Nokia announced on Wednesday that it licensed HMD to produce Nokia branded mobile phones and tablets. The new gadgets will use the Android system. The manufacturer will be Foxconn based in Taiwan, reports Xinhua.
HMD has its head office in Helsinki.
In a parallel move, Microsoft announced on Wednesday it sold its basic phone business for $350 million to HMD and FIH Mobile, a subsidiary of Foxconn.
HMD and Nokia Technologies have entered an agreement on cooperation with FIH.
Licensing the Nokia brand to a new producer became possible following the expiry of the restrictions set in the deal between Nokia and Microsoft in 2013.
Nokia remained the owner of the Nokia brand after it sold its handset business to Microsoft for 5.4 billion euros, but was forbidden to license it to outsiders until the end of 2015.
The new company HMD has made agreements both with Microsoft and Nokia about the use of the Nokia brand and some design rights. The agreement HMD signs with Nokia is exclusive and valid for 10 years.
The agreement with Microsoft has some conditions and only covers the use of the Nokia name in basic phones. Microsoft continues the production of the high-end Lumia smart phones, which will use Windows platforms.
Finnish media reported that several experienced executives with Nokia background were involved in the new HMD. The CEO of the company is Arto Nummela. He used to be in charge of marketing Microsoft phones in China.
The new Finnish company is planning to spend some 400 million euros to market the Nokia brand for the next three years.
Analysts have pondered on the attractiveness of the Nokia image on the mobile gadget market.
Hannu Rauhala from the Finnish OP Group told Finnish national radio Yle that the image of Nokia was still fairly strong in the “developing markets”.
Rauhala also noted that licensing “gives good profit” to Nokia without business risks.