The Finnish gear company Nokia began “a strategic review of its digital health business” a couple months ago, which includes recently acquired Withings. Now, the Finnish gear company has made things official, announcing that it would be selling its health tech business back to whence it came.
Wearables are certainly a tough business. Just ask one of the many companies who have tried — and have failed — to remain relevant in the currently rather lackluster space. From Jawbone to Basis, the tech landscape is riddled with the graves of companies that tried and failed to produce compelling smartwatches and fitness bands, and now, we’re looking at yet another tombstone.
Just a couple months after a report from Reuters suggested that Nokia had begun “a strategic review of its digital health business,” cutting up to 400 related jobs, the Finnish gear company made things official, announcing that it would be selling its health tech business back whence it came.
On Wednesday, May 2, Nokia revealed that it will be selling its ill-fated health tech division back to Éric Carreel, the co-founder of Withings, which also happens to be the health-tech startup that Nokia bought just two years ago. While details around the deal have not yet been revealed, it’s safe to assume that Nokia will be losing quite a bit of money. Nokia purchased Withings for $191 million, but given that Nokia is effectively returning the company, we can only assume that it’s not for a profit.
The decision to sell the business back to Carreel will help Nokia shift to being a business-to-business and licensing company, the company said in a press release. The deal is expected to close late in the second quarter of 2018. It’s unclear what will happen to the Withings brand once this deal is complete.
In some ways, it’s a surprising about-face for both teams. You may know Withings for its work in activity trackers and smart thermometers, and for some time, it seemed as though it had the potential to be the next big thing in the digital health space. Alas, those times have come and gone.
Nokia wrote down $175 million of goodwill on the new business unit in the third quarter of 2017. That means that Withings’ assets simply aren’t as valuable as Nokia believed. And while Nokia has made attempts to draw upon Withings’ previous success, the fact that we haven’t heard much about the firm since it joined the much larger conglomerate speaks to how (un)well that strategy has worked.
