Should a handset-maker ever double as an operator?
Last week, HMD Global, the Finnish company that makes phones using the Nokia brand, announced plans to introduce a mobile virtual network operator (MVNO) in the UK. Dubbed HMD Mobile, the service will piggyback on EE’s network when it launches at the end of April 2021, with plans for a “gradual global roll-out”.
The company describes HMD Mobile as “a new mobile network to simplify the way people manage their mobile connection”. Prepaid plans start at £6.50 per month for unlimited minutes and texts in the UK and EU, including 1GB of mobile data. It’s a competitively priced service, but not unprecedented.
As we highlighted in our analysis of the launch (see Instant Insight: HMD Global Unveils Six Nokia-Branded Phones and an MVNO Service), the MVNO approach has also been used by PC-makers looking to bundle airtime with 4G- and 5G-connected laptops. HMD Global seems to have decided it can make a similar approach work for its smartphones. We also note that one of our predictions in 2018 was pointed in this direction, suggesting that the concept of a device manufacturer offering connectivity through a virtual agreement could prove attractive to an aspiring handset-maker seeking to establish its brand in new territories (see CCS Insight Predictions for 2019 and Beyond).
The UK is home to a vibrant market for MVNOs, and a few are reasonably successful. Each targets a certain segment of the market. For example, in 2017 Vodafone launched a sub-brand called Voxi, specifically intended for under-30s. China Mobile, the world’s largest mobile operator by subscribers, runs CMLink, an MVNO aimed at Chinese citizens living in the UK who want a convenient and affordable link to China. In general, price is the main factor leading customers to choose an MVNO, and competition can be tough.
Why is HMD Global offering mobile connectivity services when many of its phones are sold to major wireless operators? And would operators that have a wide choice of solid device brands to partner with want to be the customer of a potential rival? It’s certainly a bold move by HMD Global, but it’s also one that will bring some welcome differentiation to the device market, and plays nicely to the strong growth of online device sales in the UK.
Since it began selling Nokia-branded devices in 2016, HMD Global never gained the premium clout that the Nokia logo brought in its heyday, and the new Nokia became more about nostalgia than innovation. Although its phones are certainly solid, they’re faced with fierce competition from a growing number of Chinese players that were quickly able to build scale. So, the ability to offer connectivity could draw more potential customers to the brand as HMD Global fights to compete in a brutally competitive device market.
We believe that HMD Global is trying a different strategy, hoping that combining airtime and device will create another channel for its phones and help to build loyal relationships with subscribers who still have fond memories of Nokia. We note that this isn’t the company’s first foray into mobile services: in 2020, it launched HMD Connect, a SIM card offering global data roaming.
HMD Mobile will launch at about the same time as the six new Nokia-branded smartphones. The cheapest of these will be the Nokia C20, available for about £80, with the “top of the range” Nokia X20 priced at about £300. A low-cost mobile connection available when buying the new phones could be an easy and reasonable add-on purchase for many.
Subscribe to our blogMake sure you don't miss out on our fresh insights on topical news in the connected world
"*" indicates required fields