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 / Updated  / Source: Reuters
By Reuters

Nokia-branded mobile phones are about to make a comeback via a new venture that will reunite the Nokia brand with veteran Nokia executives who aim to move into smartphones capitalizing on an existing operation that sells low-cost basic phones.

HMD Global, a new Finnish company set up to revive the Nokia phone brand, on Thursday took over the basic phone business that Nokia sold to Microsoft in 2014. Nokia the company now largely makes telecom network equipment.

HMD, officially founded six months ago, opens for business this month. It has several advantages over other start-ups, including Nokia's strong global brand, experienced management and Foxconn as a manufacturing partner.

A Crowded Marketplace

But it also has hurdles to overcome if it is to break into a crowded smartphone market dominated by models from scores of different players using Google's Android platform.

"The barriers to entry for the Android phone space are low," mobile phone analyst Ben Wood of CCS Insight said. "What HMD has is the Nokia brand and management experience. The key to its success will be driving scale."

HMD has a licensing deal with Nokia giving it the sole use of the Nokia brand on mobile phones and tablets for the next decade and key cellular patent licenses, for which it will pay royalties to Nokia, which otherwise has no investment in HMD.

REUTERS/Dado Ruvic

As part of the plan, HMD has agreed to rely on Foxconn, the world's largest contract manufacturer, to manufacture all its Nokia devices.

HMD said it plans to introduce new Nokia Android smartphones in the first half of 2017.

"We want to be one of the key competitive players in the smartphone business," chief executive Arto Nummela told Reuters. Samsung and Apple are now big players, although Chinese brands like Huawei are closing the gap.

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Rather than building its own system, the company is working in close partnership with Android's creators, Google.

Nummela said he believed his team's extensive industry relationships with carriers and retailers, powered by the Nokia brand, could help them quickly capture smartphone share by convincing entry-level buyers of its feature phones to upgrade in markets like India, Indonesia and Russia.

"We really see the opportunity to create some space for ourselves on the (store) shelves," Nummela said. "Consumers may be carrying different smartphones now, but are they really in love and loyalty to those brands?"