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From the dominance of the world‘s mobile phone brand to the decline of the era of intelligence, Nokia’s experience has made countless people sigh.
However, the smart phone market is difficult to open, and Nokia has a firm foothold in the feature phone market that the elderly love to use. This is the secret of Nokia’s survival so far.
According to data from Counterpoint Research, in Q1 of 2021, Nokia shipped 11 million feature phones and only 2 million smart phones. The latter is less than 1/5 of the former.
According to a report by the Finnish media mobiili, in 2020, four years after taking over the Nokia brand, HMD’s financial situation has finally improved, from a loss of 295 million euros in 2019 to a loss of 47 million euros in 2020. The CEO of HMD Global said, “We have been profitable since June 2020.”
Feature phones have supported most of Nokia’s mobile phones. In the global feature phone market, Nokia still occupies a lot of shares. According to Counterpoint Research’s Q3 2020 data, in Europe and Asia, Nokia accounted for 40% and 21% of the feature phone market, ranking first.
Market share ranking of feature phones by region in Q3 2020, source from Counterpoint
However, compared with the smart phone market, the market size of feature phones is after all a minority. In the third quarter of 2020, according to Counterpoint and IDC data, global shipments of feature phones were 74 million units, only 21% of smartphones.
So, on the one hand, it is to defend the feature phone market with limited space, and on the other hand, it is to continue to survive in the highly competitive smartphone market. Where is the future of Nokia mobile phones? Can it still keep up with the times?
1. Feature phones support Nokia’s country
At today’s Nokia C20 Plus conference, which lasted nearly 30 minutes, the configuration of Nokia’s new phones was exposed one after another. Its processor uses Ziguang Zhanrui, is equipped with a 4950 mAh battery and uses a 6.52-inch LCD screen material. All are in the standard configuration of low-end mobile phones.
As a low-end phone with a starting price of 699 yuan, its price/performance ratio does not have much advantage. With reference to peers, many mid-to-low-end competing products are iterated with product updates and are superior in performance to Nokia C20 Plus, but the price is lower.
For example, the vivo Z3, which is a mid-range phone released in October 2018, is equipped with a Snapdragon 710 processor and a rear 16 million + 2 million pixels. Now the price on JD.com has dropped to 678 yuan. No matter from camera, processor or screen, VIVO Z3 performs better than Nokia C20 Plus.
Nokia C20 Plus configuration diagram, sourced from Jingdong Mall
However, low-end smartphones are no longer the backbone of Nokia mobile phones. Feature phones are.
In the global feature phone market, Nokia mobile phones occupy an important market share.
According to Strategy Analytics survey data, global feature phone shipments in 2020 will be close to 420 million, of which the top three mobile phone brands accounted for 24.9% of the market share of Transsion, 14.5% of Samsung, and 6.3% of Nokia.
Nokia’s performance in the Chinese feature phone market is also quite impressive.
In 2020, the low-end feature phones released by Nokia include the Nokia 220 in April 2020, the Nokia 225 in October 2020, and the Nokia 6300 in December 2020.
With these mobile phones, Nokia said at the end of 2020 that its “classic 4G mobile phones” (feature phones) in the Chinese market had reached the top sales volume.
Although due to the development of smart phones, the domestic market for feature phones has seldom been paid attention to, and its statistical data is also scarce, but from the data of e-commerce platform, Nokia has good sales of feature phones.
Taking JD.com as an example, the user reviews of some Nokia feature phones have accumulated tens of thousands or even hundreds of thousands. Among them, a Nokia 220 released by Nokia in April 2020 has a cumulative evaluation of more than 100,000. This cumulative evaluation has surpassed most OnePlus mobile phones and also surpassed all Meizu mobile phones.
The strong performance of Nokia’s mobile phones in the Chinese market is mainly due to Nokia’s “lack” of rivals in the Chinese feature phone market.
Domestic mainstream mobile phone brands, such as Huawei, Xiaomi, OPPO, VIVO, etc., have long turned their energy to the competition of high-end smartphones. Even if they deploy low-end smartphones, the prices are generally above 500 yuan.
In contrast, the price of feature phones is concentrated at 0-500 yuan, which makes Nokia stagger the competition with domestic mainstream mobile phones.
Nokia feature phone price, picture source Jingdong Mall
On the other hand, TRANSSION and Samsung, the rivals of Nokia’s feature phone market, are not focused on the Chinese market.
Take Transsion as an example, most of its feature phone market is concentrated in Africa and India. According to data from Counterpoint Research in Q3 of 2020, TRANSSION feature phone shipments accounted for 22% of the local market share, making it the largest feature phone brand in India.
How big is the Chinese feature phone market? Li Liyou, chairman of Spreadtrum Communications, a wireless communication chip manufacturer, once said in an interview with the media that in the feature phone market, there are still hundreds of millions of “stubborn users” in China, mainly the elderly and K12 students. In terms of regional distribution, they are mainly concentrated in counties and towns. “This market is already big enough,” Li Liyou said.
It is these “stubborn users” that make Nokia live well with mobile phones. According to the public statement of the CEO of HMD Global, since the second half of last year, HMD has turned losses into profits.
