Nokia bets on APAC nostalgia to drive smartphone comeback
Nokia smartphone-licensee is targeting to be the top Android smartphone player and betting on brand nostalgia in Asia as well as its focus on offering native Android services to fuel its ambition.
HMD Global in May last year was awarded an exclusive 10-year license to develop, market, and sell Nokia devices including feature phones and smartphones, which would run Google’s Android OS. The deal also included Nokia-branded feature phones sold by Microsoft over the past three years and Microsoft’s manufacturing facility in Vietnam, which was acquired by Foxconn’s subsidiary, FIH Mobile.
Nokia would receive royalties from every Nokia-branded device sold by HMD, a Finnish company set up in December 2015, in which Nokia was not a shareholder.
Nokia had earmarked 2017 as the “brand’s return to smartphones”. To date, Nokia 6 was the only smartphone launched and available in China and Taiwan, while the low-end feature phone Nokia 150 was launched in India and Europe last December.
Plans now were underway to introduce its products across Asia-Pacific in the second quarter of 2017, including the Nokia 3 and Nokia 5 smartphones, according to Flann Gao, HMD’s Asia-Pacific communications director.
Based in Singapore, which served as the company’s regional headquarters, Gao told ZDNet it was targeting to launch most of its phones in all markets in the region, though, availability would depend on whether the local market was dependent on 2G or 3G networks.
He acknowledged the mobile landscape had changed significantly since Nokia last reigned, with the Asia-Pacific region already crowded with global and local players including Xiaomi, Apple, and Samsung. He believed, though, that Nokia still had a unique opportunity to regain ground.
Pointing to the strength of its brand, he said consumer awareness of the Nokia name in Asia-Pacific remained high despite the fact it had not released any products in the last few years. He added that consumer perception mostly was positive.
Because it previously offered phones across a wide range of price-points, he noted that consumers in different market segments were receptive to the Nokia brand. This was not necessarily the case with other marker players, he said.
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Clement Teo, principal analyst at Ovum, said Nokia could find a place in the mid-tier segment amid the crowded mobile market.
“Producing a well-designed mid-market smartphone will allow them to be a strong alternative to the likes of other mid-market smartphone players like Huawei, Oppo, Samsung, and Xiaomi,” Teo said in an email interview.
He said the introduction of Nokia’s N1 tablet in 2014 in selected Asian markets had sparked much anticipation about the vendor’s return to the consumer market. He suggested that offering a mix of smartphones, tablets, and wearables–via Nokia’s Withings acquisition–could provide the competitive edge it needed against major players that had an ecosystem of multiple gadgets, such as Sony and Apple.
The analyst also pointed to Nokia’s investment in IoT, particularly in digital healthcare, as a key market to watch. The Withings acquisition was key as Nokia took a more strategic approach to the consumer IoT market, which Teo said promised higher growth rates than the flattening smartphone and tablet segments.
“Even though Nokia plans to capitalise on its brand in the smartphone segment by using third-party manufacturers, we expect IoT to be of higher priority,” he said.
Aggregating, processing, and redistributing health data captured by wearables, and potentially smartphones, could fuel Nokia’s push into cloud-enabled digital healthcare, he noted. “In such a form, digital healthcare should be able to encompass not only consumer self-tracking, but also professional medical services.”
Nokia, though, would have to move quickly to keep up with competitors that also were making a play for the healthcare space, including Apple with HealthKit and Samsung’s S Health.
HMD, however, currently was focused on mobile phones and had no plans to launch tablets, yet, Gao said. Its license with Nokia included tablets, but not wearables.
While feature phones were generating significant revenue, the company’s long-term goal was to be the world’s leading Android smartphone vendor, he said. He added that there were some 500 million to 600 million feature phones globally, with Nokia ranked the top or second-largest players in most major markets such as Vietnam, India, and several in Southeast Asia.
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Noting that Asia-Pacific was a highly fragmented mobile market, Gao said HMD was aiming to take the lead in the Android world with its pledge to provide the platform “in the purest form”, stripped of preloads and skins.
Its phones would run stock Android, similar to Google’s Pixel, which would ensure the devices received the monthly security updates from Google and the latest system updates.
HMD’s decision to work closely with partners such as Google as well as FIH Mobile, as its manufacturing partner, enabled the startup to operate on a leaner model and be more nimble, he said.
It also would adhere to Nokia’s brand guidance to ensure its phones reflected the latter’s design history of being “very human”, he added. “Our ambition is to be top Android smartphone player in the next few years.”
HMD’s global base of “a few hundred employees” currently included product designers, product managers, and sales and marketing managers–many of whom, such as its chief marketing officer, formerly were from Nokia and Microsoft. The Finnish startup covered 100 markets across eight regions such as Asia, Europe, India, and China, and had 500 partners worldwide, including distributors, retailers, and telcos.
Its team in Asia-Pacific comprised “several dozens” and the company was recruiting, Gao said, but would not specify the number of people he was looking to hire. He said the company had presence in almost all markets in the region, including offices in Australia, Malaysia, and the Philippines.
HMD had singled out millennials and the younger generation as an important consumer segment that would help drive its success, he noted. When it launched Nokia 6 in China at the start of the year, partnering e-commerce operator JD.com, 76 percent of customers who bought the phone were millennials, he said.
He declined to reveal sales figures for China, but said 1.3 million customer registered for the phone during the launch in January and its first batch of units sold out in 23 seconds. He said HMD chose to launch in the Chinese market first because it was highly competitive, accounting for half of the world’s smartphone sales, and would offer valuable consumer feedback.