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Nokia Plans Big Mobile Phone Comeback In 2017 With New Android Line, But There May Be More To The Story

By Darien Cavanaugh
Published on: 02:47 PST, Dec 9, 2016

Nokia is planning to fight its way back to the top of the mobile phone industry after years of lagging behind several of its competitors.

Nokia was once the world’s “dominant” cell phone manufacturer, a recent article from Fortune recalls. However, the company fell from grace when it adopted Microsoft’s Windows operating system for its mobile phones and failed to adequately adapt to the shift to smartphones.

In 2014, Nokia quit selling smartphones altogether and sold its Lumia line to Microsoft, which continued selling the brand until earlier this year, Fortune points out.

Now, the Finnish company is looking to regain some of the ground it lost.

“Nokia smartphones are poised for a comeback after former managers at the Finnish company licensed the handset brand from Microsoft and struck up partnerships with Google and phone manufacturer Foxconn,” the Fortune article reads. “Nokia was once the world’s dominant cellphone maker but missed the shift to smartphones and then chose Microsoft’s unpopular Windows operating system for its Lumia range.”

It will be an uphill battle for Nokia, as Apple, Samsung, and several other companies, such as China’s Huawei, are deeply entrenched in U.S., European, and Asian markets.

That’s not deterring Nokia.

HMD Global, a new Finnish company that manufactures mobile phones under Nokia’s brand, intends to launch its first Nokia smartphone in early 2017. The phone will use the Android operating system.

“Consumers may be carrying different smartphones now, but are they really in love and loyal to those brands?” Arto Nummela, the CEO of HMD, said in an interview quoted by Fortune.

Nummela was once an executive at Nokia.

Nokia does potentially have one ace up its sleeve. While the brand has lost much of its prestige among high-end mobile and smartphone users, it still has a following among those who prefer less expensive options.

“The Nokia consumer brand lives on as the badge on cheaper, entry-level ‘feature phones’ sold mainly in Asia, India and Eastern Europe, though Microsoft invested little to market the name in recent years,” the Fortune article continues. “Smartphones typically cost anywhere from 10 to 30 times as much as these basic phones, which sell for as little as $20.”

Some analysts believe this could allow Nokia to capture a portion of the smartphone market more easily than expected and catch its competitors off guard.

“For a new entrant, having an established brand provides it with an instant on-ramp,” Fortune quotes Ben Wood, a mobile phone analyst with CCS Insight, as saying.

“The barriers to entry for the Android phone space are low. What HMD has is the Nokia brand and management experience. The key to its success will be driving scale.”

Not everyone is convinced Nokia will have such an easy go of it.

Vlad Savov at the Verge thinks Nokia might be looking at a broader marketing strategy. He believes that in terms of profitability, Nokia’s new smartphones would be “dead on arrival.”

However, he sees an opening for the phones to be a vehicle to steer consumers toward other Nokia products, something along the lines of what China’s Xiaomi does.

“Xiaomi has built its entire business on this premise of creating extremely appealing smartphones with negligible, if any, profit margin as a way to route shoppers to its online sales platform,” Savov writes. “Chinese consumers can buy air conditioners, drones, laptops, luggage, hoverboards, and a litany of other things from Xiaomi. It’s a smartphone maker that doesn’t hope to profit directly from making smartphones, and that’s a reasonable path that Nokia can pursue as well.”

That wouldn’t be a terrible strategy, and it’s one that’s worked well for Xiaomi. The problem with Nokia adopting that model is that while it offers a range of products and services in the communications and virtual reality industries, it doesn’t have anywhere near the diverse line of consumer electronics that Xiaomi offers. That doesn’t mean the same approach couldn’t work for Nokia; it just means the model would have to be somewhat different.

Either way, if Nokia is planning on using its new smartphones more as vehicles to attract consumers to its other products, it’s probably not going to openly admit as much before launching its new line. We’ll just have to wait and see how this plays out.

[Featured Image by Justin Sullivan/Getty Images]

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