Yesterday, Microsoft had announced that it has reached an agreement to sell the company’s entry-level feature phone assets to FIH Mobile, which is a subsidiary of Hon Hai / Foxconn Technology Group, and HMD Global for US $350 million. As part of this mega deal, FIH Mobile will also get Microsoft Mobile Vietnam, which is the company’s manufacturing facility in Hanoi, Vietnam. Also, when everything falls in place and the final deal goes through, approximately 4,500 employees will transfer to, or have the opportunity to join, FIH Mobile or HMD Global.
Microsoft has also revealed that it will continue to develop Windows 10 Mobile and support Lumia phones such as the Lumia 650, Lumia 950 and Lumia 950 XL, and other phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO.
As part of this deal, Microsoft will transfer substantially all of its feature phone assets, including brands, software and services, care network and other assets, customer contracts, and critical supply agreements, subject to compliance with local law. The deal is expected to close in the second half of 2016, subject to regulatory approvals and other closing conditions, said the company.
Upon analysing this decision of Microsoft wanting to sell its feature phone business to Foxconn, we should recap a bit. The company had started to winding down its feature phone business over the past couple of years, since Asha, Series 40 and Nokia X devices shifted to a “maintenance mode” back in July 2014 and hence Microsoft did not add any new feature or update these devices ever, since July 2014. Then the company had switched its focus completely on Windows Phone, however that has sort off failed as well. Microsoft has only sold 2.3 million Lumia devices in the last quarter, which is an enormous 73 percent drop from the 8.6 million in the same period witnessed in 2015.
The only positive news from this deal is that Nokia is gearing up to license its brand to a company called HMD global, which will manufacture and sell an array of Android smartphones and tablets.