2. After several changes of owners, Nokia’s PlayerUnknown’s Battlegrounds
Choosing the feature phone market is behind Nokia’s rather bumpy fate.
Back in 2013, Nokia is in a quagmire.
Since the continuous rise of smart phones, Nokia stuck to the closed Symbian system and had to retreat steadily. Not only did the sales of smart phones fail, but the overall sales of mobile phones, including feature phones, were declining. Nokia issued a series of profit warnings, eclipsing the former mobile phone overlord.
In 2013, Nokia met its first buyer, Microsoft.
According to internal information disclosure at the time, Nokia was no longer able to raise funds in the open market, and Microsoft gave it a preferential loan of 1.5 billion euros with conditional acquisition negotiations. In the end, Microsoft spent about $7 billion to acquire most of Nokia’s mobile phone business and its patent licenses.
With layoffs and termination of cooperation with the Google Android system, Microsoft intends to bring Nokia back to the era of smart phones, but the condition is to install the Windows Phone operating system with a market share of only about 1%. With Microsoft’s “selfishness” in mind, Nokia’s subsequent Lumia phones were unsurprisingly defeated under the envelope of iOS and Android systems.
In 2015, Microsoft’s second-quarter financial report showed that Microsoft lost US$7.6 billion, which is almost equal to the US$5 billion that Microsoft acquired from Nokia’s mobile phone business, plus the US$2.2 billion of Nokia’s mobile patent portfolio.
This is tantamount to sentence of death for Nokia’s smartphone business.
By 2016, Microsoft agreed to sell the mobile phone unit acquired from Nokia to Taiwanese technology group Foxconn for US$350 million.
Later, Foxconn and Nokia jointly established a new company, HMD, and sent employees to station. So far, the manufacturing of Nokia brand mobile phones and tablet computers has been taken over by HMD.
HMD’s play style is “conservative” a lot.
This kind of “conservatism” is reflected in the fact that when major mobile phone manufacturers aim at the smartphone market and frequently launch new products to grab the attention of consumers, Nokia’s flagship smartphones and 5G mobile phones are always late to appear, and the mass production time is repeatedly delayed. And most smart phones stay in the low-end positioning.
At the same time, Nokia has continued to reproduce the classics, returning with the appearance of a feature phone.
After HMD took over Nokia, the first mobile phone launched was a replica machine. In 2017, Nokia resurrected the classic 3310, as well as countless “snakes” that are well known to those born in the 80s and 90s. After that, the Nokia reissue 8110 was also released in February 2018. In the past 2020, Nokia also launched three replica machines.
Most of these phones maintain the original style and features, and optimize performance on this basis. This kind of feature phone with a strong retro style and nostalgic atmosphere has just met the needs of some groups, who hope to get a respite in the era of information bombing. At the same time, hundreds of millions of middle-aged and elderly people in this era still have a demand for functional machines.
The result was unexpected, HMD bet on the feature phone market. According to Counterpoint data, starting from the fourth quarter of 2017, the growth rate of global smartphone shipments has turned from a rise to a fall. Feature phones, on the contrary, global shipments of feature phones reached 450 million units in 2017, a year-on-year increase of 5%.
Until now, there is still a very large market for feature phones in countries or regions such as Japan, the Middle East, Africa, and India. For example, the penetration rate of smartphones and Internet penetration in Africa is low, while developed countries such as Japan do not have inadequate infrastructure, but the aging problem is serious. For them, feature phones are just needed.
Nokia also has a tendency to come back to life. According to financial data released by HMD, after changing from the downward trend in 2017, Nokia’s global shipments reached 80 million units in 2018, an increase of 10 million units compared to 2017.
Nokia mobile phone shipment changes, source Counterpoint
However, it may be affected by the epidemic, or it may be that the functional machine market has been seized by other players. According to Counterpoint Research data, in 2019, Nokia’s global shipments fell again to 70 million units, and in 2020 it dropped sharply to 46.6 million.
At present, many giants and mobile phone manufacturers are also seizing this market. The Indian brand Jio phone is constantly combining feature phones and smartphones to launch new products. The American technology company Google and French operator Orange SA are also deploying this market through investment and other methods. One market.
Although HMD has maintained a certain momentum through feature phones and has become a leader in the market, as more and more companies realize the huge market behind feature phones, HMD and Nokia may wait for the revival of feature phones at the same time. As a result, more challenges are encountered.
HMD can no longer be “conservative”. Nokia needs to continue to attack on feature phones, but if it wants to return to the mainstream vision and become a leading mobile phone manufacturer, it must not only rely on feature phones, but also need to come up with competitive smart phone products. .
3. Can Nokia catch up with the times again?
Nokia, which sells nostalgia, has never given up its coveting the smartphone market.
In January 2017, at the launch conference of HMD’s first Nokia smartphone, Nokia 6, staged a very interesting scene: On the one hand, HMD Nokia’s CEO played a sentiment card: “I knew Nokia when I was very young.” On the one hand, the product team still uttered bold words: “We are not old people, and we have to climb to the top of the world in three to five years.”
