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Fri 6 Sep 2019 12:04 AM

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Is Nokia making a comeback?

The Finnish handsets were the must-have items in the late 90s and early noughties, but they were quickly overtaken by the smartphone revolution. Will nostalgia be enough to generate a resurgence in the popular brand?

Is Nokia making a comeback?

Everyone loves a great comeback story. Remember when Robert Downey Jr, the absolute star of 80s, went missing in action for a few years and then leaped back on the silver screen as Iron Man and was even more successful? Or Paula Abdul, the 90s popstar who faded into the new millennium, only to reappear with Simon Cowell as a judge behind the American Idol desk? Then there’s Lindsay Lohan, the child star of the noughties who befell the clichéd tabloid route of drugs and legal misdemeanours, went off the radar, and is regularly attempting a comeback, whether it’s on Oprah’s couch, an MTV reality show or a Dubai photo shoot.

When it comes to the technology sector, one of the most widely discussed comeback stories in recent years has been Nokia.

How many of us remember the iconic Nokia ringtones? Back in the days when things were simpler and you just used your phone for calls and text messages, when the term ‘phubbing’ hadn’t been invented and Snake was the coolest game ever.

The journey

To help understand this comeback story, let’s first look at the Nokia brand’s impressive journey. The company was originally founded in northern Finland in 1865 as a single paper mill operation but fast forward to 1991 and the first GSM call in the world was made using a Nokia-built device. Within seven years, Nokia became the bestselling mobile brand in the world and in 2003 it introduced the world’s first camera phone.

We have a presence in over 80 countries across the world and our smartphones are activated in 180 countries

Nokia single-handedly controlled more than half of the smartphone market but all that changed in 2007 when Apple launched the iPhone. Within a year, Google introduced the Android operating system, which, as you know, ended up being adopted by Samsung, HTC and most smartphone operators, meaning it was pretty much downhill from there for Nokia.

The company’s biggest problem was it didn’t adapt to the changing demands from consumers and the rapid pace of technological advances. Many analysts attribute some of the slump to the company’s overconfidence in its brand name and its underestimation of its competitors, despite being aware of Apple’s attempts to make a smartphone for mainstream users.

Eventually, Nokia got consumed by its competitors - mainly Apple and Google - who began producing smartphones aimed at mass market customers. iOS and Android smartphones also made the jump in no time, meaning Nokia was being squeezed out. Inevitably, by 2013, Nokia’s share of the smartphone market dropped to less than 2 percent from more than 50 percent in 2007 and its handset business was sold off to Microsoft.

Nokia re-entered the mobile handset business in 2016 with a licensing agreement with HMD Global

“We didn’t do anything wrong, but somehow, we lost,” are the final words former Nokia CEO Stephen Elop said at his last press conference.

HMD to the rescue

Did the Microsoft gamble work? Not really, as Nokia’s smartphone market share plunged below 1 percent. As things went quiet on a global level, in a city called Espoo in Finland a start-up, HMD Global, was slowly emerging, with one mission in my mind – to licence the Nokia brand for its handsets and breathe new life into the nostalgic brand. It launched as the ‘home of Nokia phones’ in 2016 and officially entered the smartphone market.

“We are a start-up based in Finland and we bring the best of the smartphone ecosystem. We have a very strong tie-up with Nokia, with an exclusive licence for the next 10 years. Today we have a presence in over 80 countries across the world and our smartphones are activated in 180 countries across different parts of the world,” Sanmeet Singh Kochhar, general manager – Middle East at HMD Global, tells Arabian Business.

Nokia has proven its ability to launch attractive handsets that garner attention in the marketplace

HMD Global pushed the emotional elements such as trust and loyalty and had timing in their favour. How? Well, HMD Global came into the picture when Nokia had been away from the market for long enough that customers had started missing it, but not long enough for them to forget about it altogether. In fact, they even hired some former Nokia employees who understand the brand and its customers. As a result, HMD Global went from selling 100,000 phones in the first quarter of 2017 to 4.4 million pieces in the last quarter of the same year.

Nokia in the GCC

GCC countries experienced the comeback wave too and proved to be very receptive of the brand. In 2018, HMD Global was among the top five smartphone players in the UAE, at a time when shipments of mobile phones to GCC countries fell 9.4 percent year-on-year in 2018 to total 23.6 million units, the lowest since 2013.

Internet-based market research firm YouGov, which calculates whether respondents have heard anything positive about a brand as part of its BrandIndex scores, found that Nokia has seen a significant uplift in the past three years.

Nokia has operated in various industries over the past 150 years, including smartphones

“Nokia has certainly made a splash with some of its handset launches in the past three years. In recent years, we see a distinct peak in Brand Sentiment (BrandIndex ‘Buzz’ score), Brand Health (‘Index’ score) and Consideration around Q4 2017. This would suggest that while the brand enjoyed a strong resurgence as it launched handsets like the Nokia 8 and the new 3310, subsequent launches have served more to keep the brand afloat than set it apart,” says Scott Booth, head of data products, MENA at YouGov.

