Two years after spending $190 million on Withings, Nokia selling digital health business
Nokia says move reflects focus on business-to-business and licensing activities
In May 2016, Finnish network infrastructure vendor Nokia spent $190 million to acquire Withings, a maker of connected devices focused on consumer health care. After announcing in February an internal review of its digital health unit, Nokia now says it will sell the business to Withings Co-founder Eric Carreel for an undisclosed sum with closing expected late in Q2.
In a broad statement, Nokia said divesting the consumer-facing product line will help better focus on its business-to-business and licensing activities. But, based on a leaked internal memo published by The Verge, the digital health business has struggled since is acquisition two years ago.
In the memo, Kathrin Buvac, chief strategy officer, wrote, “In its entirety, our digital health business has struggled to scale and meet its growth expectations. Currently, we don’t see a path for it to become a meaningful part of a company as large as Nokia.”
For consumers, the brand is Nokia Health (Withings) and it sells smart watches, a connected scale, sleep sensors and other products in that realm. Since Nokia got out of the handset business–granted, the company licenses its name to HMD Global, which makes branded Nokia phones–it has become a business-to-business company. In that context, the consumer product line always seemed a bit out of place.
At the time of the Withings acquisition, Ramzi Haidamus, then-president of Nokia Technologies, called the expansion in digital health “an exciting new chapter in the history of Nokia Technologies.” Haidamus left Nokia a few months later. In October of 2017, Nokia took a $164 million write-down on the digital health unit based on projections for the business, Reuters reported. A Nokia spokesman told Reuters that the company “[remained]confident in the potential of our digital health business” and that it believed “we have the assets, the brand and the innovation capabilities to succeed.”
In the eight months since, the company’s position has changed. According to the Buvac memo, getting rid of digital health “will allow us to focus and transform Nokia to be a business-to-business and licensing company in telecoms and industrial automation. We will continue to have opportunities to address the IoT opportunity in digital health with private connectivity solutions, platforms and software, just no longer from a consumer product perspective.”