HMD Global's $100 million funding boost could help it cement the Nokia brand in the smartphone game

While Nokia enjoys the broader brand appeal thanks to the nostalgia element attached to the brand, it will not get them too far without underlying innovation.

Editor's note: This article was originally published on 28 February. It is being republished in light of  Nokia licensee HMD Global's 100 million dollar funding boost  that is set to provide a major fillip to the smartphone brand.

When Nokia announced its comeback back in 2016, many expected HMD Global to fall flat, more so because of the domination of bigger brands like Samsung and Apple in the premium segment and Chinese brands like Xiaomi, Huawei in the mid and budget range. Moreover, the Nokia Lumia and Microsoft partnership hadn't really created any dent in the smartphone segment.

Surprisingly, they did not fall flat this time around. According to a recently released report by market research firm Counterpoint, Nokia alone shipped more smartphones in the fourth quarter of 2017, than HTC, Sony, Google, Lenovo or even OnePlus. If you paid attention to this year's Mobile World Congress 2018 launches, it appears from the massive lineup that Nokia is back in the game and could soon be challenging the big guys in the smartphone space.

The 2018 Nokia family unveiled at MWC

The 2018 Nokia family unveiled at MWC

HMD Global explained

HMD Global is currently the Finnish company that owns the Nokia brand or rather the license to build and sell Nokia-branded smartphones. It acquired the same back in 2016 and it comprises of some excited Finns whose ideas have brought it the success in just a little over a year. The smartphones are designed and manufactured in part by Foxconn, meaning that while the ideas come from Finland, the smartphones are still manufactured (and at times designed) in China.

Since HMD will never reveal the exact shipment or sales numbers, a combined report from Counterpoint and IDC obtained by NokiaMob, gives us a clearer idea of what we are on to here.

Both reports clearly hint that Nokia went from the "Other" smartphones category to "Nokia" taking up 1 percent in just a year of being relaunched, with the brand shipping out an estimated 8.7 million units by the end of Q4 2017.

So what is Nokia doing right?

Back in the early 2000s, or the pre-iPhone era, Nokia was doing alright with little or no competition from other semi-smartphone manufacturers like LG and Samsung, until Apple's iPhone came along and took the world by storm.

Nokia innovated at a hardware level but was completely left behind with software experience once Android and iOS started picking up steam. Letting its dated Symbian OS deal with the UI of not just flip phones or camera-centric phones but even the good old Communicator series, was not such a great move.

Indeed, Nokia made two big mistakes of skipping on the evolution of its mobile software and not being able to imagine a single smartphone that can do everything all at once because Nokia always launched smartphones that were purpose-built (for example, the E series for business, N Series for multimedia).

Steve Jobs at iPhone launch in 2007. YouTube/superapple4ever

Steve Jobs at iPhone launch in 2007. YouTube/superapple4ever

Steve Jobs showed up on stage with an iPhone, that combined the experience of a music player (its iPod), a desktop-like web browsing experience and a smartphone that could place calls, runs apps, all in a package that was slim, refined and did not need buttons; but just a finger to navigate.

Everything post that is history.

Coming back the present, if you looked up the selection of smartphones both at Nokia's first wave of launches and the recent ones at the ongoing MWC 2018, it's evident enough to tell that Nokia is playing its cards well since its launch in 2016.

What we have is a mix of some nostalgia-inducing hits with the return of the Nokia 3310 last year (the most popular feature phone in existence) to the recently announced Nokia 8110 (the Matrix phone) for entry-level features phones and a new conversion of the premium 8800 Sirocco, which made a comeback at the MWC as the Nokia 8 Sirocco.

With the 8110 (aka banana phone) priced at €76 and the Nokia 8 Sirocco priced at a premium €799, HMD Global seems to have a complete smartphone lineup across different price segments.

