HMD’s Nokia moves ahead with innovation and manufacturing strategies

Nokia phone launch at MWC 2018
HMD announced new Nokia branded phones at MWC 2018 to enhance smartphone and feature phone business revenues.

HMD shipped over 9 million Nokia smartphones in 2017, slightly over 12 percent of their total mobile handset shipments. HMD operates in over 80 countries now, analyst firm IHS Markit said.

HMD shipped many more smartphones in 2017 than established brands such as HTC which  had no period of market absence. HMD’s smartphone volumes in 2017 was more on an annualized basis than brands such as Sony or Lenovo.

Nokia innovation continues

“Continuing on from the success of the retro 3310 launched at MWC last year by HMD, the 8110 at euro79 still has its iconic shape but has been given a reboot with a color display and 4G connectivity,” David McQueen, research director at ABI Research, said.

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The Nokia 1, a 4G $85 device, could gain some serious market share to HMD. The Android One product allows for a stock Google experience and is built on Android Oreo Go Edition. At such a price point, and with the emerging market in mind, this is to be a big volume opportunity.

Nokia’s 6 and 7 Plus, two mid-range phones at competitive prices, offer new features such as Zeiss optics, high-performance chips, fast charging and large screens.

Nokia 8 Sirocco, the high-end phone, is earmarked as a flagship product with stainless steel and glass design, a 5.5” 2k OLED display, Nokia spatial audio, wireless charging and 6GB of RAM.

Priced at euro749 this does put the phone squarely in line with some higher-end offerings from the likes of Huawei, which demonstrates a statement of intent from HMD despite only being back in the smartphone market for less than 2 years.

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Nokia is expected to improve on its shipments of 70 million smartphones and feature phones from last year. Through its distribution partners and building partnership with Google — Android One, the company is trying to re-establish in the global mobile phone marketplace.

This expansion of the portfolio allows it to hit a number of price tiers while also creating a presence through regional expansion.

Innovation and accentuated designs at competitive prices will help these devices stand out in the crowd, and some of Nokia’s old brand traits such as long battery life, durability, and quality all seem to resonate well with these latest announcements, David McQueen said.

IHS Markit Senior Research Director and Analyst Ian Fogg said HMD is shrewdly building a strong Google relationship to support its emerging market entry tier smartphone business at the same time it is investing in attractive premium designs to target a revival of Nokia in Western Europe.

HMD’s strategy aims to return Nokia to be a mobile market leader, even if it’s too early for HMD to target displacing Samsung or Apple. To date, HMD has married excellent industrial design with strong brand and channel knowledge. In future, HMD must deepen its innovation to justify premium margins and ensure new Nokia smartphones live up to the brand’s image.

In 2018, this portfolio demonstrates HMD is seeking to innovate as well. Nokia 8 Sirocco proves HMD aims to target premium smartphone buyers not just emerging markets.

Nokia 8 Sirocco’s curved design uses a premium steel frame, the same material Apple uses on the iPhone X. Its shape has echoes of the organic Nokia concept phones of the early 2000s as well as Samsung’s Galaxy S portfolio of the last few years. Nokia 8 Sirocco is an extremely attractive design.

Nokia strategies

Faced with a mature mobile phone business with significant manufacturing cost structures and rising competition from Apple, Samsung, Google and Chinese handset makers, Nokia sold its devices unit to Microsoft, with a short three year non-compete clause. Microsoft not only paid Nokia for this business but subsequently invested significantly more to restructure the business, and eventually to shut it down.

Nokia re-entered the smartphone business by licensing its brand exclusively to HMD Global with an outsourced manufacturing business model closer to the model of Apple’s iPhone business than to old Nokia.

HMD is partnering with Hon Hai Precision (Foxconn) for the manufacture of Nokia-brand handsets.

Unlike other OEMs, HMD is not copying Apple’s products but its business turnaround. IHS Markit expects HMD to successfully increase Nokia smartphone shipment volumes using this expanded portfolio in 2018.

But long term, HMD must invest significantly more in camera technologies and innovation to be competitive at the top end of the smartphone market than it has done to date, IHS Markit Senior Research Director and Analyst Ian Fogg said.

Image source: Reuters