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HMD Officially Enters the Business With Ambitious Plans

by Ville-Petteri Ukonaho | Dec 01, 2016

Today is the first official day of the new home for Nokia branded devices as Nokia, Microsoft and HMD Global finalized their deal where HMD licenses Nokia brand for 10 years and acquires all feature phone businesses from MIcrosoft. HMD Global has exclusivity to use Nokia brand in all different types of devices including feature phones, smartphones and tablets. Nokia brand is making a serious comeback.

A journey that started in May just nudged a huge step forward with the finalization. HMD is off to a flying start as they will continue the well performing feature phone business largely as it is today. HMD sells feature phones in all regions giving them much needed capital as well as important brand visibility. With the feature phone business HMD gains wide scale and is well positioned in many emerging markets in Asia and Africa.

HMD confirms it will enter smartphone business 2017 but Windows Phone or Lumia is no more. Smartphones will be using Android as sole operating system and Nokia brand will be used throughout portfolio. The usage of Android is the only viable option that will give them freedom and reach to all same assets as other vendors. Information about the potential usage of Nokia's own Z Launcher on top of Android is not yet known and the company says it will reveal more when the first devices are launched during first half of 2017.

The structure of the co-operation with Nokia, HMD and Foxconn has divided responsibilities. HMD will be in charge of Sales and Marketing, Foxconn will do R&D and manufacturing whilst Nokia will oversee the whole program making sure everything is done right.

The leadership team consists of old Nokia leaders with years of experience running successful handset business. The HMD Global team is headed by CEO Arto Nummela and President Florian Seiche. In the key positions there are also several Nokia and Microsoft leaders with broad experience from handset business. The caveat of such leadership is the heritage that they bring from Nokia and Microsoft. The old market is gone and new rules apply. The ability to renew own thinking and doing as well as ability to quickly adopt the new way business needs to be done, defines the success the company will have.
Ambitious Plans, Global penetration as a goal

HMD has ambitious plans. They want to become a globally recognized player. One of the main assets HMD gained from Nokia is the vast sales channel partner network that Nokia used to have. The feature Phone business acquired from Microsoft also contains great channels to numerous markets. So for HMD it is much easier to begin working towards global market penetration with such assets.

HMD will be using much of the same attributes in its marketing messages that made Nokia phones popular: Quality, Simplicity, Reliability, etc are the attributes that Nokia emphasized during their tenure in the top. Recent Samsung problems show that small hiccups are not lowering customer loyalty so HMD will have tough road ahead to get existing smartphone owners to switch.

HMD is also planning to do co-development with users by establishing 24/7 consumer engagement with consumers which is very much similar approach as what Nokia had with Asha Phones that were somewhat successful in several emerging markets.  

HMD is betting a lot for the brand. According to the company the return is much expected. Based on numerous field studies, channels and consumers are expecting the brand. The Nokia brand is iconic and is synonymous to mobile phone in many countries, however, it won't be a walk in the park for HMD. Despite good brand recognition combined with the existing feature phone channels, HMD needs to work hard to penetrate to markets. New players have taken over what Nokia left into the smartphone business and those guys aint giving up easily. Oppo, vivo, Huawei, Xiaomi, etc are all fighting hard to keep HMD-Nokia out of the top.

Furthermore, as we have pointed out several times, industry growth has slowed. There are hundreds of microvendors squabbling for the same device pie, marketing spend among the noise will be expensive, and online / retailer / operator distribution channels are fragmenting heavily. So HMD needs to come up with totally new gameplans if they want to become world leading vendor. The old Nokia playbook does not apply anymore. It is a totally new game with new players.

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