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The two-year-old company that makes Nokia phones is now worth over $1 billion

The new Nokia 8110 is seen during the Mobile World Congress in Barcelona
Reuters/Yves Herman
The Nokia 8810 is the company’s new take on an old favorite.
By Joon Ian Wong
Published Last updated This article is more than 2 years old.

The Finnish company that sells Nokia-branded phones isn’t named Nokia. It’s a startup called HMD Global founded two years ago to license the Nokia brand for its handsets. Yesterday (May 21) it announced that it’s valued at over $1 billion, after raising $100 million from investors.

HMD says the funds will be used to scale up its business with new smartphone models and to improve its distribution and sales channels. It currently sells four smartphones and three feature phones (better known as “dumb” phones). The smartphones run on Android and compete by offering a price that’s low relative to the high-quality finish of their hardware. Its feature phones rely on classic Nokia designs, and offer long battery lives and low price tags. HMD announced in February that it shipped 70 million handsets in 2017, and sold phones in more than 80 countries.

HMD also published financial information for the first time, saying it posted revenues of €1.8 billion ($2.1 billion) in 2017, with operating losses of €65 million. When HMD Global was founded, it pledged to spend $500 million over three years on marketing its handsets. The fresh funding will come in handy to meet that goal.

The startup is stocked with longtime Nokia executives, which suggests stability, but it has already changed leaders in its short life. Founding chief executive Arto Nummela left the firm in July through “mutual agreement,” and was replaced by company president Florian Seiche.

Last February, a former C-level executive at the firm, who declined to be named, said the firm’s sales figures at the time suggested it was still struggling to penetrate the smartphone market. “Shipping 70 million units doesn’t mean anything,” he said on the sidelines of the 2018 Mobile World Congress trade show in Barcelona. He questioned how many of those units were smartphones, rather than feature phones. Any handset maker would have to ship “50 million smartphones, or else you’re not making any money” the former HMD Global executive said. “Basically if you want a branded feature phone it’s going to be a Nokia,” he said.

For now, HMD Global has achieved “unicorn” status by dominating the feature-phone niche, but it won’t be enough to make it a serious smartphone player for the future.

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