Would you buy a Nokia cellphone?
That's the question that Foxconn, the Taiwanese technology giant, and HMD Global, a Finnish company, are hoping to answer after they joined forces Wednesday to license the once-powerful brand to build smartphones and tablets, primarily for customers in emerging countries.
The announcement signals the potential return of Nokia-branded phones after the company sold its handset division in 2013 for $7.2 billion to Microsoft, which subsequently wrote down most of that investment. Microsoft later discontinued Nokia-brand smartphones.
The attempt to revive Nokia phones and tablets (the company had previously licensed its brand to Foxconn to make a tablet in China in 2014) also comes almost two decades after Nokia, then the world's largest smartphone maker, reached its highest valuation of almost $250 billion. It is now worth around $30 billion.
After a number of missteps, most notably the failure from 2007 onward to adequately respond to the global popularity of Apple's iPhone, Nokia has been forced to reinvent itself as a telecommunications equipment maker, producing mobile network and broadband infrastructure for the likes of AT&T and Verizon Wireless.
The deal announced Wednesday aims — admittedly amid cutthroat competition in the world's smartphone market — to resurrect the Nokia brand for consumers who may still remember the company's glory days before it fell behind rivals like Apple and Samsung.
To make that happen, Foxconn, which put up most of the cash, and HMD Global, a private-equity-backed Finnish group led by former Microsoft and Nokia executives, agreed to buy Microsoft's so-called feature phone unit for $350 million. The division has 4,500 workers worldwide and a manufacturing facility in Vietnam. Feature phones are basic devices, mostly used in developing markets, that often lack services like Internet access.
Foxconn and HMD Global also sealed a separate agreement with Nokia to license its brand to manufacture new smartphones and tablets, adding that they planned to spend a further $500 million over the next three years to promote the devices, which would run on Google's Android operating system.
Under the complicated agreement, Foxconn — which also makes devices under contract for other manufacturers and has attracted criticism for how it treats its workers — would manufacture the devices, which have not yet been released, as well as the existing feature phones.
HMD Global, based in Helsinki, would design the new smartphones and tablets. The deal is expected to be completed by the end of the year. HMD Global is backed by a private equity firm run by Jean-François Baril, a former Nokia executive with close ties to Foxconn.
Nokia would be paid a per-device licensing fee, and it will have a position on HMD Global's board, although it did not put any money into the entity.
"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," Arto Nummela, HMD Global's chief executive, said in a statement.