Is the secondary mobile device market ready for a 4G device deluge?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Alan Bentley, President, Global Strategy at Blancco, looks at anticipated 5G device sales forecasts and considers the impact that they could have on the secondary device market.

The global device market has been under criticism in recent years. Many industry commentators have bemoaned slowing levels of innovation when it comes to new smartphone functionality. Global OEMs have been trying to maintain high prices for premium high-end devices, despite minor improvements in features and technology. While on one hand, device prices have sustained themselves, on the other, consumers are keeping their old devices for longer and global smartphone shipments and sales have started to decline.

Global OEMs and operators have been looking to accelerate their sales figures. Both have pointed towards 5G as the catalyst to build much healthier pipelines and grow revenues. 5G promises greater capacity, richer content and faster processing speeds. The hope is that it will excite mobile consumers in new ways and persuade them to part with more money for the privilege of consuming it.

5G device demand is looking strong

The good news is that industry predictions seem to support these hopes. Only last week, industry analyst Canalys predicted that 1.9 billion 5G smartphones will ship over the next five years. Global volumes will increase from an anticipated 13 million devices this year, to a daunting 774 million by 2023. This suggests that the current period of smartphone upgrade inertia we’re experiencing will end.

However, the success of the secondary mobile device market will be a significant contributing factor to the success of 5G devices and network service uptake. Over the past few years, it has helped improve consumer affordability for high-end devices, while helping OEMs sustain high prices. In other words, if OEMs and operators hope to sell high volumes of 5G devices, they must also be ready to collect almost the same number of used 4G smartphones.

Secondary strain from primary market pain

There is a clear link between the success of the new smartphone market and the secondary device ecosystem. If the primary market stalls, so will the secondary market. The affects of this link have been felt over the past year. According to Counterpoint Research, the secondary market grew just 1% in 2018, compared to around 13% the year before. The primary reason was the 11% drop in new smartphone sales in the same period. If consumers aren’t upgrading, old devices simply can’t be collected. However, the secondary market still grew. Consumer appetite for 5G is reflected by the 5G device shipment forecasts and there is also increasing comfort for engaging in the secondary market, assuming data security standards remain high. This will lead to a deluge of 4G devices hitting the secondary market in the next 12-18 months and the supporting ecosystem needs to be ready.

Is the secondary market ready?

The commitment from every stakeholder within the secondary market ecosystem is clear. OEMs, operators and the logistics providers that manage buyback and trade-in programmes on their behalf, are investing significant time and money to scale secure device collection. While Canalys predicts that 582 million 5G smartphones will ship in 2022, Counterpoint Research predicts that less than half, just 220 million devices will be collected in the same year.

Canalys smartphone forecast

This feels conservative. Operators and OEMs are marketing buyback ad trade-in programmes very hard. Earlier this year, Apple’s Tim Cook openly stated that its iPhone buyback programme was central to its strategy of stimulating device sales and maintaining premium pricing. Several of the world’s largest operators are known to be predicting or expecting significant revenue from used device collection and resale this year (and in future years).

Most now advertise their buyback programmes on their website homepages and include the ability to trade-in used handsets for all new device purchases. There is also strong consumer incentive to engage in the process. Recent statistics from HYLA Mobile suggest that the secondary market returned more than $2 billion to US consumers that traded in their devices in the US last year alone. All secondary market stakeholders have significant incentive for the entire ecosystem to deliver.

More devices, more speed, more risk

The significant increase in 4G devices hitting the secondary market will drive greater efficiency enhancements across an increasingly complex supply chain. Mobile device processors will be judged according to a variety of factors. Perhaps the main one is speed – of device diagnosis, repair and resale. Technology advancements, including the use of AI and automation continues to drive through mobile device processing efficiencies. Mobile devices can now be processed in seconds, rather than minutes. This is vital in retaining as much of the latent value held in used devices as possible.

However, with greater speed comes greater risk, especially given the importance of maintaining consumer trust in data management practices tied to the secondary market. If consumers lack the confidence in operators, OEMs and logistics companies to keep their data secure, they won’t trade-in their old devices. What’s more, upgrade inertia will continue.

The mobile industry is dependent on 5G to grow revenues. This requires a healthy device upgrade cycle. It’s time for all parties in the process to play their part in ensuring that the secondary device market is booming, for a strong and secure future.

 

alan-bentleyAlan Bentley is President, Global Strategy at Blancco. An industry veteran, he joined the company in October 2016, and has worked closely with Blancco’s many customers and partners to implement data erasure solutions to mitigate security risks and ensure regulatory compliance. This gives him a unique insight into the market and business requirements driving the needs of today’s businesses.

