- Nokia is washing its hands of digital health. The company announced plans Wednesday to sell its digital health business to Eric Carreel, co-founder and chairman of French startup Withings, which Nokia purchased in 2016.
- The deal, which is expected to close late in the second quarter, includes trackers, connected scales, blood pressure monitors and other digital health devices for consumers and enterprise customers.
- Nokia took a 141 million euro writedown on the Withings deal in October, according to Bloomberg. Nokia said the sale is part of a strategy to become a business-to-business and licensing company.
Nokia’s short foray into digital health is an example of how a company can misread the tea leaves when it expands into new business areas.
The Finnish tech firm acquired Withings, a consumer electronics company, for $191 million in April 2016. The move signaled a new focus following the sale of Nokia’s mobile phone business to Microsoft in 2014, and a bet that there was plenty of room for growth and investment in wearable fitness trackers. But that gamble turned south as Apple and other competitors added fitness tracking features to their smartwatches.
Nokia’s exit comes as more companies are eyeing a piece of the digital health pie. According to PwC’s Health Research Institute, 84% of Fortune 50 companies are invested in healthcare, up from 76% five years ago. In all, 967 deals were cut in the U.S. health services market last year and 2018 shows no signs of slowing down.
During the first quarter of this year, digital health funding hit a record high of $1.62 billion across 77 deals, up from $1.41 billion the previous year, according to a recent Rock Health report. The haul included three $100 million-plus deals, with an average deal size of $21 million.
The top-funded categories were digital diagnostic solutions, disease monitoring, diabetes, consumer health information, R&D catalysts, on-demand health services and health benefits administration.
Notably missing among current top value propositions were fitness trackers and wearables. That’s a message Nokia apparently learned too little and too late.