Withings To Be Sold Back To Co-Founder By Nokia

Nokia has disclosed that its struggling digital health business, Withings, will be sold back to its founder. This comes less than two years since Nokia acquired the French startup. Withings was co-founded by Eric Carreel, who will be buying it back for an undisclosed price, together with Cedric Hutchings in 2008. Hutchings is currently Nokia’s Digital Health vice president. In a statement Nokia said it had sold the startup since its focus is on being a business-to-business company as well as a licensing one.

The most recent quarter saw sales at the Finnish telecommunications giant fall by 8% year-over-year and this resulted in the operating profit declining. In 2017 overall sales were 23.2 billion euros and the contribution of the health unit was 52 million euros.

Wearable hype

Though health was supposed to reposition the firm there have been a lot of changes since the acquisition. At the time of the acquisition there was a lot of hype surrounding wearables but the space hasn’t lived up to expectation. Despite the fact that the smartwatch that Withings makes is integrated with the HealthKit of Apple, the view nowadays is that having a standalone device business brings no strategic advantage in the healthcare data sector.

Fitbit for instance recognizes this and earlier in the week inked an agreement with Google which allows the data it has acquired to reach doctors through the tech giant. This is because Fitbit had been shut out from the ecosystem of Apple Health. As it is the owners of the platforms such as Google and Apple have the advantage and the hardware is just a tiny part of the equation.

Accounting charge

Though terms of the deal were not revealed earlier in the year an accounting charge of 141 million euros was taken by Nokia and this an indication that the Finnish giant is selling the business for less than it acquired it. Nokia expects the sale to be concluded before the end of Q2.

The sale of Withings comes less than three months since Nokia launched a review of the health unit. In a company memo that was obtained by the media then, the chief strategy officer of the Finnish, Kathrin Buvac, firm told members of staff that the digital health business was struggling with regards to scaling and meeting growth expectations. According to Buvac at the time the digital health business was unlikely to contribute meaningfully to the wider business of Nokia.

 

 

 

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