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 may be looking at yet another tombstone. As per a new report from Reuters, the Finnish gear company Nokia has begun “a strategic review of its digital health business,” and may cut up to 400 jobs in its native Finland.
It’s a surprising about-face for the company, which bought French startup Withings just two years ago. 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.
While Nokia paid $191 million two years ago in order to acquire Withings, reports note that the company ultimately 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.
There is no clarity as of yet as to how the review will ultimately affect Withings and Nokia’s overall digital health business. After all, the digital health business was one where Nokia was hoping “for growth opportunities amid a tough market for its mainstay telecom network gear business,” Reuters reported. It would appear that Nokia is scaling back its spending as a whole.
The reductions are part of a 1.2 billion euro ($1.5 billion) global savings plan being pursued by the company, which has actually been in place since 2016, when Nokia acquired rival company Alcatel-Lucent.
In any case, Nokia has noted in a statement that the process “may or may not result in any transaction or other changes.”
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