Gen Z, the X factor and smartphones: Inside HMD's bold gambit

Nokia phone maker HMD plans to stand out in the cluttered smartphone market by loading its phones with sustainability, repairability and data privacy. Can the Finnish company find its X Factor in wooing Gen Z?

By Rajiv Singh Forbes India Staff

Published: May 31, 2024 04:59:44 PM IST

Updated: Jun 3, 2024 05:05:01 PM IST

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Ravi Kunwar, VP-India & APAC, HMD (human Mobile Devices). The maker of Nokia-branded phones, HMD is all geared up to launch the company's own branded phones in India soon.

Image: Madhu Kapparath

Ravi Kunwar has loaded his armoury with unconventional weapons. “We are not waging a spec war,” says the vice president (India & APAC) of HMD Global. The Finnish company, which has been producing Nokia phones since 2017, is set to launch its own line of mobile devices sans Nokia branding. “It’s not going to be ‘X’ megapixel versus ‘Y’ megapixel,” reckons Kunwar, an old Nokia hand who joined HMD in December 2016, and has had stints with Microsoft and Samsung in his over three decades of experience in the mobile and consumer durables industries. “It’s not going to be ‘small’ versus ‘big’ screen,” says Kunwar, outlining HMD’s differentiated game plan.

The Finnish brand is shunning the tried-and-tested path. HMD will not play a price warrior. “It can’t be our price versus their price,” says the handset veteran, who is confident of taking on the much bigger smartphone rivals in India with his out-of-the-box product and marketing strategy. HMD, he underscores, will roll out phones that would be loaded with a different kind of specs: Sustainability, repairability, and data privacy. “Our products will have best-in-the-class features,” he claims. “But we are more than that. We are making sustainable phones,” he underlines. HMD’s plan, he lets on, is rooted in purpose. “We do what is right for our partners, people, and the planet,” he says.

Kunwar’s language mirrors HMD’s global ideology. Take, for instance, the talk on sustainability, which revolves around three Rs: Repair, reuse, and recycle. HMD’s approach, he reckons, spans the lifecycle of a device. “We make devices that last; we help keep devices in use for longer, and we harvest recycled materials. Then we do it again,” he says, reflecting the global credo of the brand. “If your car breaks down,” the Finnish company decodes its philosophy by making an elementary point on its website, “you don’t drive it straight to the junkyard. You try to get it fixed.” The descriptive note flashing on the global website goes on to ask a pertinent question: Why should one buy a brand-new phone if the screen cracks, or if the battery runs dry?

HMD is building for the present and future. “We’re making phones that you can fix yourself,” says Kunwar. “We are making phones which appeal to Gen Z,” he says. This generation—born between the nineties and the noughties—prefers a brand that drives sustainability. “We needed to answer ‘what next’ for HMD,” he says, adding that the philosophy of the company was in sync with Gen Z and a growing set of consumers who care for the environment, and the future.

Noble intent notwithstanding, the task won’t be easy. “I know it’s a red ocean,” confesses Kunwar. With the top five brands collectively cornering almost 65 percent of the smartphone market during the first quarter of this year—Vivo (16.2 percent), Samsung (15.6 percent), Xiaomi (12.8 percent), Oppo (10.2 percent), and Realme (9.8 percent)—there is not much left for a new brand to manoeuvre. “I know it’s hyper-competitive,” concedes Kunwar, who is fixated on the task of making a mark in the Indian market, which happens to be HMD’s biggest in terms of value, volume, and profit. “But we are ready,” he says beaming. His team flashes a victory sign.

The smartphone dangal is on. As one strides into the corporate headquarters of HMD in Sector 62 of Gurugram, one can sense a feisty vibe. “Fight the odds,” reads one of the motivating posters of Aamir Khan-starrer Hindi blockbuster Dangal, which dangles on one of the walls. Then there is Shahrukh Khan-starrer Chak De India, which urges the team to “find your chords”. For the ones still starved of inspiration, there is another poster of Bhaag Milkha Bhaag, and the message is: Run to greatness. ‘Take bold steps,’ ‘dare and dazzle,’ and ‘show your colours’ are a bunch of energising words that lift the peppy office interior.

The panoramic landscape, though, changes as one steps out of the building. Just 100 metres away, one can spot a billboard of Vivo, the biggest smartphone brand in India during the January-March quarter of this year. A kilometre away from HMD’s building, Samsung makes its strong presence felt via signboards, posters and aggressive advertisements. Xiaomi, another Chinese biggie which topped the chart for 20 consecutive quarters in India, starts grabbing the eyeballs as Mi-branded stores dot the competitive landscape.

Also read: The Nokia 3210 returns, offering a retro alternative to modern smartphones

For HMD, the fight won’t be a cakewalk. What makes it tougher for the Finnish challenger brand is the sobering reality that Nokia—a brand that HMD has been making and selling since 2017—doesn’t even have a 1 percent smartphone market share in India (see box). Even though Nokia is the biggest feature phone brand in India in terms of value market share, this statistic won’t be of much use when it comes to the smartphone battle. HMD is going solo, and it won’t be easy.

Interestingly, a clean slate and a life without baggage—HMD won’t be carrying Nokia branding on its phones—is what gives the Finnish contender a fighting chance. “It’s a new beginning, a new brand, and a new experience,” reckons Ashita Aggarwal, professor of marketing at SP Jain Institute of Management and Research. The fact that HMD has been selling Nokia-branded phones by highlighting its name—the makers of Nokia phones—makes it a known brand. “It will have the brand equity and recall that Nokia had,” she adds.

Industry experts too reckon that HMD will reap a positive Nokia rub-off. “Nokia’s strong position in the feature phone market and its vast retail footprint is an opportunity for HMD in entry-level smartphones,” says Upasana Joshi, senior research manager at IDC. Nokia, she adds, had a 21.6 percent market share in feature phones in the first quarter of this year.

Another plus for a rookie brand is a dominant feature phone market in India, which rebounded last year. “A huge chunk of the population remains unpenetrated. This gives new players an opportunity,” says Tarun Pathak, research director at Counterpoint Research. Last year, around 65 million feature phones were sold in India. As and when a user upgrades to a smartphone, HMD will strongly remain in the recognition fray of the buyer. HMD, Pathak underlines, has experience in manufacturing Nokia phones. “Therefore, it’s not new to the market,” he says. HMD plans to enter the belly of the smartphone market—$100-$200 (Rs 8,327-Rs 16,654)—that covers 48 percent of the smartphone market in India. “Since Nokia’s market share is negligible, there won’t be any chance of cannibalisation,” he adds.

A new brand, point out handset analysts, will also have an initial edge. “This edge is known as ‘beginner’s luck,” reckons Faisal Kawoosa, founder of techARC, a technology analytics, research, and consulting firm. But after the honeymoon, he underlines, the brand will have its task cut out. “Your product, proposition, and marketing will decide your fate,” he says. “Beginner’s luck can only work in the beginning,” he says, adding that HMD needs an aggressive marketing strategy to take on the nimble and fierce Chinese brands. A Nokia pedigree, he points out, gives an entry. “How HMD plays its game after the entry is up to the new brand,” he says.

HMD’s Kunwar, for his part, is confident of success. “We are sticking to innovation, and the three pillars of sustainability, repairability and data privacy. We are confident,” he signs off.