Foxconn Technology is best known as the company that assembles iPhones for Apple. The Taiwanese company, headed by billionaire Terry Gou, provides the devices and other tools for the U.S. tech giant and other developers at large factories in China. But Foxconn is now essentially making its own phones through its stake in HMD, the Finnish company behind Nokia. Foxconn’s subsidiary, FIH Mobile, owns 6% of HMD and builds the phones designed by its Finnish partner.
Smartphone sales are declining after years of growth and are not expected to recover yet. This makes it difficult for HMD to win the market. Or is it not?
“Looking at HMD’s growth over the past two quarters, it’s not at all disappointing, considering the global recession and competition from Chinese rivals,” says Kiranjeet Kaur, research director at IDC’s Asia-Pacific Client Devices. Still, she says, “it’s a tough task to continue growing and competing with other players who have strong power in certain distribution channels or a lot of money to push marketing.”.
Slow but steady start
HMD is expected to capture 1.5% of the global smartphone market this year, up from 1.4% last year and 0.4% in 2017, according to Strategy Analytics forecasts. The phones it has launched so far have good specs and prices, according to Strategy Analytics’ director of wireless devices, Neil Mawtson. “HMD’s smartphones offer relatively high specs at relatively reasonable prices,” he says.
To put it in numbers, HMD sold 13 million smartphones in the first three quarters of 2018, compared to the 10 million it sold in all of 2017, according to IDC data.
The $511 Nokia 8.1 offers “value for money and flagship imaging,” writes Forbes contributor Ewan Spence. The Android One has great battery life, an HDR10 designed to increase color quality, and an “impressive” camera, Spence adds.
A comparison of specs shows that Nokia smartphones may lag a bit behind competing models, but these phones stand out for their clean Android interface and commitment to upgrades, according to Kaur. “I wouldn’t be surprised if this gives HMD an easier entry into the enterprise space,” she says.
FIH Mobile's revenue reached $3.28 billion in the first quarter of 2018, a 70% increase over the same period a year ago. In the third quarter, the company's global smartphone shipments grew 141% year-on-year, making HMD one of the fastest-growing smartphone vendors.
Foxconn’s HMD phones will try to maintain their momentum this year. HMD is trying to grow by focusing on the big markets of China, India and Russia. It has had some success, but it lags behind the top 10 brands in those countries, Kaur says. Foxconn could ultimately help HMD become more competitive through “a more streamlined supply chain and manufacturing process,” she says. A proof of concept could be the much-anticipated Nokia 9. It’s supposed to come with five camera lenses and cost less than iPhones, Mawston says. That camera is particularly important to HMD, as it could help the company improve its brand value.
