Back when Microsoft’s deal to purchase Nokia’s handset division closed in 2014, we figured that Nokia was getting out of consumer electronics for good, content to relegate themselves to the arena of telecom network hardware. Looks like we were wrong. We’ve heard rumors that Nokia is planning to build their own handsets again, but this week’s news is no rumor. In announcements from both companies, it’s been confirmed that Nokia will acquire connected health giant Withings for $191 million in a deal that is slated to close by the end of the year.
The Withings announcement sent to their customers is light on details, but cites Nokia’s plans for preventative health and patient care as something that convinced the company and CEO Cédric Hutchings to go through with the deal. The Nokia announcement cites Withings’ success in health tech and wearables, but offers more details about the deal itself — that it’s worth €170 million and that the deal is expected to close in Q3 of this year.
What does it mean for us? Hard to say, but it’s always worth looking at acquisitions with some concern. Things always sound rosy at the beginning, but acquisitions often don’t go as well as planned — you can take Microsoft’s purchase of Nokia’s handset division as exhibit A. The worrying part for Withings customers is that Withings doesn’t exactly make standalone devices — everything in their connected health catalog is tied to their Health Mate app. If the deal goes poorly and Nokia decides they don’t want to pursue health tech after all, owners of Withings products could be left in the lurch.
Sound extreme? It’s not. Earlier this month, Nest (owned by Alphabet, the parent company of Google) made the wrong kind of news by shutting down the Revolv smart home system that the company had previously purchased. Revolv was a connected home hub that allowed multiple smart home devices to work together by using a single app. When Nest shut it down, they didn’t just stop supporting it — they announced that the app will stop working altogether, making every Revolv hub functionally useless. Those who spent hundreds of dollars on Revolv products were left with nothing to show for their money and little more than an apology from the company.
It’s the same concern that exists with ownership of digital media through services like Steam — if the the things you own can be made useless or taken away at any time with no recourse, did you ever own them at all? It’s usually an overblown fear, but it becomes very real when mergers and acquisitions happen. If the old services ever stop serving the purposes of their new owners, consumers are the ones who will be left out in the cold. We hope this doesn’t happen with Nokia and Withings, but it’s worth being aware of the risk.