Smartphone spyware FinSpy is back and thriving

Cybersecurity vendor Kaspersky has reported that FinSpy, a piece of malware that allows private information to be stolen from smartphones, has made a reappearance.

FinSpy spyware is apparently made by German company Gamma Group and sold by its UK sub-division Gamma International to governments and state agencies so that they can spy on their citizens. It has been around for a few years but seems to be experiencing a renaissance, with activity recorded in Myanmar last month.

The recent appearance of FinSpy has brought to light the IOS and Android mobile implants that can install this spyware on mobile devices. This now enables the FinSpy spyware to collect personal information such as contacts, SMS/MMS messages, emails, calendars, GPS location, photos, files in memory, phone call recordings and data from some of the most used messenger services including Facebook, WhatsApp and Skype among others.

The greatest cause for concern is FinSpy’s ability to gain this information even if the phone’s user is running an encryption program. Talking about encryption, FinSpy’s developers have been improving their own encryption to reduce the risk of traceable activity being discovered, the Kaspersky report claims.

“The developers behind FinSpy constantly monitor security updates for mobile platforms and tend to quickly change their malicious programs to avoid their operation being blocked by fixes,” Alexey Firsh, a security researcher at Kaspersky Lab, told Cyberscoop. “We observe victims of the FinSpy implants on a daily basis.”

Kaspersky has also claimed that these implants were detected in almost 20 countries however it’s likely the real number is higher. These new implants appear to be a real threat, with the developers constantly updating the spyware by reducing its trace while improving it to the point where it can break through encryption. FinSpy along with Gamma group are thriving although Kaspersky says it is conducting further investigations to tackle this issue.

The number of commercial 5G devices almost tripled in Q2 – GSA

The latest data from the Global mobile Suppliers Association show the number of 5G devices being launched worldwide is accelerating rapidly.

If you take at look at the GSA data from the end of March only 19 vendors had announced forthcoming 5G devices, with 33 models officially confirmed. These numbers have now significantly increased, with the latest data showing 39 vendors have now announced upcoming devices and the number of officially confirmed devices has now nearly tripled, standing around 90.

Looking in depth at the recent data also provided by GSA, 28% of the 90 officially confirmed devices are phones (the number standing at 25). On top of that GSA found 23 CPR devices, 23 modules, seven hotspots with assorted dongles, routers and drones comprising the chasing pack. The devices contained 5G chipsets from just four vendors – Qualcomm, Mediatek, Samsung and Huawei, with Intel no longer in the game.

As expected, smartphone vendors have jumped on 5G for various marketing campaigns. The most conspicuous of these is Samsung, which released  the Galaxy S10 5G first in Korea on earlier this year and then in the UK on June the 7th . The S10, due to its 5G compatibility, has a wider array of VR and AR functions than other 4G phones. This new way to experience VR and AR is critical as it will reach further out towards the younger generations who enjoy mobile gaming or more specifically games like Pokémon GO and the more recent Harry Potter: Wizards Unite that heavily rely on the use of AR.

This latest batch of data from the GSA indicates the device ecosystem is fully ramping up its 5G output. How much of this is purely speculative rather than responding to specific demand is still unclear, but we should get the first lots of 5G device sales data before long, which will clarify things.

Samsung profit is halved, company guidance warns

Samsung, the world’s largest smartphone and memory chip maker, warned the market its quarterly profit would drop by 56%, prior to the official result announcement later this month.

Samsung Electronics told the market that the operating profit generated in the quarter ending 30 June amounted to KRW 6.5 trillion ($5.55 billion), which would be a 4% sequential improvement on Q1 this year, but would represent a 56% drop from the same quarter a year ago. The total revenue is expected to be around KRW 56 trillion ($47.8 billion), a 7% sequential growth, but 4% year-on-year decline. The continued depressed profitability (operating margin almost unchanged from last quarter at 12%, compared with 25% a year ago) indicates Samsung’s main business has not turned the corner.

The semiconductor sector, where Samsung has generated the highest profit among all of its business units, remains weak. Last month investment analysts from the private fund Evercore reported that the inventory of memory chips by downstream device makers continued to be at excessively high level, therefore the investors did not see the sector recover before 2020.

