Hi all, FIH Mobile have released their preliminary annual report for 2019 and inside it contains information about HMD's business. Why?
FIH Mobile have released their preliminary annual report for 2019 and inside it contains information about HMD's business. Why? Well, until May 2019 FIH Mobile were the sole ODM (original design manufacturer) of smartphones for HMD, and they remain the sole ODM for feature (non-touchscreen) phones. Since May 2019 HMD have sold phones made by a range of ODMs, not only FIH Mobile.
Also, FIH Mobile are one of HMD's major investors. When Microsoft sold the remains of Microsoft Mobile (which used to be Nokia's devices and services division, aka phones business) they sold most of it (~90%) to FIH Mobile, and the rest to HMD. HMD have the Nokia brand licence and part of their business model was to partner with FIH Mobile who would make the phones for HMD to sell. FIH Mobile investing in HMD was a key part of that partnership, and it remains a key investment for FIH Mobile even if they are no longer HMD's sole ODM.
So, what's new in this report? Well, actually not much. The date of May 2019 for HMD to changeover to the multi-ODM strategy is new I think. However, FIH Mobile continued to make all smartphones "until the end of their lifecycle", which means that they didn't just stop in May 2019. For example the 8.1 remained in production until later in 2019 and maybe other models did as well. The report states that by the end of 2019 almost all of HMD's smartphones were made by ODM's other than FIH Mobile - I think that the 9 PureView is the only smartphone still made by FIH Mobile, although all non-touchscreen phones are still made by FIH Mobile. It appears from the report that the only smartphones which HMD are still making are profitable, which means that - against the odds! - the 9PV is profitable for FIH Mobile (I presume for HMD as well, otherwise they wouldn't still try to see it, one year after its release). 😃
Apparently the change to multi-ODM has been successful for HMD and HMD were apparently profitable for the first time in the final quarter of 2019. However, HMD are currently going through a series B funding round (it means the third time they've had funding; second time is A and first time is "startup phase") which actually started almost a year ago, and HMD hope to have it secured before end of June this year. This is important as it strengthen's HMD's balance sheet and makes them more credit-worthy, meaning they can get better payment terms from their suppliers which gives them more flexibility. Unfortunately I suspect that the ongoing COVID-19 pandemic is causing some issues to both this investment round and HMD's cashflow and relationship with suppliers, so for HMD's sake let's hope that they sail through these rough waters without serious financial problems. 🤞
More relevant to us as consumers and followers of the journey of Nokia phones is that FIH Mobile report that they think that HMD's promise of always up-to-date software is unique.. however we know that it isn't as there are other Android One phones, so I think that they maybe just chose the wrong word 😉 Interestingly, they say that they think in future smartphone innovation will be less on hardware and more on software, which I am pleased to read however HMD appear to be interpreting this to mean that they should continue to focus on "pure" aka beige Android rather than providing new and unique software experiences, i.e. that Nokia feeling. Oddly, FIH Mobile think that consumers interested in privacy like the beige Android approach, but these must be the kind of consumers who think that giving all their data to Google is fine for their privacy... 😕
HMD is apparently doing very well with the enterprise market and they have done some significant deals. Enterprises apparently do like the beige Android approach, which I think is understandable and fine for them. But I hope that HMD could start to provide some consumer-focused software which is an optional installation alongside the Android One approach.
Finally, it's worth noting that the report says that although a large number of people may not yet want to upgrade to 5G phones because there is not enough network coverage yet, the report also says that some people may not buy a 4G phone because they're waiting for more capable 5G phones to become available! Now we understand the vendor mentality of pushing their 5G phones, they want to make sure that they have something that people will buy, even if the coverage isn't there yet. This makes the new 8.3 5G look quite attractive then, so long as it comes to market before competitors also release models with as wide a range of frequency support.
If you're interested check out the report yourself and tell us if you see anything else interesting and what you think of the above.