Although the slogan is loud, HMD’s steps towards smart phones are still conservative.
The first smart phone, HMD chose to enter the low-end market of 1500-2000 yuan. At the same time, due to the weak foundation of offline channels in the past, HMD could not bear the financial pressure of resetting channels on a large scale, so when entering the Chinese market, it chose to cooperate with JD.com to sell through all channels online.
As of today, Nokia still does not have an offline store in China, and there is almost no news about new developments in offline channels.
Judging from the release rhythm of Nokia’s new phones in recent years, only 2-3 models of smart phones are released each year, usually one in the spring and another in the winter. Compared with the annual pace of 10 new phones from brands such as Xiaomi, OPPO, and VIVO, Nokia’s speed appears to be much slower.
In April of this year, Nokia mobile phones released a set of pictures on Weibo. Nokia said that it will re-divide the product series into three series of X, G, and C smartphones, each series covering 9 models.
Nokia product planning map, source of the Nokia official micro
Among them, the C series are low-end devices, focusing on the 3G and 4G markets below 1,000 yuan; the G series is positioned in the mid-range market of 1,000-2,000 yuan, retaining large batteries and high pixels; the X series is priced below 5,000 yuan, which is Nokia’s highest-end product series.
After checking with Insight, it is found that the current Nokia X20 model with the highest configuration uses the Snapdragon 480 processor, and is equipped with a 48 million pixel lens + 5 million pixel ultra-wide-angle lens, and this configuration is basically at the domestic mid-range machine level.
Positioning in the low-end and low-end phones, the release of new phones is slow, and it is difficult for Nokia to break through in the mobile phone market full of giants.
According to data released by Counterpoint Research in Q1 of 2021, Nokia’s smartphone shipments are 2 million units, which is less than 1% of the global smartphone shipments of 354 million units. Compared with Samsung, Xiaomi, OPPO and other manufacturers with sales of more than 35 million units, Nokia’s volume is far from it.
However, Nokia’s efforts in the field of communications have given certain support to the mobile phone business.
Patent is the “legacy” left by Nokia’s empire to the mobile phone business. No matter in the 3G or 4G field, Nokia’s communications business has a relatively deep technical accumulation, with 16,000 in the United States and nearly 20,000 in Europe.
With a large number of patents in hand, Nokia has rejected many competitors for its mobile phone business, and it has also brought substantial patent income to itself.
In 2013, Nokia and HTC had a patent dispute. Nokia sued HTC for infringing more than 50 patents on “terminals, methods and computer programs used to interact with signal tags.” The lawsuit was settled in 2014, and HTC had to compensate for huge patent fees, which was greatly injured.
Since then, mobile phone companies such as Apple and BlackBerry have had patent disputes with Nokia, all of which ended in failure. In terms of navigation systems and communications, it is difficult for mobile phone manufacturers to avoid Nokia’s patents and have to pay compensation.
Although Nokia and major companies have not disclosed details of the fees paid for technology patents, from its 2020 financial report, technology business revenue accounted for 6.4%, reaching 11.19 billion yuan, which may be used as one of the evidence of patent revenue.
In the 5G business, Nokia’s strength should not be underestimated.
Since 2013, Nokia has spent tens of billions of euros in the acquisition of Nokia Siemens Networks held by Siemens and telecommunications equipment manufacturer Alcatel-Lucent. 5G market share.
By 2021, the “Who is leading the 5G patent race?” report released by the German consulting agency IPlystics shows that Huawei ranked first with 15.4% of 5G standard essential patents, and Nokia ranked third with 13.2% of market shares. .
The 5G patent has once again become Nokia’s card location. According to the patent fee collection standards announced by Nokia in 2018, it charges a fixed 5G patent fee of US$3.43 per mobile phone, compared to Ericsson’s patent fee of US$5 per high-end mobile phone and US$2.5 per low-end mobile phone, and Qualcomm’s 5% of the price of each mobile phone is a royalty, and the price is quite competitive.
Several 5G mobile phones released by Nokia also carry their own communications patents. Although the specific cooperation price has not been announced, it is not difficult to infer that Nokia mobile phones will enjoy many technical preferential conditions.
Not long ago, Nokia also launched 6G technology research with Japan, vowing to win 10% of the patent market, which may open the way for Nokia mobile phones in the 6G era.
At present, Nokia mobile phones are not only alive, but also a bunch of “backers.” In August 2020, HMD announced that it has received a new round of financing, totaling 230 million US dollars. In addition to Nokia, the investors also include partners such as Google and Qualcomm. With the latter’s technical blessings in operating systems, chips, etc., it will be more conducive to HMD smart phones to improve performance and experience.
However, competition in the mobile phone market is still strong. The competition among manufacturers such as Huawei, Apple, Samsung, and Xiaomi has long been fierce. If HMD wants to break through, it needs more than just helpers. Its brand, market, and R&D capabilities all need to be greatly improved.
In the past few years, Nokia relied on the legacy of the old era-feature phones, to be a cornerstone. But the smart phone market is destined to be dominated by young people. This market is already a red sea. Every step forward requires determination and courage. But if you want to keep up with the times, this is what Nokia has to do.
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