Nokia Entry Into Device Segment - Real Facts Can Nokia Do It

Ex-Nokia employee and its management at last brought back the pride of Nokia to Finland by acquiring Feature phone and Tablet part from Microsoft in firesell cleanup process by Microsoft post their multiple misstep prior and post acquisition of Nokia devices. I believe that Microsoft acted sooner than later and managed to get out some value instead of putting that segment into Goodwill. The Collaboration between HMD Global Oy and manufacturing partner Foxconn subsidiary agreed to invest $500 in next three years with condition attached such as IP licensing from Nokia, Brand usages from MS.

I have serious doubt about the success of initiative given the transition of design segment in the feature phone as well as tablet market which is volume and channel management game. The $500 Mn investment which cover from building team, innovation, advertisement and reestablishment of channel sales mechanism worldwide is just a drop which is needed. The most interesting part is that it will not be moving into Android Smartphone as agreement is specifically for Feature Phone and Tablet.

When the whole world is moving from feature phone to Smartphone then the upcoming team of thinking Feature phone. Its Nokia strategy since early 2000 to always capture low earning group user ad that is the reason that their Device ASP never matched with their competitor and turned out to be one of the major reason of their downfall spiral. Its interesting to hear from someone that they are focusing on Feature phone when rest is moving forward. Take an example of India where respectable brand or unbranded feature phone is selling in $15 to $17 range. I don't think HMD Global Oy want to have few cents earning per device.

At the same time that

We should not communicate that Nokia is entering into device segment but its not correct. As per the press release that they will be lending their Strategic Branding to HMD Global oy on exclusive basis and in return will get the royalty from them. We all should restrain in saying "

Regarding Tablet market

All players are facing the music and at that point of time if HMD global Oy think that they can make a dent in the market place which is totally captured with established player at very competitive price then they must do reverse eagle eye analysis to reach out to RoI model. I know that they must have done the RoI but its always easy to make it on paper vs bank transaction.

In my point of view, "Nokia Finland is not buying back handset business from Microsoft but trying to generate much needed revenue by leveraging their brand value as well as IP they acquired during their good times".

 

This Article Written By - Devendra Prasad