Last year in May, I published an article in LinkedIn on loyalty to the Nokia Brand on the announcement of HMD partnership aka licensing deal. SA had predicted the return of Nokia to handsets/smartphones as far back as August 2015. Kudos to Linda Sui our smartphone lead.

Admittedly, we named Foxconn and Android mid range contenders as the most likely partners, well before the fledgling HMD came to light:). As you will have seen unless living under a rock, HMD stole the show at #MWC17 with the relaunch of the iconic Nokia 3310 as covered by our device team.

So, how well can HMD do in the ultra competitive global device market leveraging the power, loyalty, emotional attachment and draw of the Nokia Brand?

We are optimistic about the outlook for HMD/Nokia as detailed in our MWC Post Show wrap presentation. HMD is off to a strong start with its well drilled, uber Nokia (at its peak) style launch of three solid N series devices at MWC.

Solid products with good (but not great) specs at reasonable price points, manufactured by Foxconn to very stringent build quality standards adding to the positive reception for the N6 device in China all augur well. HMD notes success of the N6 in the next generation who never owned a Nokia device.... well it has been a few years and most Chinese buyers in the last 3-5 years have never bought a Nokia device. The strong history between Jingdong and HMD CEO, Artoo Numella certainly helped shape the positive reception to the N6 in China at least in terms of pre-orders but we note that the vast majority of the 1M+ preorders in the first week did not have deposits. Clients can view our initial analyis of the N6 launch in China here.

The management team filled with Nokia loyalists (the words multimedia computah...just keep coming to mind) is in my view quite impressive. However, the secret sauce for success for HMD with its Nokia branded products may just be the former Microsoft/Nokia certified sales assets in dozens of countries it gained as part of the acquisition.

The first wave of products are solid, price points for devices are competitive so the keys to success will be the remaining 2Ps, Promotion and Place.

We await details on how many countries, how many channels and exactly when but the chart  below showing the huge market share of the original Nokia brand and products should be instructive.




Strategy Analytics Handset Country Share Tracker program monitors vendor share across 45 countries on a quarterly basis and can provide detailed current share and volume data for vendors that HMD will have to displace and vendors who risk being displaced if the rejuvenated Nokia brand catches fire.

Marketing and promotion to the next generation of featurephone users migrating to smartphones for the first time and campaigns targeting current mid and entry tier smartphone buyers will determine the scale of success that HMD Nokia can enjoy.

The mantra of Pure, Secure and Always Updated Android with the trusted Nokia brand is likely to resonate well with consumer in many Asian and a few select European markets in our view. Residual resistance among operators burn by the Nokia/Microsoft fiasco may be a factor in Europe but we do expect HMD to get ranged in a number of operators. 

Can the Nokia brand bring people together or connect again?

We believe HMD has a good shot at success. HMD management and their in-country probes clearly suggest continued strong affection for the brand. Strategy Analytics own consumer research suggests that as recently as last year, one third of potential device buyers (computers, tv, smartphones) would consider Nokia with very strong presence in across many generations.



The goodwill factor of the relaunched Nokia device brand and the feelgood factor of the iconic 3310 wont be enough on their own. HMD and the Nokia brand bring a very interesting new wrinkle to the hugely crowded global smartphone market. At a time when the bubble has birst for some Chinese Oems, might we see a flight to quality both in product and brand essence? While Vivo, Oppo have joined the 100m units shipped annually club in 2017 (alongside Samsung, Apple, Huawei), other high fliers like Xiaomi, Gionee, TCL Alcatel have hit some headwinds in their attempts to grow their international businesses. Headwinds are not the preserve of challengers from China of course as Lenovo-Motorola, LG and Sony can all attest to.

Can HMD ride the Nokia white horse to displace vendors and break in to the top 20 on a global basis?

At the consumer and I suggest even prosumer level there is likely positive sentiment to the grand old Nokia brand but regaining top tier status will not happen overnight. HMD will need more than brand trust and will have to expand upon the materials leadership and build quality assets to offer more Nokia DNA and differentiating features to sustain growth. 

In the short term a 1% global share is a challenging but achievable goal. Mid term a 3% global share would see HMD Nokia break into the top 10 globally as the smartphone markets returns to 7% growth trajectory according to our latest forecast of 88 countries.

In APAC, almost 900M units will ship this year but only a 2% share would be needed to break in to the top 10 vendors.

Rapid growth is possible in this highly fragmented market.. but so are very rapid declines if a vendor disappoints or fails to innovate year on year. 

W. Europe represents just under 10% of total smartphone volumes and Huawei has broken clear of the chasing pack to take the number 3 position. Could HMD break into the top 5 in Europe? We think it is possible for HMD Nokia branded devices as we detail in our report Global Smartphone Shipments Forecast by Vendor by Region by Quarter: 2015 to 2018 which clients can download here.

Missing today for HMD is a flagship product offering to drive value share and profits.

But the mobile phone industry is one where one product cycle miss condemns vendors to obscurity (think Siemens, later Nokia itself in the transition from 2G to 3G and Motorola, well on several occasions).

A critical question for HMD in 2018-2020 will be the decision on what technology aspects to focus and deliver the best in class user experience.

The camera space where Lumia devices were briefly well positioned as technology leaders is already crowded and well staked out. Display technology doesnt offer significant diffrentiation capabilities in our view and giant batteries aside, not much is changing in the power side of things. Google Assistant is table stakes and AI risks becoming a hugely over used and ill understood term.

Might we see HMD Nokia collaborate to aggressively attack 360 content capture, live video? Or possibly make a strong play in the fledgling VR space?

Or Could we see HMD Nokia make a serious run at the productivity, mobile professional space that way back in the day Nokia, Sony-Ericsson pursued... Older readers might even remember Palm?

An interesting tale of two licensees of iconic brands is set to play out in 2017 and beyond.TCL has licensed the BB brand and Nokia has licensed HMD to be the new home of Nokia brand devices.

TCL launched its Android Blackberry device at a very low key, launch in Barcelona. The mantra of pure BlackBerry, pure Android, alway secure KeyOne device with the iconic Blackberry keyboard is strikingly similar to the language used at the HMD N series product launch.

Can TCL tap in to the brand loyalty and emotion of BB users who love the keypad and crave security? Will the million of BBM users in markets like Indonesia, Malaysia to name just two flock back to a BB device? Not at the $500+ price points announced for the KeyOne device! Mid range TCL-Alcatel devices announced at MWC are competitively priced, well positioned but not likely to attract former BB users I would say.

Its a case of back to the future with planned rejuvenation of both the beloved Nokia and addict inducing BB brands in the market.

HMD has a bigger potential market we beleive as the genie is out of the box in terms of touch displays, gesture based interfacers, natural language interfaces and only a select group of hard core crackberry fans if they still exist will convert. Nokia still appears to have a significant body of "raving fans"or promoters who either a) have not converted to smartphones yet in the case of much of Asia, CALA, AME or b) who are smartphone buyers but are not seeing significant value in upgrading to the latest LTE devices in Europe or other regions.

And then there is North America which, as Huawei most recently has found and the original Nokia lives painfully through for a good decade, is a completely different beast altogether. Huawei continues to struggle in North America where it trails ZTE in our latest vendor share analysis. 

Interesting times:). I welcome your thoughts and comments.

David Kerr
Senior VP at Strategy Analytics