Did Foxconn screw up buying the Nokia brand?

Madalina Dinita
by Madalina Dinita
Former Managing Editor
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Yes, the rumor is now official: Microsoft is selling the Nokia brand to Foxconn, finally ending its continuing phones business. We can all agree that Microsoft made a huge mistake when it bought the Nokia brand, only making it worse by stubbornly trying to revive customer interest in it.

Microsoft never managed to score a profit in selling Nokia phones. In fact, it actually sold the devices at a loss — and continued to do so for years. The best decision would have been to either stop manufacturing and selling Nokia devices, or sell the Nokia brand a lot earlier than right now.

Why would Foxconn buy something as unsuccessful as the Nokia feature phone business? This could negatively impact their future business, after all, especially having witnessed Microsoft’s attempts over the years. But the Chinese manufacturers simply wanted the brand because there, and in a consortium of emerging markets, Nokia is actually very popular. This could be the direction Foxconn is heading towards after closing the deal.

It could be that Foxconn will continue to sell dumbphones to emerging markets under the Nokia brand for profit while taking advantage of the loyalty for Nokia people have in these regions.  At the same time, Foxconn could develop affordable smartphone models ranging from $150 to $300. The company could sell the $300 phones on the world’s markets and roll out the $150 devices to emerging markets as early as the beginning of 2017.

While emerging markets are not yet saturated with dumbphones, customer preferences are slowly shifting towards smartphones. Foxconn probably sees this as an opportunity to feed that demand with dumbphones this year while setting them for the affordable $150 smartphones going forward. In this manner, the Chinese giant can make sure it has an available market for its products, keeping the cashflow coming.

What specs could the new phones have? Well, it would be nice if Foxconn brought back the long lasting battery Nokia phones are so famous for, especially since it will probably run Android. A phablet with an 8MP camera and 4G connectivity with better specs for the $300 version, would do.

In conclusion, Foxconn wants to take advantage of the Nokia brand loyalty and involve itself in emerging markets with affordable smartphones, while leaving competition to focus on the high-end pricey terminals.

What’s your take on this? Could Foxconn also have other plans in mind?

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  • Microsoft sold their feature phone business to Foxconn, not the Nokia brand. Nokia licensed their name to Microsoft when they acquired their devices division and under that contract, Microsoft is allowed to use “Nokia” for smartphones until 2016, and “Nokia” for feature and basic phones until 2024.

  • Madeleine, it seems you’ve really misunderstood what is going on. Foxconn haven’t bought the Nokia brand, what they’ve bought are factories from MS Mobile. The Nokia brand has been sold to a new Finland-based company called HMD Global. So in other words, it’s HMD who will be making new Nokia phones, whereas Foxconn (or more specifically, its subsidiary FIH Mobile) will be manufacturing and disitributing them.

    • Nokia licensed their brand to HMD. They didn’t sell it. HMD is essentially Nokia because it is run by former Nokia executives. I happen to believe that Nokia actually owns it. They just don’t want it to distract them from their networking business, so it got spun off as a separate company.

      • Actually the main money seems to be group of private investors and foxxcon. However I suspect Nokia holds significant amount of control lock on the company by the licensing agreement. Nokia announced the license deal has brand and performance clauses, which pretty much can mean they have a hefty lock hold on the company. Should HMD do anything Nokia doesn’t like, the license gets revoked.

        So the deal seems to be Foxxconn brings in money and the Nokia factories it bought from M$. Nokia “invests” in the brand, patents and access to Nokia’s vast R&D library through Nokia Technologies division. Ex Nokian’s will do the actual phone design work in Finland, expect lot of the design people Microsoft fired to be hired by HMD.

        HMD global seems to be a front company to minimize everyone’s risks involved. It is essentially a sacrificial front in case one is needed. Should the new business go badly, they will just bankrupt HMD global and make it eat any losses incurred. Foxxconn gets their money from manufacturing contracts from HMD and Nokia gets their money from the license payments. Thus the main players are insulated, but still in control behind the scenes.

  • Just to correct this story. MS are no way out of the Smartphone market, they will be releasing devices in 2017 under the surface brand. They will not make anymore Lumia devices.

    • Well nothing’s been confirmed yet from MS regarding Lumia. But yeah it’s very likely that they will kill off Lumia and go Surface.

  • Don t make only chip phones NOKIA. A lot of people like your brand and will buy high and phones as well. In USA and Europe.