The New Nokia 6, Nokia 8 Sirocco, Nokia 8110, Nokia 1 and the Nokia 7 Plus are seen at a pre-launch event in London, Britain February 22, 2018. Picture taken February 22, 2018. REUTERS/Peter Nicholls - RC160CD74C00

The New Nokia 6, Nokia 8 Sirocco, Nokia 8110, Nokia 1 and the Nokia 7 Plus. Reuters

"One good thing Nokia has done is it has managed to build upon its strength, which is solid design and build quality," said Tarun Pathak of Counterpoint Research. "In fact, each of their new announcements looks quite different design-wise across the price bands, which will help it to differentiate from the current range of "me too" Android devices," he added. Pathak also mentioned that another differentiator is Nokia's strong partnership with Google, promising the latest Android experience with Android One and Android Go.

The new Nokia 8 Sirocco. Nokia Mobile.

The new Nokia 8 Sirocco. Nokia Mobile.

It's clear that Nokia is going big on 'nostalgia', by reminding existing fans and new customers about the brand's focus on design (Sirocco+8110) combined with the durability (3310) of what once was unique to the Nokia brand. Clearly, this is something that remains in your mind, makes you want to know about the whacky and outrageous designs that were common back in the day, before the iPhone came along and gave everyone a simple rectangular display to play around with, which is now getting a bit boring.

The old Nokia 8800 Sirocco. nokiamobilesa2z

The old Nokia 8800 Sirocco. nokiamobilesa2z

IDC India's Navkendar Singh commented that the nostalgia factor plays well with its feature phone lineup.

Out here in India, the feature phone market is here to stay. The very reasons for this are the affordability of these devices, the use case of discovery, the comfort of using a touchscreen and the monthly spends.

"Nokia enjoys strong brand equity with its erstwhile feature phone portfolio and will remain an important component of Nokia’s India strategy for next few years. Of course, in the long-term, the objective of this will be to get these set of feature phone users to migrate to the Nokia smartphones," he told Tech2. So the formula does work well and the nostalgia factor is not just for show and marketing the brand.

HMD's Nokia is a case study

HMD Global's success with Nokia brand almost feels like a case study for the smartphone and technology space. It teaches the industry lessons that one needs to keep innovating both at a hardware and a software level but not forget its root to maintain its brand identity.

With the recent announcements at the MWC 2018, Lenovo too seems to have taken a page out of HMD's playbook with the CEO hinting at a possible comeback of the much-loved Moto RAZR smartphone, albeit not just with a flip phone form factor but with a new age folding display as well.

Nostalgia is good, but innovation is better

While Nokia enjoys the broader brand appeal thanks to the nostalgia element attached to the brand, it will not get them too far. He highlighted the fact that new Nokia is now listening to its customers as compared to the past, where it simply followed trends in fashion and technology and pushed out smartphones.

"Nokia enjoys huge brand appeal and nostalgia attached to it, but this cannot be the only plank for long-term success in a market which is so hyper-competitive with value-conscious consumers. Innovation and value will remain the most important for a sustainable competitive edge in the market," said Singh.

And this appears to be Nokia's only crux at the moment. The brand has brought back the Pro Mode from the Nokia 1080 PureView smartphone, but still banks on its Zeiss Optics branding onboard the Nokia 8 Sirocco. Whether or not it performs is something that remains to be seen as the brand's last flagship the Nokia 8 saw lacklustre performance in the camera department, something that we have grown to expect from the brand.

The Nokia 8 Sirocco. Nokia Mobile.

The Pro camera mode in the Nokia 8 Sirocco. Nokia Mobile.

But Nokia is up to something big.

If the recent rumours and leaks are to be believed, we should see Nokia make a comeback to the camera smartphone space as well with a penta-lens camera, one that should hopefully rival the Google Pixel 2's AI smarts.

But can a penta-lens camera with Zeiss branding convince a consumer to switch back to a premium Nokia smartphone (like the new Sirocco)?

Singh's not too convinced about this. "At the super premium end of the smartphone market, it is very difficult for any third brand to enter a make a mark, hinting that it will be a challenge for Nokia to even be a mention in the premium segment at the moment. "It will be more of a flagship being used in marketing messages and communication," he added.

The message is loud and clear, Nokia needs to innovate to keep up the current momentum else it will gradually turn into a memory like its past.

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