MC Exclusive: HMD not giving up on Nokia; moving global production to India, says COO

HMD COO, Alain Lejeune

HMD, the maker of Nokia-branded phones, is ramping up its investments in India by deepening its manufacturing capabilities and hiring more employees. It is also looking to build research and development (R&D) capabilities in India to support its new strategy, which will see India-first device launches. In an exclusive interaction with Moneycontrol, Alain Lejeune, chief operating officer at HMD said that the company is building India as a global platform for innovation. He also revealed that HMD is not giving up on the Nokia brand and will continue to use it for feature phones while smartphones will be launched under its own brand. Edited excerpts:

What led to the change in strategy, which now involves two separate brands?

The company underwent a significant transformation, which has been in the works for the last year. We have achieved a very healthy financial situation, turning profitable in Q4, and will be profitable for the entire year. So the company is now in a very healthy financial position, and we're determined to keep it that way. The first quarter is also looking good.

We've been working on bringing our HMD brand to the market. We devised this multipronged strategy to serve different consumers with different brands. We are keeping Nokia focused on the feature phone segment and will bring our own HMD originals to the smartphone market. With the strategy change, we want to focus on a younger audience and female consumers and sharpen our focus on sustainability. The industry provides similar products that don't mean much to consumers anymore. We want to change that and are looking at it from a fresh perspective.

Under the new strategy, we are forming new partnerships. We partnered with Mattel for the first Barbie phones. We also have while-label partnerships in Kenya with M-Kopa.

What does this strategy change mean to India? How do you see India?

India is a super important market for us. It's a top-priority country. We look at it from multiple dimensions, such as the fast-growing economy, the population, and digitisation. It's a massive market, and we want to be part of it in a big way.

We are already well established in India. We have regained the number one position in feature phones in terms of market share and value. The momentum is exceptionally positive already for our business.

We aim to be a deeper part of the Indian ecosystem. We are moving more production to India because the country is becoming very competitive. It is a clear advantage to put production in India, not just for the Indian market but also for exports. We have started exporting certain products from India and will export more models.

If you look at our global organisation, we're building India as a global platform for innovation. We brought UPI (unified payments interface) to feature phones and are working on more such innovations.

Ravi Kunwar, Vice President - India & APAC at HMD & Alain Lejeune, COO, HMD Global

Will India see global-first products under the new strategy?

Yes, we are ready to bring some global-first devices to India. This is what we're working on. We don't consider India a second or third-priority market, and we will prove it this year. The Fusion modular smartphone will also be launched in India as part of our global launch strategy. I would expect more creative and surprising concepts to come out of India.

Will you increase investments in India under the HMD 2.0 strategy?

I can't disclose the number, but I can tell you how we can rebalance our resources: India will soon be our top manpower country, and we're bringing more people into India.

Can we expect HMD to move some of the R&D and design assets to India?

The answer is yes, but the question is about the timing. We are focusing on building and ramping up our operation base, with a strong focus on bringing production and some products to India. We are building some software and need to see how to proceed. It's a step-by-step process. There are some emerging technologies, like artificial intelligence, for which India could be a perfect place to start.

Additionally, the industry is maturing regarding software integration and validation, so we need to see where we can add value.

What contribution do you expect India to make to your global operations?

India today represents a good quarter of the company in terms of revenue. And we want to keep it at least that way. I believe it's a country where we could probably transform.

The way we succeed in India is a very transformative dimension for HMD. We will have more products made in India because we see the benefit and are very happy with the government's support of our industry. The environment is highly positive, so we are very encouraged.

Do you plan to export smartphones as well?

Yes. We are very pragmatic as well. On the manufacturing side, we have a simple approach: in some countries, we need local manufacturing because of the constraints. And there is only one place today where we are building a bigger space—India, where we want to do our manufacturing for export.  It doesn't make sense to have multiple manufacturing sites. Now that we have put the product in India, we want to reach the maximum markets.

Is the focus also on being price-competitive in India?

Indian consumers are incredibly savvy, and you can't bring something that doesn't make sense. We're respectful of that and will be very competitive on price. But it's not just a logic of going to the cheapest point; it's about bringing the correct features.

Are there other countries where you plan to set up manufacturing facilities besides China and India?

There are a couple of other countries that are candidates. But it is not easy to be competitive. It's a lot of work. We also saw the investment made in India to build the ecosystem.

Will you reduce your focus on feature phones under the new strategy?

Feature phones are a segment that should not be overlooked. We are already committed and see us doing many things in India, emerging markets, and markets like Europe. There is a lot of momentum for feature phones. The exciting trend is a digital detox, which is picking up globally. While the feature phone is the first device that comes to mind, we're also working at innovating in that space. We have a couple of things on our drawing board that, as feature phone-plus, are getting into that companion device category.

In many places, the feature phone is the first device in the connected world. Our industry is doing a terrible job of reducing that digital gap because, due to various factors, it's increasingly expensive to build smart devices. We want to stay in that space and bring more innovation.

What about the Nokia brand after the licence expires in 2026?

We're not giving up on the Nokia brand and are committed. However, I can't discuss discussions between Nokia and HMD. We are bringing new products under the Nokia brand this year and keeping investments in it. We see strong momentum and demand for Nokia brand phones.

Our focus on smartphones is all around the HMD brand. This is a strong opportunity to bring something different to the market with a fresh brand. For smartphones, we want to start forming new partnerships to drive growth.

Are you also focusing on India's 4G-to-5G handset transition?

We are definitely in the trend. We understand what's happening in India. Consumers are moving toward better products and user experiences. We are focusing a lot on 5G.