HMD moves Nokia phone user data storage to Finland

HMD Global, the maker of Nokia-branded smartphones, announced that it is moving the storage of user data to Google Cloud servers located in Finland, to ease concerns about data security.

The phone maker announced the move in the context of its new partnership with CGI, a consulting firm that specialises in data collection and analytics, and Google Cloud, which will provide HMD Global with its machine learning technologies. The new models, Nokia 4.2, Nokia 3.2 and the Nokia 2.2, will be the first ones to have the user data stored in the Google Cloud servers in Hamina, southern Finland. Older models that will be eligible for upgrading to Android Q will move the storage to Finland at the upgrade, expected to take place from late 2019 to early 2020. HMD Global commits to two years’ OS upgrades and three years’ security upgrades to its products.

HMD Global claims the move will support its target to be the first Android OEMs to bring OS updates to its users, and to improve its compliance with European security measures and legislation, including GDPR. “We want to remain open and transparent about how we collect and store device activation data and want to ensure people understand why and how it improves their phone experience,” said Juho Sarvikas, HMD Global’s Chief Product Officer. “This change aims to further reinforce our promise to our fans for a pure, secure and up to date Android, with an emphasis on security and privacy through our data servers in Finland.”

Sarvikas denied to the Finnish news outlet Ilta-Sanomat that the move was a direct response to privacy concerns triggered by the controversy earlier this year when Nokia-branded phones sold in Norway were sending activation data to servers in China. At that time HMD Global told Telecoms.com that user data of phones purchased outside of China is stored in AWS servers in Singapore, which, the company said, “follows very strict privacy laws.” However, according to GDPR, to take user data outside of the EU, the company would have had to obtain explicit consent from its EU-based users.

Sarvikas claimed that the latest decision to move storage to Finland has been a year in the making and is part of the company’s overall cloud service vendor swap from Amazon to Google. “Staying true to our Finnish heritage, we’ve decided to partner with CGI and Google Cloud platform for our growing data storage needs and increasing investment in our European home,” Sarvikas added in the press release.

Francisco Jeronimo, Associate VP at IDC, saw this move a positive action by HMD Global, calling it a good move “to address concerns about data privacy” on Twitter.

Nokia phone saviour HMD hits unicorn status

HMD Global, the home of the re-booted Nokia devices, has raised $100 million from multiple investors to become the 24th company in 2018 to hit the $1 billion unicorn valuation status.

The round of investment was led by Geneva based, Ginko Ventures with participation from DMJ Asia Investment Opportunity and Wonderful Stars, with the funds to be used to scale business operations and fund the company’s growth in its second year. Initial plans will focus on growing its portfolio of Nokia devices and expanding channel reach in strategic markets. When HMD initially entered the segment it promised to spend $500 million to market the Nokia brand; this cash injection will certainly help.

“We are thrilled to have these investors join us in our journey to script the next chapter of Nokia phones,” said Florian Seiche, CEO of HMD Global.

“It is our ambition to deliver great smartphones that delight our fans while staying true to our Finnish roots and the hallmarks that the Nokia brand has always been known for. We aim to be among the top smartphone players globally and our success to date gives us the confidence to further continue on a growth path in 2018 and beyond.”

Over the first 12 months of operations, the team shipped 70 million Nokia branded phones with activations coming from 170 markets. The devices are now sold at 250,000 retail outlets worldwide, posting total revenues of €1.8 billion during the first year, with an operational loss of €65 million. While the devices are generally targeted at the cash-conscious, who could forget the wave of nostalgia which captured the attention during 2017’s edition of Mobile World Congress.

Perhaps it was perfect indication of how the smartphone market has stalled, but a 16-year old rebooted device enthralled the halls of the Fira, only to be followed up at this year’s event with a re-release of the banana phone. For HMD it was a perfect storm of the mundane features, over-pricing and nostalgia. Since re-launching the Nokia 3310 during 2017, the Finnish start-up has introduced 16 new devices and signed partnerships with the likes of Google and Zeiss.

“We are proud to contribute to the next phase of Nokia phones and the successful raising of this investment round,” said Jean-Francois Baril, Ginko Ventures Managing Director. “Personally, as someone who has long been associated with the Nokia brand, this journey is very exciting. From its roots in Finland, HMD Global has chosen an agile strategy that leverages global relationships and collaborations to achieve its phenomenal growth.”

Although some might have viewed the initial relaunch of the 3310 as a gimmicky ploy to capture column inches, you cannot argue with its success. As a re-entrant to the European market, HMD has managed to capture roughly 3.5% of shipments across 2018 Q1, taking it to fifth in the market share rankings. The success here has been leaning on operator relationships, which the team seem to want to double down on with this additional investment. It might be a bit soon to expect profitability at the firm, as it is still a footnote in the greater smartphone story, but progress in re-establishing the Nokia devices brand is certainly being made.

The real test will come before too long as the nostalgia bug dies off. Some trendy characters might still be excited by the idea, but when it gets in the way of feeding the digital habit, the sentiment will disappear rapidly. HMD will now have to show it can strike a balance between quirkiness alongside relevance and innovation; in short, it has to be more than a dated brand.