From startup to start again: How Withings plans to recover from its Nokia experience

In Nokia’s earnings report released October 2017, a line item showed that the company was taking a $164 million write down on its digital health division, almost completely devaluing its business in the space.

It was the beginning of the end of the Finnish technology and telecom company’s effort to revitalize its consumer technologies business. In its heyday, it was top manufacturer of candy bar-style cell phones. But after losing increasing market share to Apple and Android, the company was hoping to forge a path into new and innovative industries with digital health being a strong focus.

The crown jewel in that transformation was supposed to be the purchase of French wearables company Withings. But less than two years after the $192 million acquisition, the executive who spearheaded the deal was booted and a statement released in February noted that Nokia had “initiated a review of strategic options for its Digital Health business.”

The Verge got its hands on an internal memo that expressed the reality a little bit more bluntly.

“Rather than only falling in love with our technology, we must be honest with ourselves,” wrote Nokia’s Chief Strategy Officer Kathrin 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.”

The white knight for Withings came in the form Eric Carreel, one of the company’s co-founders who purchased the company back from Nokia to “push the boundaries of connected health,” according to the sale announcement. 

The road ahead is difficult, especially considering that Withings’ product offerings remained largely stagnant during its tenure with Nokia. Moreover, the Finnish firm was roundly criticized by customers who found technical support and software features for Withings devices lacking.

But with Carreel back at the helm of the company, there’s hope that Withings can renew its focus on wellness and disease prevention.

“By relaunching Withings what we want to do is position ourselves as a preventive health helper to show that we’re a part of this revolution in health which is to take care of ourselves in our daily lives,” Carreel said in a recent phone interview.

An example of this seamless health data collection strategy is in the company’s sleep tracking mat, which Carreel said only requires one-time set-up and collects much more robust information than typical fitness trackers over a longer time period of time.

He added the company is hoping to play a more active role in its users’ health by using the collected data to provide personalized and advanced feedback using technology like AI-enabled chatbots. While this doesn’t sound too different from the pitch made by a number of similar companies, Carreel said the wide open space presents an opportunity.

“We have to admit we are just at the beginning of this new science; we have to say that nobody is very strong in this area and that I have not seen any application or any service that we consider as enough good for the future,” he said.

What’s also on the roadmap is making strides in the enterprise and healthcare space in areas like chronic disease management. Like many digital health startups that began with a business-to-consumer strategy — Fitbit included — Withings has realized that success necessarily hinges on a strong b-to-b model.

“It’s the right time to do this because the ecosystem is moving. Everybody now is convinced that the future is there and that we will not be able to help people with their chronic disease without being in their daily life and without connecting doctors and patients,” Carreel said.

Alexis Normand, Withings’ vice president of healthcare, has been spearheading the company’s efforts in the enterprise space. He said that key to its strategy is developing devices that can be used in a healthcare setting, but stays true to the company’s roots as in consumer technology.

“In our case it’s about building a medical-grade device that is appealing to consumers,” Normand said. “What we’ve learned is that even if you give them information that can save their lives, if it’s not appealing they won’t notice or pay attention.”

One area that Normand is particularly excited about is diabetes prevention programs for pre-diabetic patients that can pair health coaching with Withings’ digital scale technology. He said that the commercial payers are paying for the digital scales, which are being sent to online health coaches who monitor the weight of people at risk of developing type 2 diabetes.

Another area of growth has been in remote monitoring of patients with hypertension and congestive heart failure. But there are countless other companies – some with clinical grade products offering similar services.

Where exactly Withings can worm its way into the healthcare ecosystem is still to be determined. Carreel said the company is targeting patients, providers and payers in an effort to pry open the door to the industry.

The challenges notwithstanding, Withings does have a few key competitive advantages.

One is the fact that the company never fully embraced the smartwatch trend, preferring to keep an analog feel and design to its wearable devices as core to the brand. This has kept Withings products distinct and attractive to an older market not drawn to the most advanced gizmo.

Additionally, that design sensibility may serve Withings well as it serves an aging population with its health-related smart home monitoring devices like internet-connected thermometers, blood pressure cuffs and sleep trackers.

Unencumbered from the bureaucracy of a large multinational corporation like Nokia, Normand said the company is going back to pushing and launching new products faster.

“Being a startup again basically means you are basing everything on your devices; it’s much more a matter of life and death. The message is more innovation faster and taking risks,” Normand said.

So far, in 2018, the risk taking has been rather light. The two products Withings launched after freeing itself from Nokia — the Steel HR, a watch and fitness tracker with limited smartwatch capabilities and the Pulse HR, an update to a  fitness tracker from 2013 — will not turn any heads. Both those, however, were in the development pipeline at Nokia.

It’s yet to be seen what the company will release as it takes the wheel on its own destiny.

“Success going forward will depend on both making the right products – and on making the products right,” Adam Powell, president of healthcare consultancy Payer+Provider Syndicate, wrote in an email. “Withings has the potential to build a comprehensive ecosystem of home devices, which will grow in importance as America’s population ages.” 

He added that the company’s focus on “traditional designs and on addressing conditions like poor sleep and high blood pressure will help it tap this market.” 

But that may not be enough.

Brian Chapman, a principal at consulting firm ZS Associates, said strong clinical validation and regulatory approval are necessary for a company like Withings to take its largely consumer-facing products into the health ecosystem. However, Chapman added that consumer device makers with medical grade hardware could act as bridges into the healthcare system as the industry moves towards being more patient and consumer friendly.

He pointed to the FDA approval of the Bose Hearing Aid which received FDA clearance earlier this year. The product its able to appeal both to patients suffering from diagnosed hearing loss, as well as general consumers who don’t want to fully go into the medical world to fix their hearing issues, he said.

“All of these barriers have suddenly fallen and when you think about a medical device that’s only a couple of hundred dollars, to many consumers when you’re talking about this potential impact on life, they’re quite excited. I think that this sort is underestimated,” Chapman said.

Withings is only too aware of the need to get a regulatory stamp of approval. It has sought for a pre-certification FDA clearance for some of its more medical oriented devices.

Meanwhile, the company’s relaunch has led to positive reception from users online and a clean break from some of the issues during its time at Nokia.

In this new environment, Withings does have the potential benefit of being platform agnostic and already links to Apple’s HealthKit and Google Fit, each company’s fitness and health data collection platforms. The French company’s independent status will also help to turn the page in its relationship with Apple that soured because of Nokia’s legal battles with the California tech company. Earlier that resulted in Withings products being removed from Apple’s stores.

And at the very least, moving forward as an independent company has been good for morale for the company’s roughly 220 employees, split between Paris and Boston, Massachusetts.

“The relaunch is all about going back to our original DNA,” Normand said. “Coming back to Withings, to be frank, has a sentimental attachment. There’s a very strong emotional link between the founder and the team and that changes everything when you’re doing innovation because people want to stay, they want to work, they want to innovate.”

Picture: Getty Images, Mykyta Dolmatov