Nokia – Regaining the Crown? – A Detailed Brand Comeback Analysis

Nokia has a rich history of creating high-quality phones which were in sync with the needs of customers at that time. However, the iconic brand completely missed the touch-screen smartphone trend which later resulted in a fall of the Nokia brand. An attempt to revitalize the brand in a new Windows Phone avatar by Microsoft was also not successful. However, after the HMD takeover, we have seen the Nokia brand comeback both in the smartphone and the feature phone category. This report analyzes the market scenario to understand the key reasons for Nokia’s comeback as a brand in the last one year. Some of the key reasons are as follows:

1. Reigniting and fulfilling feature phone demand:

  • Nokia HMD’s timing was fortunate. It took over control of the old Nokia feature phone business that Microsoft had ceased investing in and that was steadily declining. It also inherited around 10m units of inventory.
  • There are around 2bn users of feature phones globally. While there has been a trend toward smartphone migration, there remains a large number of feature phone users that are not ready or willing to upgrade to a smartphone – especially a low-end one with poor performance.
  • Some African countries faced an economic slowdown e.g. Nigeria, due to a reduction in demand for natural resources such as oil. This caused forex rates to weaken raising the effective price of imported goods such as smartphones. With lower purchasing power, consumers returned to buying feature phones.
  • The return of Nokia-branded feature phones addressed the latent demand for high-quality feature phones. Foxconn manufacturing abilities helped Nokia to maintain the quality, which the brand has always been known for.
  • Nokia HMDs genius move was to launch a modern version of the 3310. This product has been a smash hit, even in strongly smartphone-oriented markets.
  • These helped Nokia to become the world biggest feature phone vendor in 2017.

2. Smartphones:

HMD realized that it would not be able to compete on price/specification battle with players like Xiaomi. It therefore focused on great product design married to ‘good enough’ features that could act as a vehicle for the Nokia brand. Viral videos such as using the Nokia 8 to smash walnuts helped to drive its reputation for quality.

3. The rapid expansion of retail presence:

In one year, HMD established operations in 70 markets, with over 600 direct operator and distribution partners selling the device in 250,000 retail outlets globally. It has seen devices sold in 170 markets during 2017. Initial sales channel developed for selling feature phones provided a solid foundation for smartphone sales.

4. Nokia is not only for “Old Generation”:

According to Nokia HMD, two in three Nokia customers are younger than 35 years, which is a direct indication that Nokia was successful in approaching the youth with its brand messaging and promotions.

 Growth Areas:

Nokia did well in sell-through of its handsets in India, Asia Pacific countries (excluding China), Middle East & Africa with a CAGR of 40%, 25%, 21% respectively in 2017. Additionality, Nokia smartphones have been well received in European countries.

Please find the below chart of Nokia(HMD) market share in different countries for Q4 2017. This is Sell in data derived from our Quarterly Market Monitor Tracker of 50 countries. Please feel free to contact us at [email protected] for further questions regarding our in-depth latest research, insights.

Exhibit 1: Nokia HMD Handset Shipment (Sell in) Market Share by Countries (%) in 2017Q4

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Source: Counterpoint Research- Market Monitor