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Microsoft India mobile business head,Ajey Mehta to move to HMD Global

Microsoft India’s head of mobile division Ajey Mehta, along with 60-70 sales and marketing staff, will move to HMD Global, the newly-created company.

, ET Bureau|
Updated: May 30, 2016, 09.39 AM IST
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Microsoft India’s head of mobile division Ajey Mehta, along with 60-70 sales and marketing staff, will move to HMD Global, the newly-created company.
Microsoft India’s head of mobile division Ajey Mehta, along with 60-70 sales and marketing staff, will move to HMD Global, the newly-created company.
NEW DELHI: Microsoft India’s head of mobile division Ajey Mehta along with 60-70 sales and marketing staff will move to HMD Global, the newly-created company through which Nokia-branded phones will make a re-entry into global markets, including India.

People aware of the changes said Mehta and the staff at the software maker will move to HMD in India after Microsoft’s deal to sell its feature phone business to Foxconn and HMD closes in the second half of this year.

The team led by Mehta will be responsible for taking the Nokia brand forward in India, starting with feature phones and following up with smartphones on Android, the people added.

The deal, however, leaves out Nokia’s phone manufacturing plant in Chennai, which had been frozen by tax authorities in the country due to an ongoing Rs 20,000-crore tax dispute.

“We expect the announced transactions to close in H2 2016. Further announcements about specific operations, personnel and activities in each geography will follow in due course,” a spokesperson from HMD told ET exclusively over email.

Microsoft and HMD did not comment on senior executives from the former moving to the latter. Mehta didn't respond to calls and messages seeking confirmation as of press time Sunday.

HMD will begin operations selling its existing range of Nokia feature phones and it will also start developing a new smartphone portfolio and make further product announcements as it builds towards launch. The timeline of a possible launch was not shared.

Nokia was the world's leading mobile phone maker for more than a decade since 1998 until it bet on Microsoft's Windows mobile platform for smartphones. The move turned out to be a flop and Nokia sold its phone business to Microsoft for $7.2 billion.

Microsoft’s feature phones, which still sell under the Nokia brand, have also suffered.

But HMD believes there is still enough opportunity in the global handsets business, despite a recent slowdown in global sales.

“Although mobile phone technology has in large part been commoditized and the market has naturally slowed, we believe there is a significant opportunity to differentiate with branding and distribution,” an HMD spokesperson said.

Nokia-branded feature phones have a huge market in Africa, where they have a 10.6% share of the market, as per Counterpoint Research.

HMD added that Nokia remains one of the most recognized brands in the world—recognized by 95% of mobile users. “We believe that if we create great products, people will want to use them.”

People movements at Microsoft follow the Redmond-headquartered company’s move to sell its feature phones business and manufacturing facility in Vietnam to Foxconn Technology Group subsidiary FIH Mobile and HMD Global for $350 million, announced last week. FIH also gets Microsoft's feature phone sales and distribution.

Microsoft has given rights to use Nokia brand on feature phones and some design rights to HMD Global—a newly-formed company in Finland—till 2024.

Microsoft will also lay off 1,350 jobs at the mobile division in Finland and 500 people globally, at a charge of $950 million, of which $200 million will be for severance payments.

Nokia has given exclusive global license, branding rights and intellectual property licensing to the company to create Nokia-branded mobile phones and tablets for the next 10 years. HMD will give royalty payments to Nokia from sale of Nokia-branded mobile products.

In other words, before the end of the year, HMD Global will be responsible for bringing in Nokia-branded phones and tablets, running on Android OS, besides creating, designing, branding, marketing and launching of these products across geographies. The company will invest $500 million over next three years.

It will also have exclusive access to global sales and distribution network that FIH will get from Microsoft and access to Foxconn’s manufacturing capabilities.

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