Nokia-branded smartphones and tablets are coming - and they will be running Android

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Smartphones and tablets running Android, plus feature phones, will be made by new company run by former Nokia execs.

Nokia-branded smartphones and tablets are making a comeback, although they won't be made by the company itself -- and they will be running Android.

It's the latest twist in the story of the once-giant mobile phone brand. Back in 2011, unable to cope with competition from Android and iOS, Nokia famously switched to Windows Phone as the operating system for its smartphones. The Finnish company subsequently sold its smartphone business to Microsoft for $5.4bn in 2014, but the following year Microsoft wrote off $7.6bn on the deal and has since massively scaled back its smartphone ambitions.

Now Nokia Technologies has granted HMD global Oy -- a new company based in Finland -- exclusive rights to make Nokia-branded mobile phones and tablets for the next ten years. According to Nokia, HMD has been founded to provide "a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets".

HMD's new smartphone and tablet portfolio will be based on Android, which Nokia described as "uniting one of the world's iconic mobile brands with the leading mobile operating system and app development community".

The news comes at the same time as Microsoft is selling off its feature phone business, which it acquired from Nokia. HMD is also buying from Microsoft the rights to use the Nokia brand on feature phones, a deal that's expected to close in the second half of this year.

HMD plans to spend $500m over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business.

FIH Mobile -- a Foxconn subsidiary -- has bought the rest of Microsoft's feature phone business assets, including manufacturing, sales and distribution. HMD and Nokia Technologies have signed an agreement with FIH to establish a "collaboration framework" for building a global business for Nokia-branded mobile phones and tablets.

Nokia will not be making a financial investment or holding equity in HMD, but will take a seat on the board and set brand guidelines "to ensure that all Nokia-branded products exemplify consumer expectations of Nokia devices, including quality, design and consumer focused innovation". Nokia will also receive royalty payments from HMD for sales of Nokia-branded mobile products.

After the deal with Microsoft is completed, Arto Nummela will become HMD's CEO: he has previously held senior positions at Nokia and is currently the head of Microsoft's mobile devices business for Greater Asia, Middle East and Africa, as well as heading up Microsoft's global Feature Phones business. HMD's president will be Florian Seiche, who is currently senior vice president for Europe sales and marketing at Microsoft Mobile, and who has also previously held key roles at Nokia.

Ramzi Haidamus, president of Nokia Technologies, said: "Today marks the beginning of an exciting new chapter for the Nokia brand in an industry where Nokia remains a truly iconic name. Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets."

Nummela said: "We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers. Branding has become a critical differentiator in mobile phones, which is why our business model is centered on the unique asset of the Nokia brand and our extensive experience in sales and marketing."

HMD is owned by Smart Connect LP, a private equity fund managed by Jean-Francois Baril, a former Nokia executive, as well as by HMD management.

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