Image source: Nokia

Leaked memo suggests Nokia may stop making wearables

Last week, Nokia issued a short press statement saying it has initiated a review of strategic options for its Digital Health business. This is the division which manufacturers the company’s smartwatches, scales and other wearables. Now a leaked memo obtained by the Verge shows its possible the company might shelve the entire concept.

Nokia’s chief strategy officer Kathrin Buvac told employees that the digital health side of the business is struggling to scale and meet growth expectations.

“Rather than only falling in love with our technology, we must be honest with ourselves,” writes Buvac.

“Currently, we don’t see a path for [the digital health business] to become a meaningful part of a company as large as Nokia.”

To recall, the Finnish tech giant snapped up Withings some two years ago for a cool €170 million. This is one of the pioneers of the wearable tech industry which brought us goodies such as the first Wi-Fi scale. Since the acquisition, Nokia has primarily been busy rebranding the Withings range of connected health devices.

Essential reading: Top fitness trackers and health gadgets

A few months ago, Nokia announced it is planning to shift focus away from virtual reality (VR) to health and fitness digital health. That left us with the impression it might beef up its fitness segment. This was confirmed at the recent CES 2018 when the Finish company added to its portfolio of health and fitness gadgets a sleep tracking pad.

Nokia Sleep is the successor to the Withings Aura, and is a device that nestles under your mattress to help you catch more ZZZs. It is expected the gadget will be released sometime this quarter.

Nokia drops pulse wave velocity from its top of the range smart scale 01 - Leaked memo suggests Nokia may stop making wearables
Image source: Nokia

But Nokia has had its share of difficulties with the Withings purchase. In late January, the company announced it is removing Pulse Wave Velocity (PWV) from its top of the range Body Cardio scale. PWV is a measure of arterial stiffness or the rate at which pressure waves move down the vessels. Seen as ground-breaking, the scale dishes out readings and provides an assessment. But it seems that Nokia was hit with regulatory issues in the US and decided the simplest way forward was just to pull the feature. Its safe to say existing owners of the scale were not too happy at the news.

More importantly, a few months ago Nokia recorded a €141 million charge due to ‘the impairment of goodwill related to its digital health business.’ In English, this means Nokia wrote-off the vast majority of its Withings acquisition. And now its clear that Digital Health business sales are are struggling to meet growth expectations.

Its still to early to say whether Nokia will give up entirely on digital health. We certainly hope not. The company says “the strategic review of the Digital Health business may or may not result in any transaction or other changes”. In other words, wait and see.

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