Nokia has announced plans to sell its struggling health tech business back to Éric Carreel, co-founder of Withings, the French startup Nokia bought in 2016.
Terms of the deal have not been announced, but the Finnish tech giant is surely taking a substantial loss on the sale. Nokia bought Withings two years ago for $191 million, before rebranding the startup’s products (including a smart scale and various well-received fitness tracker watches) as part of its new “Digital Health” business in 2017.
However, the rebadged Withings products clearly weren’t making enough money for Nokia: In October 2017, the company announced a write-down of $164 million on the assets. This was followed by the launch of a “strategic review” of the division this February, with an internal memo obtained by The Verge showing that execs thought there was “no path” for the business to become “a meaningful part” of Nokia.
All this bad news was confirmed in the company’s first quarter earnings this year. The Digital Health business brought in just $20 million in revenue, compared to net sales of $5.9 billion for the rest of Nokia.
As the company noted in a press release, selling Digital Health back to Carreel fits Nokia’s new focus on becoming primarily a “business-to-business and licensing company.” That means getting out of any consumer markets while concentrating on selling telecommunication hardware (Nokia is the third biggest vendor after Huawei and Ericsson) and licensing its huge portfolio of patents (amassed during its time as the king of mobile in the 1990s and 2000s).
Nokia says the sale is expected to be completed by the end of the second quarter this year, while the future of the Withings brand is unknown.