If you've been following my channel for a while now, you probably know I'm generally
very excited about the return of the Nokia brand.
I have the Nokia 9 as my main phone right now phone, I had the 7 Plus before that, I loved it, I've talked about
the Banana phone, about the success of the business and I've generally been very positive
about the company.
But in the last couple of months I've started to get a little worried about them.
So, in the 47th episode of The Story Behind series, let me explain why.
And thanks to Skillshare for sponsoring this video.
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Since the revival of the Nokia brand, their phones have always been a little rough at launch.
My 7 Plus launched with multiple bugs including Spotify and Google Maps that would randomly
crash for example and the internet is filled with people complaining about similarly random
bugs in early software.
But I've always cut them some slack.
They were a new company, they had to figure out and optimize their processes first and
they launched a big portfolio right away so they had lots of devices to support.
Plus they do fix their bugs eventually, so I thought it was OK as long as things improved.
But the problem is, as the company grew, things haven't really improved.
In fact, they actually seem to have gotten worse.
HMD Global, the company behind the revival of the Nokia brand has not slowed down with
releasing new devices, which means they now have 22 smartphones to support.
That's without even counting the regional variants and feature phones, and as you can
imagine, the company hasn't matured fast enough to handle this new level of complexity.
Remember, unlike most phone manufacturers, HMD Global does keep all of their Android
One devices updated for 3 years, so that's a lot of devices to take care of.
Though Nokia still outperforms most manufacturers significantly in delivering updates quickly,
they have started missing their own deadlines, there was recently a report of a major security screwup
where a batch of phones mistakenly sent sensitive user data to an activation server that they
shouldn't have, and new devices still get released with buggy software.
Case in point, the Nokia 9, which is so buggy, it actually prompted me to make this very video.
This was supposed to be the crown jewel of the company.
A limited edition device with a ridiculous 5 camera setup that was created to generate
hype and great headlines and get people to start taking the Nokia brand seriously as
a maker of high end stuff, not just a brand for solid mid-rangers.
And while I do actually like the phone overall for its gorgeous design, the clean stock Android,
and so on, this phone is incredibly unfinished.
Especially the camera, the one feature that actually should have blown people away right
from the start.
Just look at the reviews.
Most of them range from a straight up "don't buy it" to a more generous "wait until it
gets updates".
I'm in the second camp, because
occasionally the phone does take great photos, which makes me think software updates can
eventually make this a great phone, but
the amount of bugs and slow processing and inconsistent results are not excusable for
a phone that's actually been shipping to people for a good while now.
Which is stupid.
This phone had the potential to be a big PR victory for Nokia and instead they botched
the launch and got a PR "meh" at best.
Ugh.
Add to the buggy launch software that the company just has so many devices that it is
unable to create any clear differentiation between them, and has a naming strategy which
makes it even harder to figure out how these phones relate to each other, and you are left
with a device portfolio that's a bit of a mess to say the least.
Both of the buggy launch devices and the confusing portfolio appear to be coming from the exact
same problem.
A management team that has prioritized launching many new devices as possible
instead of launching a few very good phones.
And apparently, these issues have started impacting the business as well.
Starting with sales figures.
If we look at the overview that Nokiamob has compiled, we can see that after a meteoric rise in their
first year, growth has essentially flatlined.
To be clear, it's still very impressive of a 2 year old company to sell over 17 million
phones a year, that's way more than brands like Google, OnePlus or Sony managed to sell,
but it appears that HMD Global's growth has hit a pretty hard ceiling in 2018.
Nokia is entering new markets like the US where they partnered with big carriers, which
might bring them a much needed boost, but in many existing markets, especially Europe,
they have actually started losing market share already.
And here comes the real trouble.
On the company rating website Glassdoor, where HMD has a pretty terrible rating of 2.2 starts,
multiple employees claim the business is now under extreme pressure with multiple reports
of people getting fired and downsizings throughout the organization, especially in Europe.
Similarly, HMD Global's most influential partner, FIH, which is currently the exclusive manufacturer
of the new Nokia phones,
has announced that they lost 368 million Dollars in 2018 from the Nokia handset business as
their margins continue to get squeezed due to the tough competition.
FIH will therefore start refusing to manufacture Nokia models it deems unprofitable, forcing
HMD to either cut down on the new models or find alternative manufacturing partners.
Given that FIH is a subsidiary of Foxconn, the largest electronics manufacturer in the
world making stuff for just about every consumer electronics company on the planet, this is
likely a huge blow to HMD.
So the huge positivity we've seen around the business last year seems to have faded quite a bit.
Now, to be clear, none of what I've just said means that Nokia is doomed,
or even that hard times are unique to the Nokia smartphone brand.
Almost every mobile brand apart from maybe Huawei and Xiaomi had a rough year as global smartphone
sales are declining and competition is intensifying, and HMD, even with these troubles
still pulled off a 120 percent growth year over year, becoming now the 9th biggest smartphone
maker in the world.
But it is clear that their breakneck growth has started grinding to a halt at the end
of this year and the company has run into some serious challenges with supply, product
pipeline and software development.
And I think there are two main factors to blame here.
First, the "oh look, Nokia is back" factor seems to be gone for the most part and
the brand loyalists like me, who were really excited about the return of the Nokia brand
have already bought their Nokia phones.
HMD Global now has to convince people beyond just the brand loyalists and has to compete directly
against newer companies like Xiaomi and Huawei, and older incumbents like Apple and Samsung.
And that, as we know, is a hell of a task for any smartphone maker.
And two, as I said before, the management team got a little too excited about expanding rapidly.
They have too many devices and tried to enter China, India, a bunch of other Asian countries,
Europe, Africa and now even the US all within 2 years.
That's insane and just seems a little too much for the company to handle.
The weird naming, the buggy launch devices, the issues with software quality control and
so on, they all point towards an organization that's just stretched a little too thin.
In other words, after the huge initial success, I think HMD has hit a bit of a roadblock and
needs to reevaluate its strategy.
Looking at the business from the outside, it appears to me that they should reduce the
number of models they launch and instead focus on making those few models better.
They should make a few phones like the Nokia 9 with unique value propositions and make
them great straight out the gate instead of launching a tons of buggy devices that don't
really manage to stand even from their own crowded line-up.
The good news is that if the brand manages to focus, I really believe they can turn things
around and return to the fast growth trajectory they were on just last year.
After all, they have plenty of building blocks necessary for success.
A beloved, unique brand, exclusive partnerships with some of the world's best companies
like Zeiss, and a promising Android One software strategy.
Until then, I'll be sticking with my Nokia 9, and I'll be sure to share news of software
updates and loads of camera samples, so if you want to see those things, be sure to follow
me on Twitter and on Instagram.
This phone is all about taking pictures in RAW and then editing them in post in a program
like Lightroom, which is not something I'm particularly good at yet, but I do reaaally
enjoy lately.
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technical level, but also how you can create your own style and to go beyond just bumping
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