Will Nokia branded phones with Android OS shake up smartphones scene?

Nokia's upcoming smartphones and tablets will be based on Android OS.

Nokia's smartphone chapter ended three years ago and on a really sad note. By the time Microsoft acquired Nokia's phone business it was in bad tune and making losses. Nokia's fall from the pole position in the smartphone market was quite a shocker for the loyalists. But the latest news is making waves in the tech industry and has put everyone on their toes.

After staying out of the smartphone business for three years, Nokia's making a comeback. This time, we are not talking about some rumours from industry insiders. The Finnish company itself has confirmed its plans for its return to the smartphone market. This time around Nokia is playing smart trying to avoid past mistakes.

Nokia's upcoming smartphones and tablets will be based on Android OS while the company plans to continue selling feature phones. Nokia won't manufacture anything, but still drive revenue from the licensing, effectively keeping itself away from any risk of the bussiness.

Since Nokia anyway doesn't have factories to build phones after Microsoft transaction, another Finnish company, HMD Global, will be building Nokia branded smartphones, feature phones, and tablets. Nokia and HMD Global have signed the ten-year agreement for it.

According to this agreement, HMD Global will be licensed to use Nokia's brand name as well as Nokia's intellectual property. HMD Global will also be responsible for distribution, marketing, and service for Nokia's phones. Since Microsoft owns some of the branding and design-related rights, HMD will acquire those too from the former. This transaction is expected to close by H2 2016.

There is another key party involved in the transaction. FIH Mobile Limited, a subsidiary of Foxconn, will acquire the remainder of the Microsoft's feature phone business including manufacturing, sales and distribution.

Nokia and HMD have tied up with FIH to provide manufacturing, sales and supply chain as well as support for the upcoming devices. This is the same portfolio which Microsoft had acquired from Nokia. Nokia once had the most robust supply chain and it will be indirectly gaining the control of it again. A bit confusing for a layman.

The HMD is a newly founded venture to make Nokia branded smartphones. However, Nokia doesn't plan to invest in it or hold equity. Yet, the company will be on the board of directors to set the branding and performance criteria.

Nokia or HMD haven't mentioned when we can see the first Nokia branded smartphones. But since one of the transactions is expected to close in the H2 of 2016, its first smartphone wouldn't arrive before 2017.