Nokia creates plan for digital health, announces it could cut 425 jobs

By Laura Lovett

This week Nokia Technologies announced both a strategic review of the digital health department and an update on its cost saving reduction plan, which could result in substantial layoffs. This comes not two years after Nokia created its digital health unit through the acquisition of French digital health company Withings for $191 million.

According to Nokia, however, the strategic review and job reductions across the business are unrelated. Job reductions are part Nokia’s ongoing 2016 to 2018 synergy and cross savings across the businesses, which kicked off after the company acquired Alcatel Lucent in 2016, a spokesperson told MobiHealthNews in an email. Reuters reports that the company could cut up to 425 positions in Finland this year as part of the $1.3 billion in savings that the reduction plan entails.

Ever since the Withing’s acquisition Nokia Technologies has made connected health one of its focus areas. The Espoo, Finland-based company released a statement this week saying that the review of the digital health business, which includes hybrid watches, scales and digital health devices, “may or may not result in any transaction or other changes.”

“Nokia has taken an entrepreneurial approach to running Nokia Technologies, exploring different ventures in new industries. We continue to believe in the promise of the digital health sector and the Nokia digital health product line,” a Nokia spokesperson told MobiHealthNews. “Products like SteelHR, BodyPlus and Nokia Sleep are receiving solid reviews. During this strategic review we are focusing our resources on delivering strong products to serve a market need and how we can meet connectivity needs of hospitals and enterprises.”

Nokia purchased Withings in 2016 in what it called a “reverse takeover,” putting former Withings' CEO Cedric Hutchings in charge of Nokia’s digital health. As part of the restructuring, Hutchings moved into an advisory position. Rob Le Bras-Brown is now head of digital health and Gregory Lee, president of Nokia Technologies, will now be handling the day to day operations of the digital health business, according to a Nokia spokesperson.  

The Withing’s deal came after Nokia’s Device and Services Business was acquired by Microsoft for $7 billion in 2014, which included its signature mobile phones and smart devices, Engadget reported.

This left the company opened to reinvent itself—eventually finding its way into digital health.

“I was doing market research on our brand to see if our brand would be well received in the digital health space,” Ramzi Haidamus, former president of Nokia Technologies told MobiHealthNews in 2016, “and indeed the top attributes of the brand were trustworthiness, reliability, dependability, and in fact, even if you were to say that the brand itself was associated with an older demographic, that’s even more perfect, because older demographics are looking for digital health products more so than the 20-somethings who [believe they] are never going to die.”

However, the move into the digital health space had challenges. Shortly after the acquisition, Withings products were removed from Apple Stores due to a law suit between Nokia and Apple. That has since been resolved.

The company was also in the news in January when it abruptly pulled Withing’s Body Cardio scales’ velocity measurement feature, citing a potential need for regulatory approval for the product. This was met with a backlash from clients, questioning how the scale was now different than a similar Withing scale that was $80 less. 

As of CES in January Le Bras-Brown said the company has no plans to devlop new products. Instead it plans to focus on the current offerings, according to a TechRadar article. 

“Honestly, I feel like we’ve rounded out our portfolio,” Le Bras-Brown, told TechRadar. “Now it’s about adding incremental utility. Our focus is on preventing chronic illness, particularly heart-related diseases and working with our medical experts so you’ve got data about your weight, heart and activity so you can start to really affect the trajectory of those conditions.”