Nokia embarks on its second chapter

Read time 6min 30sec
Shaun Durandt, southern Africa GM of HMD Global.
Shaun Durandt, southern Africa GM of HMD Global.

Although the Nokia brand is making inroads in the smartphone market since its resurgence, the company’s feature phone portfolio is still a significant part of the business.

This is according to Shaun Durandt, GM for southern Africa at HMD Global, who says Nokia is the number one feature phone brand in terms of value and volume share globally.

In recent years, the African continent has witnessed growth in the smartphone market, spurred on by the introduction of affordable smartphones. However, feature phones have managed to keep a firm foothold in Africa.

Latest data from research firm GfK South Africa shows the feature phone segment enjoyed a slight resurgence in the first quarter of 2019, with unit sales up 4% year on year.

The IDC’s Quarterly Mobile Phone Tracker further highlights that feature phones still constitute a significant 59.9% share of the total mobile phone market due to their relative affordability and durability.

“If you consciously look around in your travels, when you go into shopping centres or you're sitting at a coffee shop, there are so many people that still use a feature phone,” says Durandt.

Referencing the Nokia 105, one of the brand’s best performing feature phones, Durandt notes the device retails for R229 per month, has 30-day battery life and 21 hours of talk time. “That springboard in terms of the success of feature phones has been really positive for us to introduce our smartphone proposition.”

Durandt says the feature phone market is as important as the smartphone market. “The reason is that those feature phone users, not all of them, but a significant portion of them, will be at a stage in their lives where they're ready to upgrade.

“If they are familiar with a Nokia device in terms of brand, functionality, durability and battery life, then their first consideration will be a Nokia. That's why that feature phone space is still so critical for us.

“It's a significant part of our channel partner business. If you look at all the major retailers like Pepko, Edcon, TFG and Truworths – that feature phone space is still a significant part of their business, and then by association, the operators.”

Second chapter

Two years ago saw the Nokia brand revived by HMD Global, the Finnish company that owns the right to use the Nokia on mobile phones.

At the time, the company launched reimaged retro feature phones, most notably a reinvention of the 3310, and smartphones that use Google's Android as an operating system.

Two years later, Nokia phones are said to rank in the top 10 among other global smartphone brands, and top five in more than 30 countries around the world, according to the company.

When Nokia unveiled the 3310 at Mobile World Congress (MWC), in Barcelona, fans were happy to get a second chance to own the iconic cellphone of the early 2000s.

The original device was one of the best-selling mobile phones, selling 126 million units when it was launched in 2000. It was known for its durability and long battery life.

The device has been made available in four colours: the original dark blue, selling for R749 from most retailers, and matte grey, yellow and red, which will be available through MTN for R699.

Explaining the local market’s reception to the 3310, Durandt says the phone became more of a nostalgic purchase for those who remembered the original 3310. “We did some really good numbers there, but not to the level of a Nokia 105.

“The biggest market in South Africa is the mid-range device – devices ranging between R1 000 retail, and R2 500 to R3 000. There is a massive opportunity there in terms of volume and price, and that's where we're really strong. So, devices like the Nokia 1, Nokia 2.1, then the Nokia 3.1 – those are the top performers for us.”

Smartphone traction

In keeping with tradition over the past two years, Nokia releases smartphone devices as well as feature phones that resemble devices from the early 2000s.

At MWC this year, Nokia launched four new smartphones and one new feature phone: the Nokia 9 PureView, Nokia 4.2, Nokia 3.2, Nokia 1 Plus and Nokia 210.

The flagship Nokia 9 PureView, the company's first smartphone that features a five-camera set-up with Zeiss Optics, was introduced to the South African market in April.

Most recently, HMD Global announced that the Nokia 2.2 is now available to buy from Vodacom for R1 899.

According to the company, the Nokia 2.2 delivers sophisticated artificial intelligence-powered low light imaging and Google Assistant at the press of a button.

It is the first 2 series Nokia smartphone to be part of the Android One programme, delivering the latest full Android experience on a modern 5.7-inch screen with a discreet selfie-notch.

Shipping with Android 9 Pie, Nokia 2.2 is Android Q ready and will receive two years of OS upgrades and three years of monthly security updates, ensuring access to all the latest innovations from Android, it says.

Durandt notes the company is looking to grow in the mid-tier and high-end sectors of the market.

“That's where the real opportunity is for us, but that doesn't happen overnight. The consumer confidence needs to be there for a while; we obviously need to get our value versus cost ratio right. In other words, people should look at our device and think, as far as competition goes, this is really good value for money.

“We're not going to change the world on the high end overnight, and we realise that there's a lot of work to be done in the entry-level to mid-market. In time, we will have that confidence and start breaking through significantly into the high end of the market.”

Longer life cycle

A Gartner report predicts the trend of lengthening the lifespans of mobile devices, which began in 2018, will continue through 2019. In addition, the research firm forecasts high-end phone lifespans will increase from 2.6 years to nearly 2.9 years through 2023.

The longer lifespan of devices is something Nokia regards as one of its major pillars as a brand.

Historically, people associate Nokia with durability of quality and that resonates so well with the brand, notes Durandt.

“People are tightening their belts on a monthly basis, and more so in the past three, four or five years.

“The opportunity we see from a Nokia perspective is to continue to deliver on the promise that we've started out with, and that is bringing a device that keeps getting updated over time. The big requirement is regular security and operating system updates to ensure we can deliver on that.

“We need to deliver a value set that is significantly higher than our competition, based on the money that consumers are putting out.

“Economically, it's not going to get easy. I think it'll probably get a little worse before it gets better, and those critical financial decisions are going to happen more regularly, which is why the position we've taken from the get-go becomes even more important as time goes by,” he concludes.

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