Technology

Maker of Nokia-branded phones, HMD wins $230 million investment led by Google and sees Brazil as a key market

The company's strategy is to continue to invest in low-priced feature phones and deepen its relationships with carriers in markets in Africa, India and Brazil

Florian Seiche, CEO OF HMD Global. Photo: HMD Global
  • Nokia’s brand is strongly linked to the mobile market history and evolution in Brazil;
  • The round of investment, which also attracted Qualcomm and Nokia Technologies, will help accelerate the development of 5G devices;
  • HMD’s first 5G device – the Nokia 8.3 5G – goes on sale in September 2020.

HMD Global, the maker of Nokia-branded smartphones, has secured $230 million of investment from partners including Google, Qualcomm and its former parent company Nokia Technologies, to help accelerate its development of 5G devices.

The company’s strategy is to continue to invest in low-priced feature phones and deepen its relationships with carriers in markets in Africa, India and particularly Brazil, a strategic country where Nokia’s brand is strongly linked to mobile market history and evolution.

This connection is so strong that, when HMD announced earlier this year it was resuming the sale of Nokia phones in Brazil after 6 years, a key marketing strategy was tinkering with consumers’ nostalgia.

A pioneer in the local phone market, with models such as Nokia 5110 and 8110 in the late 1990s and early 2000s, the Finnish brand has had a tumultuous path and left the Brazilian market for some time.

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Currently managed by HMD Global, the manufacturer introduced in Brazil the Nokia 2.3 model last May, sold for approximately $160 and imported by Multilaser, a local manufacturer of electronic devices. It is trying to compete for space with devices made by market leaders Samsung and Motorola, as well as by Chinese brands Huawei and Xiaomi.

Nokia 2.3, the new smartphone for the Brazilian market. Photo: Nokia

After the Windows Phone didn’t take off, Nokia employees founded HMD and took over the brand for handheld devices

HMD Global is a company that was founded by former Nokia employees to carry out the assembly of smartphones with the Finnish brand using the Android operating system. Previously, in 2013, Nokia’s mobile device division had been bought by Microsoft in an attempt to get its Windows Phone operating system off the ground, a plan that was abandoned shortly afterwards as it failed to stand up to Google’s Android and Apple’s iOS.

Three years later, the brand rights for mobile phones returned to the Finns, but the parent company, Nokia Technologies, maintained its focus on manufacturing network equipment, including in the 5G-technology field. That was when HMD Global appeared, and since 2017 it has launched and marketed Nokia devices in more than 50 countries. 

Other Latin American markets, such as Mexico, Colombia and Argentina, have also been receiving Nokia cell phones.

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The latest funding round

HMD’s CEO Florian Seiche said the success of the funding round – the largest since the Finland-based company was founded in late-2016 – validated its strategy of working closely with partners in software and hardware.

This significant investment with some of closest strategic partners really allows us to accelerate our journey going forward.

Florian Seiche, CEO of HMD Global

He did not disclose the individual amounts, but said the investments from the three were “each very sizeable parts of the total”.

HMD’s smartphones run Google’s Android One software, an unadulterated version of the operating system that promises three years of security updates and two years of OS updates.

“Google is delivering a similar experience on its own Pixel range, and we are a perfect complement to their own initiatives,” Seiche said. “They’re focused on fewer selected geographies and channels; we are much broader and also present in emerging markets.”

HMD’s first 5G device – the Nokia 8.3 5G – goes on sale in September 2020, and Seiche said the investment would accelerate HMD’s development of 5G handsets at lower prices.

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“We believe the second half of this year will see a broader set of 5G phones in the market, and we believe the true mid-tier range will probably be in the first half of next year,” he said.

Seiche said COVID-19 had impacted sales, but demand had “come back quite strongly” in May and June, and the company had returned to profitability in June.

Nostalgia is important for Nokia phones

In Brazil, Nokia-branded phones may benefit from the perception of resistance and robustness its devices left by the previous incarnation of the Finnish brand. During the 2000s, images on the Internet became popular with jokes about the infinite life of its battery and the ability of the phone to function after falling from great heights or even being thrown onto the street.

Actually, HMD has been making  During the 2000s, images on the Internet became popular with jokes about the infinite duration of the charge and the ability of the device to stay working even if falling from great heights or even being thrown in the street.

Actually, HMD has been launching “retro” versions of Nokia’s classic devices, such as those already mentioned. Equipped with the KaiOS operating system, with 4G and WhatsApp, these devices are considered feature phones and sold for less than $100. The company has not revealed if it intends to also market these handsets in Latin America.