Market Insight

Nokia 8 flagship smartphone aims to re-establish the brand

August 17, 2017

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Brand licensee HMD Global has launched its first flagship smartphone. Nokia 8’s notable features include:

- Nokia OZO spatial audio recording.
- Dual rear 13mp camera, colour & mono, laser & phase detection autofocus, and with OIS on one sensor.
- Zeiss optics on both front and rear cameras.
- Dual-Sight live video streaming use both rear and front camera simultaneously.
- Snapdragon 835 chipset, with LTE Cat 9.
- 5.3” LCD display, 2560x1440 resolution.
- An all aluminium industrial design, with a high gloss polish finish.
- Expected retail price of Euro599 including 20% sales tax, but no subsidy.

Our analysis:

Nokia 8 is an important launch for exclusive brand licensee HMD Global because as a flagship model it must re-establish the Nokia brand as premium and innovative. 

The last true Nokia flagship, the Nokia Lumia 1520, launched in 2013 almost four years ago and as a result of the time lag almost no consumers will currently be using a premium Nokia smartphone now. Without a Nokia flagship, and only a portfolio of featurephones and low to mid range phones, it is almost impossible for HMD to re-build Nokia’s brand.

HMD is correct to focus on imaging with Nokia 8, because Nokia was always known as a leader in smartphone camera technology. But with every smartphone maker focusing on imaging innovation now it’s increasingly hard to stand out with camera quality. The hardware specifications are not sufficient, HMD needs to have excellent software to intelligently combine the output from both rear cameras to deliver best in class images. For a company focused on a lean operating model, it’s unclear until Nokia 8 ships the extent to which HMD has delivered on imaging quality.

Qualcomm has been closely involved in the Dual Sight live video streaming which is an industry first. This feature is highly computationally intensive to drive both cameras and also stream over the cellular network all at once. In the past OEMs like LG have offered simultaneous still photo capture, but not twin camera video recording and simultaneous live streaming.

Qualcomm needs OEMs that lack their own in-house chipset and modem designs to be successful. HMD’s success would increase the addressable market for Qualcomm in smartphones if HMD can cut into the share of the top three smartphone OEMs — Samsung, Apple and Huawei — all of whom have in-house chipset designs now. By working closely with OEMs to maximize usage of its Snapdragon platform’s features it helps its customer OEMs to differentiate and be successful. 

HMD is shrewdly leveraging both brand and intellectual property from (old) Nokia. The OZO brand and audio comes from Nokia’s recent diversification into professional VR cameras. While the OZO brand will mean little to consumers, to the trade it demonstrates HMD’s ongoing access to Nokia IP. In addition, HMD has shrewdly secured Zeiss lens expertise, which is a premium imaging brand long associated with Nokia smartphones and which will be familiar to consumers.

Smartphone design is all about the trade-offs. It’s impossible to include every feature and deliver a compact smartphone with great battery life. HMD has chosen offer a premium aluminium industrial design in a very compact frame, but has sacrificed the additional RF antennas needed to deliver “gigabit LTE” Cat 16 as a result.

IHS Markit believes this is a shrewd decision if HMD wishes to target the European market with Nokia 8 because European operators are less focused on Cat 16 than those operators in North America or lead Asian markets such as Australia, Japan or Korea. Additionally, European consumers have been slower to adopt the super large smartphone designs popular in Asia and used to buy Nokia smartphones in enormous numbers: Nokia used to have handset share in much of western Europe of a staggering 30-40%.

The Nokia 8 is already shipping to operators and retailers and HMD expects it to be available in just two weeks internationally, with a focus on Europe and Asian markets.

Success for Nokia 8 will depend as much on price positioning as on the Nokia brand. HMD clearly has tremendous confidence in both Nokia’s brand and in the quality of Nokia 8 to set an expected end user price of Euro599. IHS Markit believes HMD must be nimble on pricing, be prepared to drop operator transfer pricing if needed, to ensure the Nokia 8 achieves significant volumes, because the elegant industrial design and Nokia experience must reach as many consumers as possible if HMD is to build momentum around the Nokia smartphone re-launch.

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