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Roundup: New Finnish company set up to revive Nokia mobile phone brand

Xinhua, May 19, 2016 Adjust font size:

A new company called HMD has been allowed to produce mobile phones and tablets in the name of Nokia as of Wednesday. Finnish media described the news as a resurgence of Nokia brand.

Nokia announced on Wednesday that it licensed HMD to produce Nokia branded mobile phones and tablets. The new gadgets will use the Android system. The manufacturer will be Foxconn based in Taiwan.

HMD has its head office in Helsinki.

In a parallel move, Microsoft announced on Wednesday it sold its basic phone business at a price of 350 million U.S. dollars to HMD and FIH Mobile, a subsidiary of Foxconn. HMD and Nokia Technologies have entered an agreement on cooperation with FIH.

Licensing the Nokia brand to a new producer became possible following the expiry of the restrictions set in the deal between Nokia and Microsoft in 2013. Nokia remained the owner of the Nokia brand after it sold its handset business to Microsoft for 5.4 billion euros, but was forbidden to license it to outsiders until the end of 2015.

The new company HMD has made agreements both with Microsoft and Nokia about the use of the Nokia brand and some design rights. The agreement HMD signs with Nokia is exclusive and valid for ten years.

The agreement with Microsoft has some conditions and only covers the use of the Nokia name in basic phones. Microsoft continues the production of the high-end Lumia smart phones, which will use Windows platforms.

Finnish media reported that several experienced executives with Nokia background were involved in the new HMD. The CEO of the company is Arto Nummela. He used to be in charge of marketing Microsoft phones in China.

The new Finnish company is planning to spend some 400 million euros to market the Nokia brand for the next three years.

Analysts have pondered on the attractiveness of the Nokia image on the mobile gadget market.

Hannu Rauhala from the Finnish OP Group told Finnish national radio Yle that the image of Nokia is still fairly strong in the "developing markets".

Rauhala also noted that licensing "gives good profit" to Nokia without business risks.

The licensing announcement coincided in Finland with the publication of an ETLA research institute report saying that Nokia is again the most important Finnish enterprise, if assessed on the basis of additional value produced. Nokia is today focusing on communication technologies and equipment.

Licensing of the Nokia brand to an outsider for production was expected.

Nokia chairman of board of directors Risto Siilasmaa said earlier this year that Nokia would not start producing a new gadget itself "unless it is somehow revolutionary."

Following the publication of the licensing of the brand, the Nokia stock went up in the Helsinki stock exchange. At 4 p.m. Helsinki time, it had gained over two percent over Tuesday, and was at 4.63 euros per share. (1 euro = 1.12 U.S. dollars) Endit