Microsoft announced this week it intends to sell its entire feature phone business FIH Mobile – the Foxconn subsidiary – as well as Finnish company HMD Global Oy for only $350 million.
Microsoft has a rocky history with the mobile phone industry. In 2013, retiring CEO Steve Ballmer purchased Nokia’s weak mobile phone business, mostly because Nokia is one of the only brands that used the Windows 10 Mobile OS. And while Nokia is great at pumping out inexpensive handsets worldwide, its products didn’t fit into Microsoft’s software-based business model. This was evident when current CEO Satya Nadella laid off 18,000 employees from the Nokia sector in 2014 and cut 7,800 from the smartphone hardware business last year.
This purchase gives FIH Mobil all of Microsoft’s feature phone assets, including brands, software, customer contracts, and a Vietnam-based factory. In addition, 4,500 Microsoft employees will be transferred.
Although this is a huge move, Microsoft isn’t completely willing to part with the smartphone. The company will continue to develop Windows 10 Mobile for Lumia. However, it may be all for naught as Lumia and Windows 10 have not been able to compete with Apple or Android in the past and do not seem poised to take any major market share now.