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The Withings tale

15 May 2018
00:00
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In 2016, Nokia acquired Withings, a French start-up that was recognized as an innovator in the world of connected wellness. The latter made products such as hybrid smartwatches, Internet-connected bathroom scales, thermometers and blood-pressure monitors. Nokia paid €170 million (about $192 million) for Withings, which at the time seemed like a bargain given the interest in wearables and connected health. The acquisition enabled the Finnish company to re-enter the market for high-tech consumer goods in a particularly hot area.

In February 2018, news emerged that Nokia was "reviewing its strategic options for its digital health business". Major names such as Google's Nest reportedly showed interest, but in the end, it is a Withings co-founder, Éric Carreel, that will be buying the unit. Details of the transaction haven't been disclosed.

Withings was intended to be a cornerstone of Nokia's new digital health division, an Internet of things play from the Finnish company. There was certainly hope that Nokia could reinvent itself once again and break into an exciting new field. It's a talent that it has demonstrated over the past century and a half, transitioning from being a pulp mill, to making cables, tyres, mobile phones and most recently focusing on mobile infrastructure.

Nokia's "buyer's regret" is partly owing to the wider difficulties of the wearables and connected health markets. Withings was one of the companies that sparked the market for a product category that few people realized they needed, but rivals such as Apple have done a better job of creating ecosystems for digital health so far. Even wearables darling Fitbit has seen its growth stall, with its latest financial results making painful reading.

Ultimately, Nokia was unable to turn Withings into a market disruptor. This could be a matter of impatience on Nokia's part, as it only owned the manufacturer for less than two years. But it's clear that the market for digital health is still in its infancy, and Nokia would have to hang on to a loss-making unit for many years to come while continuing to ramp up investment.

Withings was rebranded as Nokia Health as recently as June 2017, so a resurrection of the Withings name could leave many existing customers scratching their heads. All eyes will now be on the original owner to see if he can rediscover the magic that built Withings into a company worth nearly $200 million. The market is very different from a few years ago so he will need a smart strategy to get the business back on track.

Ben Wood is chief of research at CCS Insight

This article first appeared on CCS Insight

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