Those Cool New Nokia Phones Aren’t Made by Nokia

Nostalgia is a powerful force when it comes to consumer trends. You need look no further than the resurgence of turntables and vinyl records at a time when everyone is streaming music on a monthly subscription plan to see this effect. Record sales are seeing double digit growth while CDs and digital download purchases slump.

Nokia Stock Has Lost Everybody Except the Contrarians
Source: RistoH /

That same nostalgia is at play in the mobile phone industry. Motorola has resurrected the iconic Razr flip phone as a premium smartphone with a folding OLED display. BlackBerry still offers a handful of smartphones with physical keyboards through a licensing agreement with China’s TCL. However, the most successful nostalgic mobile phone reboot belongs to Nokia (NYSE:NOK).

Under a 10-year licensing agreement signed in 2016 with HMD Global, the Nokia brand returned to mobile phones after a disastrous deal with Microsoft. Manufacturing is handled by a Foxconn spinoff called FIH Mobile. The partnership quickly bore fruit and the first of the new Nokia Android smartphones launched at Mobile World Congress in 2017. Also released were new versions of the company’s iconic and hugely popular feature phones.

Reception to New Nokia Phones

Breaking into the smartphone business is difficult. The players are established, and trying to convince consumers to take a chance on a newcomer instead of buying one of those “it” phones from Apple (NASDAQ:AAPL) or Samsung is tough. Amazon (NASDAQ:AMZN) took a stab at it in 2014 with the Fire Phone and quickly gave up. Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google has been trying hard with its Pixel smartphones, but after four generations and class-leading camera technology, the Google Pixel has failed to crack the market in a meaningful way.

Nokia’s new smartphones including the Nokia 6 were eagerly anticipated. By promising a combination of quality, the latest version of Android, and budget-friendly pricing, the new smartphones also appealed to international markets. With a Full HD display, Qualcomm (NASDAQ:QCOM) Snapdragon 430 processor and a 16MP camera, the $229.99 Nokia 6 was sold through Best Buy in the U.S., and then released globally. The company also released updates of the classic Nokia 105, 130 and 3310 feature phones.

In 2017, it was estimated that 8.7 million Nokia smartphones were sold globally, along with an impressive 59.2 million feature phones. In comparison, roughly 1 million TCL Blackberry smartphones were sold that year.

By Q2 2019, HMD (Nokia) was in the top 10 list of global smartphone vendors — despite an overall 1.2% decline in smartphone sales — with 4.8 million units shipped that quarter. 

Cashing in on Nostalgia

On the smartphone front, HMD is depending on the Nokia brand, combined with quality design and affordable pricing. But it’s on the feature phone front where the company is really cashing in on consumer nostalgia. The updated Nokia 3310 was infamous for a battery that lasted forever and its virtual indestructibility. Last year, it was a reboot of the 8110 slider “banana phone” made famous by its appearance in The Matrix.

A few months ago, the $99 Nokia 2720 flip phone was launched. It’s updated with a 2.8-inch color display (plus a 1.3-inch external display for notifications), 27-day battery standby, and support for apps like Twitter (NYSE:TWTR), Facebook (NASDAQ:FB), and Google Maps.

Also released in September was the Nokia 9 PureView, its most powerful Android smartphone yet, and one that leverages the company’s famed camera capabilities. The new flagship smartphone (which goes for $449.99), features a 60MP and five camera PureView system with ZEISS optics.

Does Nokia Actually Make Any Money From Phone Sales?

The full financial terms of the licensing deal with HMD Global weren’t revealed. However, InvestorPlace’s Will Ashworth has been told that Nokia makes between $11 and $23 per smartphone in patent and licensing fees. 

Several years into the deal with HMD Global, whether the Nokia mobile phone revival will ultimately be a success is still up in the air. Either way, Nokia gets brand recognition from those cool retakes on its classic phones, while finally getting its foot in the door with Android smartphones. And it does so without risking its own money, instead making a small profit off each device sold.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

©2020 InvestorPlace Media, LLC