But, when doing head-on-head comparisons, Nokia hasn’t managed to surpass its competitor’s performance in terms of sales in the region. According to the latest figures from International Data Corporation (IDC), Samsung remained the clear market leader in the GCC smartphone space, with a 32.6 percent unit share in Q1 of 2019, while Huawei continued its steep rise, recording quarterly shipment growth of 16.5 percent to account for 25.9 percent share of the market’s smartphone shipments.

“Nokia (now HMD Global) has proven its ability to launch attractive handsets that garner attention in the marketplace. Despite this, the market continues to be dominated by Samsung’s Galaxy line, Apple’s iPhone and, more recently, Huawei’s newer handsets. Nokia’s sticking power moving forward will largely be determined by its ability to anticipate the needs of consumers and generate meaningfully innovative designs and technologies at a price point mass and mass affluent consumers are willing to bear,” Booth says.

Future outlook

Despite Nokia’s phoenix-like rise from the ashes and the dynamic rise-fall-and-rise tale, Kochhar refuses to call this a comeback story. Why? Technically, Nokia phones never really left the market, they just couldn’t keep up with the emerging smartphones, he claims. Agreed, they didn’t have the backup of a fancy iOS/Android-style system, but their feature phones have always been good sellers.

Stephen Elop served as Nokia’s Chief Executive Officer from 2010 to 2014

“I won’t call it a comeback as there were feature phones of Nokia that were always selling. I would say this a new chapter in Nokia smartphones,” he says. When the Nokia 3310 was relaunched at the Mobile World Congress in 2017 with the same alpha-numerical keypad as the original 2000 model, the excitement was palpable and even managed to convert into sales good enough for the company to launch a 4G version earlier in 2018.

But the question here is, if that’s just a fad and a moment of nostalgia? Or are feature phones going to be consistently in demand?

For Nokia, the feature phones business has proven to be more reliable than smartphones. According to IDC, Nokia sold nearly 60 million feature phones in 2017, compared to just 35 million the year before.

But, there is just one drawback – they are not smartphones. We are in the midst of the Fourth Industrial Revolution, an era of digital transformation and inconceivable tech dependence, where a life without smartphones seems unimaginable.

“Feature phones will likely continue to play a niche role in the basic communications market so long as they represent a lower cost point of entry for consumers. The cost divide is eroding over time, so the discussion will ultimately revolve around whether there is a functional benefit to a feature phone over a very basic smartphone,” says Booth.

Sanmeet Singh Kochhar, Middle East general manager of HMD Global

“That smartphones represent a market penetration of more than 90 percent in the UAE suggests that for most consumers a smartphone is a more functionally relevant choice – they have likely paid far more to have the functionality of a smartphone versus any feature phone option available.

“For the market as a whole, feature phones are a fad. Their sticking power will depend on their continued ability to fulfil a meaningful role for the consumer population in the future,” Booth concludes.

It can’t be denied though that with their consumer base tripling in 2018, compared to 2017 worldwide, Nokia has managed to maintain its global relevance. Apart from brand loyalty and trust, there are some other key features too that the newer Nokia phones have introduced, such as software differentiation and Android upgradeability, which has been attracting consumers to it.

However, only time will tell if Nokia proves to be like Robert Downey Jr, and surpass sales records like Samsung, Huawei and iPhone, or just a meagre Lindsay Lohan, reminiscing over its once successful past.

From Finland to the world: Nokia phones timeline

1982 Nokia launches its first car phone, the Mobira Senator

1987 Nokia introduces its first handheld mobile phone

1992 It launches the world’s first handheld GSM phone, the Nokia 1011

1994 Nokia introduces the 2110, the company’s first mobile phone to carry its signature ringtone

2000 Nokia releases the 3310, one of the most popular phones in history, selling 126 million units worldwide

2002 Nokia rolls out the 6650, its first 3G phone, and is equipped with a VGA camera

2003 Nokia launches its best-selling Nokia 1100 handset, shipping 200 million units

2005 The N-series smartphones are introduced with features including music, camera and internet access

2007 Competitor Apple enters the mobile phone market. It is now one of the world’s biggest tech companies 

2009 Nokia posts a quarterly loss for the first time in more than a decade

2010 Stephen Elop becomes CEO, getting a $1.4m annual salary

2011 The strategic partnership between Nokia and Microsoft is announced

2013 Tech giant Microsoft buys Nokia’s handset business for $7.5bn

2016 Finland start-up HMD Global launches as the home of Nokia phones

2017 Nokia 6 releases in China. Later, at the Mobile World Congress, HMD reveals Nokia 5, Nokia 3 and Nokia 3310

2019 Nokia launches its most expensive Nokia 9 Pureview with five-lens camera

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