Nokia is a shape-shifter of a company that has transformed itself many times in its 151-year history. It has been in forestry, lumber and pulp production; rubber, cable, radio, and electronics. It made mobile phones from 1982 to 2014, and while that’s a lifetime in the tech world, it accounts for just 21 percent of the company’s history.
When Nokia sold its phone business to Microsoft in 2014 to focus on cellular network infrastructure, it seemed like just another Nokia transformation. Following Nokia’s announcement, however, that its name once again will appear on phones, it’s tempting to call it a ‘back to the future’ moment.
In fact, it’s at most a side-step along Nokia’s journey to whatever-comes-next.
That’s because Nokia is licensing its way back into the phone market. By letting others assume the manufacturing, distribution, and marketing risk, it can collect a relatively safe, stable royalty not unlike the income it derives from its valuable patent portfolio. Nokia is merely monetizing what it claims is among one of the top five most considered phone brands. If it succeeds, this will become an attractive annuity. If it fails, well, Nokia can trundle along supplying infrastructure to the world’s cellular operators, none of whom will care a lick about the fate of Nokia’s consumer brand
Even though this announcement lacks heft – the band is not getting back together, and Microsoft isn’t quitting the smartphone race – the market once again will have Nokia phones. A Finnish entity Nokia describes as “HMD, a new company led by some of the world’s top mobile specialists” will be responsible for designing the next generation of smartphones (running Android) and feature phones that will bear the Nokia name. As I see it, there are two things HMD can do to stand out in this cutthroat market. This being an Android world, though, I don’t see either one of them as a recipe for sustained success.
Allow its Android devices to update over the air: Android has become perilously fragmented because many manufacturers do not provide this capability. That means consumers are routinely blocked from getting the latest features, including security and UI enhancements. To put this into perspective, Radio-Free Mobile estimated in February that “[Android] Marshmallow and iOS9 became available at roughly the same time but Marshmallow is present on just 1.2% of Google’s devices while iOS9 is on 87% of Apple devices.” Providing over-the-air updates could give a Nokia-branded Android device a competitive advantage over other Android devices.
Wow with distinctive Finnish design: Not being a designer myself, I can’t imagine how phone manufacturers can innovate through design when every phone’s most important hardware feature is a 4″-5″ screen. What can be done with other five surfaces to differentiate? We’ve seen companies use different materials, colors and button placements. Nokia famously tried it with high-powered cameras. None of that has mattered as much as the phone’s software. Still, perhaps HMD can find some design angle to prosperity that has eluded other manufacturers.
Whatever happens, I applaud Nokia’s decision because there’s almost no downside, not because it’s a chance to re-litigate its 2011 decision to license Windows Phone instead of Android for its smartphones.