Following a strategic review of its digital health business announced in February, Nokia agreed to sell the struggling unit back to Éric Carreel, co-founder and former Chairman of French tech company Withings which the Finnish firm bought in 2016 for the equivalent of $191 million and ended up incorporating it into its operations as Nokia Health. Nokia said Wednesday its agreement with Mr. Carreel is of the exclusive variety and is expected to be completed late next month. No financial details of the transaction have been disclosed, though most industry watchers agree Nokia is most likely losing money on the sale as its digital health unit has been struggling to continue Withings' momentum and hasn't innovated in a significant manner following the 2016 acquisition.
While the move is indicative of the Withings purchase lacking foresight and long-term planning, Nokia is describing it as a result of its new shift toward business-to-business solutions and licensing. The firm hasn't provided many concrete details on the matter but its emphasis on the fact that the licensing arm of Nokia Technologies won't be affected by the sale suggests it may be looking to exit the health-focused wearable and smart scale market in a similar manner in which it left the smartphone space – by retaining the licensing rights to its name and continuing to charge royalties for them. That's the essence of its relationship with HMD Global which has been designing, manufacturing, and retailing Nokia-branded Android handsets since early 2017 and pays licensing fees to Nokia without counting the tech giant among its investors, and it's also how the Nokia Health sale may be structured.
The development is in line with recent reports claiming Nokia wanted to offload its digital health unit to a European company despite interest from Google's Nest and Samsung so as to help the tech industry on the Old Continent remain competitive in artificial intelligence and other emerging segments. The firm's latest consolidated financial report showed its reliance on licensing is still increasing, with Nokia now describing that trend as a business strategy it's consciously pursuing, especially while it's waiting for its massive 5G investments to start generating significant returns.