This transaction is expected to close in the second half of 2016.

HMD is owned by Smart Connect LP, a private equity fund managed by Jean-Francois Baril, a former Nokia executive, as well as by HMD management. The company said it would get funds from investors and from the profits of the acquired feature phone business.

As part of the same deal Microsoft is selling remaining feature phone business assets, including a manufacturing facility in Hanoi, Vietnam, and global distribution and supply chain networks to FIH Mobile Ltd., a subsidiary of Hon Hai Precision Industries (trading as Foxconn Technology Group).

HMD said that in future it will produce smartphones and tablets that run the Android operating system. However while it is clear that HMD/Nokia will not be a manufacturers of mobile devices it remains unclear as to whether it will even perform its own design. The whole focus of the launch announcement was that HMD would focus on marketing and brand. It may yet also outsource the design of its devices and focus on putting its brand in front of consumers eyes and developing services that are accessed through those devices.

Arto Nummela, who previously held senior positions with Nokia and is currently senior executive within Microsoft's mobile devices business, has been recruited to take up the CEO position on closing of the Microsoft transaction. Florian Seiche, currently senior vice president for European sales and marketing at Microsoft Mobile, who previously held leadership roles at Nokia and HTC, will be president of the company on the closing of the Microsoft deal.

“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 manufacturing and distribution providers to move quickly and deliver what customers want,” said Nummela, in a statement.

This article was originally published by EE Times Europe.

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    May 5, 2017

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