Who is really behind the new Nokia-branded smartphones?

In early 2017, new smartphones under the Nokia brand appeared on the market. Both journalists and ordinary users have shown interest in new products, because once upon a time truly legendary devices were produced under this brand.

Unfortunately, many things related to the new smartphones are left behind the scenes. An ordinary user at best knows that the Finnish company HMD Global is behind these devices, more advanced - that mobile devices are somehow connected also with Foxconn, and more precisely with her daughter FIH Mobile. Marketers promoting Nokia smartphones do not like to share details. Most often, they confine themselves to statements that assure us of a “device development team at HMD Global,” “devotion to Nokia values,” and also say that Nokia is launched at Foxconn factories (just like Apple and other mobile players )

Также стоит понимать, что мы в HMD разрабатываем нашу продукцию от самого начала и до самого конца. Мы сотрудничаем с Google, Android, Nokia и Foxconn. Последняя является нашим партнёром по производству. Но процесс производства полностью контролируем мы. Вы наверняка знаете, что многие наши конкуренты также используют услуги этого производителя.
From an interview with Pekka Rantala, HMD Global's marketing director, w3bsit3-dns.com .

I was wondering if these statements were true, and together with a friend we began to delve into the documents on this subject. Who, after all, develops, then manufactures and sells new smartphones under the Nokia brand?

The history of the mobile division of Nokia


Before you get acquainted with the current situation with Nokia smartphones, you need to find out what happened to them in the past few years.

In 2014, Microsoft acquired Nokia’s mobile division for € 5.4 billion. Nokia Devices & Services was renamed Microsoft Mobile, and the division continued to operate as part of the Redmond giant.

Already at this stage, I want to pay attention to one detail. Nokia Devices & Services operated in two directions - smartphones and regular phones (simpler dialers or feature phones). These categories were divided - for example, Microsoft switched Separate director of smart devices Jo Harlow and director of calls Timo Toikkanen. The separation was also preserved inside Microsoft Mobile - the departments for smartphones and button dialers worked separately.

Already in 2015, Microsoft, under the leadership of the new CEO, began to gradually phase out work with smartphones, and by mid-2016 this process was almost complete. Some of the employees were scattered on other teams within the company, most of them were fired. However, this did not affect (or affect not so much) the department dealing with push-button dialers. It further released more and more new models. What for? Instead of just closing the remains of Nokia Devices & Services, Microsoft decided to sell them.

Deal between Microsoft, Nokia, HMD Global and FIH Mobile


The sale of Microsoft Mobile balances to FIH Mobile and HMD Global became the starting point of the entire business associated with new smartphones under the Nokia brand. Much has been written about this deal, but we will only turn to official sources, one of which is a Microsoft press release .

Microsoft official statement
Microsoft Corp. on Wednesday announced it reached an agreement to sell the company's entry-level feature phone assets to FIH Mobile Ltd., a subsidiary of Hon Hai/Foxconn Technology Group, and HMD Global, Oy for $350 million. As part of the deal, FIH Mobile Ltd. will also acquire Microsoft Mobile Vietnam — the company's Hanoi, Vietnam, manufacturing facility. Upon close of this deal, approximately 4,500 employees will transfer to, or have the opportunity to join, FIH Mobile Ltd. or HMD Global, Oy, subject to compliance with local law.

This press release clearly states that Microsoft only sells business related to dialers. Speech about the smartphone unit, which by then had already finished eliminating, is not here. Accordingly, no Finnish smartphone development team HMD Global or FIH Mobile could receive from Microsoft. I admit that there have been a few cases of transition to the companies indicated above, but the smartphone division Nokia / Microsoft has sunk into oblivion completely and irrevocably even before the deal under discussion.

A bit about the composition of HMD Global


One of the things that the words of marketers about "our development team" does not fit in with is the composition of HMD Global, which can be found on the official website .



The fact is that among the leaders of the company there are no people who are in any way connected with the technical areas. You will find directors for marketing, finance, product launch, but you will not be able to find the main one for technology or development. Why?

Agreement between Nokia, HMD Global, FIH Mobile and TNS


Although the news of the deal between Microsoft, HMD and FIH spread across the Internet, for some reason very few people paid attention to the agreement between Nokia, HMD and FIH. At the same time, it sheds light on the origin of new smartphones. Fortunately, the document is available for download in the section for investors on the official FIH Mobile website. Already his second paragraph reveals the essence of the cooperation of three companies:

…Этот бизнес будет основан на:
(i) бренде «Nokia» и некоторой интеллектуальной собственности Nokia Technologies;
(ii) технологиях, производстве, цепочках поставок и научно-исследовательской деятельности (R&D) FIH Mobile и TNS;
(iii) коммерческих возможностях, которые будут приобретены HMD и TNS для распространения мобильных телефонов и планшетов Nokia.

