More than two years after its exit from mobile phones in April 2014 via a $7.2 billion deal with Microsoft, Nokia‘s (NYSE: NOK) long-awaited return to the business appears near at hand. According to recent scuttlebutt, the once high-flying device maker will likely take the wraps off its new smartphone at the Mobile World Congress in February.
As CEO Rajeev Suri indicated when talk of a Nokia-branded phone first surfaced about a year ago, it has no intention of getting back into the manufacturing side of the smartphone business.
Instead, Nokia has signed a deal with newly-formed Finnish manufacturer HMD giving it exclusive rights to market smartphones under its brand. Most of the rumors swirling around suggest the new device will run an Android operating system. Somewhat surprisingly given the market saturation of high-end smartphones, Nokia and HMD are reportedly working on a couple of top-of-the-line models as well.
Last quarter’s 1% increase in global smartphone shipments came despite significant declines from the top two vendors, Samsung and Apple. The sharp drops in shipments from the market leaders — Samsung shipped 11.3 million fewer units — were more than made up for by growth from low-cost Chinese providers.
That said, due to the nature of Nokia’s 10-year exclusive arrangement with HMD, it won’t bear much of the risk inherent in competing in the smartphone market. This puts Nokia in an enviable position from here.
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Tim Brugger has no position in any stocks mentioned.
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