April 28, 2016    4 minute read

Nokia Entering the Digital Health Market

   April 28, 2016    4 minute read

Nokia Entering the Digital Health Market

“We have connected people all over the world in developed and emerging markets. Now we can connect them to health and wellbeing”

Ramzi Haidamus, President of Nokia Technologies

The Finnish telecom-network-equipment producer announced yesterday plans to buy Withings SA, a French digital health company. Withings SA was among the first companies to produce Internet-connected devices to track the health of users. Rajeev Suri, the CEO of Nokia said that they always have intended that digital health becomes an important part of Nokia’s strategic interest and that the company is now ready to take actions to enter this vast promising market.

The announcement of this deal follows a series of acquisitions of fitness start-ups starting in March last year, with the deal Intel buying Basis as well as deals from Under Armour buying Endomondo and MyFitnessPal, Adidas buying Runtastic and Asics buying Runkeeper.

Nokia plans to re-enter the consumer electronics market with the acquisition of Withings SA, which is valued at €170 million. The deal’s sum only comprises a fraction of the company’s last year’s profit (€1.26 billion). Though it plays a crucial part in the plans of Nokia to expand in the “Internet of Things.” The market of digital health products is growing 31% year on year and therefore offers an excellent opportunity for the Finnish firm to access the consumer retail market again after it exited it by selling its mobile business to Microsoft two years ago. In the meanwhile, Nokia focused on the network infrastructure market. Recently Nokia bought the world leader in Internet routing technologies, Alcatel-Lucent SA for €15.6 billion. Another step into new markets by Nokia was the launch of the $60,000 virtual reality camera called OZO.

The Internet of Things (IoT) is expected to be the next big development in the market. The Internet of Things is the communication from one machine to another, which is built on cloud computing and networks of data-gathering sensors. This technology is also called “smart” because it is mobile and virtual with an immediate connection and it will dominate our lives from “smart” homes to “smart” driving. Also, many telecom companies are betting on Internet of Things and are preparing themselves to be ready for the market.

The French Startup company, Withings SA founded in 2008 has already a wide-ranging product lineup from weighing scales, smartwatches, fitness trackers, sleep-quality monitors thermometers, blood pressure monitors to baby monitors. The company which has currently around 200 employees across its locations in France, the US and Hong Kong has already been looking since early 2015 for new investors or deals to expand and it seems that they found the perfect partner.

The plan is that Withings’s CEO will lead two teams situated in Finland and San Francisco, which has already been doing research on sleep research and connectivity in hospitals by Nokia itself. Nokia’s CEO added that they have already great products, though they felt like they are three years behind. The expected deal completion is in the early part of quarter three this year which is only comprising the first step of the Finnish company, which is heading to reinvent itself and return to the consumer retail market. Nokia is assuming that people will manage their health via digital healthcare advice. Haidamus said that both companies are talking about that the Finnish company’s name could end up on the devices, as the brand is already well known and the combination of Nokia’s brand plus the knowledge in health devices from Withings could be a good branding strategy.

Digital healthcare is expected to become one of the largest markets in the Internet of Things and experts even forecast a 37% CAGR, making it the fastest growing sector of the healthcare market due to the continuing fitness and health trend. Experts predict that people will have various wearables where the data will come from.  Though, investors faced difficult times with Fitbit’s stock lately, as it is trading 60% below its post-IPO price. Fitbit is currently the market leader in the digital health sector. Nevertheless, it is expected that digital health products will be a $32 billion market by 2019, the tripled value of 2013.

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