Original Quote
The Company is pleased to announce that on 18 May 2016, the Company and TNS Limited, an indirect wholly-owned subsidiary of the Company incorporated in the British Virgin Islands ("TNS") entered into a collaboration agreement (the "Collaboration Agreement") with Nokia Technologies Ltd., a limited liability company incorporated in Finland ("Nokia Technologies"), and HMD global Oy, a limited liability company incorporated in Finland ("HMD"), to establish a collaboration framework among the parties with a view to building a globally successful business in the field of Nokia-branded mobile phones and tablets based on (i) the "Nokia" brand and certain of Nokia Technologies' intellectual property; (ii) the Company's and TNS' technologies, manufacturing, supply chain, and research and development activities; and (iii) the commercial capabilities in the field of mobile device business to be acquired by HMD and TNS for distribution of Nokia-branded mobile phones and tablets (the "Collaboration") upon and subject to the terms and conditions set out therein.

The agreement contains clear language that reveals information about the development of new Nokia devices. FIH Mobile is responsible for this process (R&D), not any HMD Global teams. Nokia has similar information. So, in one of his documents (page 25), a former industry giant spoke about the brand licensing model in the mobile market, confirming the words FIH.



To get the most complete picture of the cooperation of the parties, it remains only to find out what the TNS group of companies is doing.

TNS Mobile Oy


We decided to study the FIH Mobile reports for 2016-2017. They, like the agreement between Nokia, HMD, FIH and TNS, are publicly available.


We skimmed through the documents and found enough information about TNS and its collaboration with HMD Global and FIH Mobile. Below I will give the main points, and the original quotes you can find directly in the reports or under the spoilers.

Quotes from the 2016 report
22-ая страница:
The Company notes HMD's ambitious plans to become a globally recognised player in the handset and tablet markets. In support of this, in addition to such feature phone assets acquired from Microsoft Mobile Oy, TNS has been setting up, activating and operating new entities in the relevant locations with the aim to establishing and operating more comprehensive distribution/fulfillment channels (mainly in Asia and EMEA) to facilitate its provision of distribution/fulfillment/after-sales services to HMD and end consumers.
22-ая страница:
In 2017, as mentioned above, TNS has to continue to put efforts and resources and recruit more talents to develop products and build up IT and management systems and applications and run the Vietnam facility in a cost-effective manner and set up additional subsidiaries and branches for the purposes of its more comprehensive distribution/fulfillment network.
134-ая страница, таблица дочерних компаний FIH Mobile:



Fushan Technology — новое название завода Nokia § Microsoft Mobile во Вьетнаме.

Quotes from the 2017 report
36-ая страница:
The revenue of Europe segment increased a lot in the current period as the Group has started to manufacture feature phones and smart phones in Asia (China and India and Vietnam) under the new business relating to the Nokia-branded phones and sell the phones to HMD which is a Finnish company. TNS (which is a distributor of HMD) then sells and distributes some of the handsets throughout the European markets for HMD and earns distribution service income.

38-ая страница:
For the manufacturing part of business with HMD, right now we manufacture feature phones in Vietnam and India whilst Smart phones are manufactured in China and India.

38-ая страница:
For the feature phone part of the new business, the Group, via TNS, started business with acquired feature phone channel from MSFT in December 2016 and now has direct commercial relationships with over 600 distributor partners and customers spreading over 70 countries, and over 250,000 retail outlets are selling Nokia mobile devices and the feature phone distribution coverage is worldwide. For the smart phone part, the Group, via TNS, is strongly building on feature phone channel to reach worldwide distribution coverage.

We learn that:

  • In 2016, FIH Mobile created a subsidiary group of TNS companies, which includes at least TNS Mobile Oy and TNS Mobile International Oy. The first deals with the distribution and sale of devices, and the second with marketing. TNS also controls the Vietnam plant, which was acquired from Microsoft.
  • TNS provides HMD Global with device sales services. TNS distribution channels are based on Microsoft-acquired distribution networks.
  • Nokia branded smartphones are manufactured in factories in India and China. At the former Nokia / Microsoft factory in Vietnam, only push-button dialers are assembled.

According to these documents, new smartphones (namely smartphones, not dialers) under the Nokia brand are born as follows:

  1. FIH Mobile is engaged in research and development of devices. It has no old Finnish Nokia smartphone teams, since Microsoft only sold the business related to dialers.
  2. Engineered devices are assembled in factories in China and India.
  3. FIH Mobile sells Finnish HMD Global devices.
  4. HMD Global gives away the smartphones bought from FIH Mobile to TNS group of companies (daughters of this FIH). TNS, on the other hand, makes a profit by selling it to end customers.

HMD Global is similar to the “Finnish screen” that marketers use to create the nostalgia effect on the legendary brand among customers. The main activities related to smartphones - R&D, production and distribution - are concentrated in the hands of FIH Mobile and its TNS subsidiaries.

Output


Be careful about the words of marketers promoting new smartphones under the Nokia brand. Official documents contain descriptions of operations that are not discussed in the advertisement, but which may affect your opinion about certain devices.

Separately, I add that the above facts can only be used to analyze the origin of new Nokia smartphones . New dialers under this brand (Nokia 3310, Nokia 8110) are most likely to be developed and even produced by those who did it as part of Nokia and Microsoft, since the corresponding division is currently part of FIH Mobile / HMD Global.