The IT & Mobile communication unit, which has generated the highest revenue for Samsung, is still in trouble. Samsung has braced intensive competition particularly from the Chinese competitors, and its Galaxy S10 series have not been able to turn its fortune. The troubled launch of the Fold version of S10, which had been slated for Q2, has still yet to happen. A new Unpacked event has just been announced for August, but is likely to unveil its new tablet, the Galaxy Note 10, to consider the stylus featured on the event invitation.

When faced with pressure on profit, companies often turn to control cost. That looks to be what Samsung has been doing. A few days ago The Economic Times of India reported that Samsung will cut 1,000 jobs from the company’s smartphone functions. This is after 150 jobs are already gone in Samsung’s telecom infrastructure team.

DT, Carphone Warehouse and Elisa show their 5G FOMO

The 5G hard launches are coming thick and fast, which is causing fear of missing out for some in the telecoms game.

Today’s big announcement comes from Vodafone UK, on which more from us later. BT has also got involved and now Deutsche Telekom, Carphone Warehouse and Elisa have all rushed out press releases to make sure nobody thinks they’re off the pace.

DT hasn’t hard launched anything yet, but has chosen to detail at considerable length how profound its plans to do so are. Today’s announcement is the start of DT’s 5G network rollout in Germany. Berlin and Bonn will be first, followed by Darmstadt, Hamburg, Leipzig, and Munich and by the end of 2020 DT expects Germany’s 20 largest cities to be 5Ged up.

“We punched our ticket for a 5G future with the spectrum auction,” said Dirk Wössner, MD of Telekom Deutschland. “Our goal now is to get 5G to the streets, to our customers, as quickly as possible. Nearly three-quarters of our antenna locations in Germany are connected with optical fiber – we’re now building on that… At the same time, we need a clear regulatory framework and pragmatism from the authorities – particularly when it comes to questions regarding regional spectrum, local roaming, allocation of the auction proceeds, and the approval procedures – which takes far too long in Germany.”

Despite not having activated 5G anywhere yet DT is generously offering its subscribers to pay for it anyway. You can shell out €900 for a Samsung Galaxy S10 5G as well as a 5G tariff and when DT gets its act together you can be among the first people to get access to its 5G. “Telekom is 5G ready and offers the first 5G devices with suitable rate plans for everyone who wants to be there from the start,” said Michael Hagspihl, MD for Consumers at Telekom Deutschland.

In the UK Carphone Warehouse has joined the 5G pre-order party by announcing the availability of a few 5G smartphones. The ubiquitous Samsung Galaxy S10 5G will cost you £1099 SIM-free and is available today. We’re told the Oppo Reno 5G is also available today but you can’t can’t get it online for some reason. The Xiaomi Mi MIX 3, OnePlus 7 Pro 5G and LG V50 ThinQ will all be available for pre-order tomorrow.

“Retailing the largest range of the newly announced 5G compatible phones means those looking to upgrade to the new offering will have the biggest choice in terms of device and networks to best suit their needs across an impressive range of smartphones, deals and trade-in offers,” said John Coleman, Director of Connectivity at Carphone Warehouse.

Lastly Finnish operator Elisa is proud to announce it was the seller of the first 5G phone bought in any Nordic country. The lucky punter was one Harri Hellström, who strolled into Elisa Kulma in Helsinki unaware of how his life was about to change. Moments later, amid streamers and rapturous applause, Hellström was handed his phone by Elisa CEO Veli-Matti Mattila and held aloft by exuberant Elisa staff.

“I have always been into cutting-edge technology, and I have often been among the first to buy new devices,” said Hellström, once he had composed himself. “I feel wonderful about having the first 5G phone in the Nordic countries. I travel a lot in Finland and abroad, and I often rely on my mobile device for communication on the road. This is why fast connections are essential.” Words so fitting they could almost have been written by Elisa itself.

“Demand for 5G devices and subscriptions will increase as network coverage expands,” said Antti Ihanainen, VP of Elisa’s consumer subscription business. “5G will revolutionise the way we use mobile devices beyond anything we have seen during previous technological evolutions. Fully utilising the benefits of a 5G network requires the use of 5G devices, which means demand will inevitably rise. We are continuously developing innovative 5G services and exploring ways of utilising 5G technology.”

As more operators around the world activate 5G networks and get to bang on about how much better life is for their subscribers as a consequence, the FOMO for those operators that have yet to get involved will increase. If those subscribers start openly wondering what the fuss is all about once they start using 5G, however, being late to the game might not be such a bad thing.

Understanding the collateral damage from Trump’s trade aggression

President Donald Trump might be back on friendly terms with China’s President Xi Jinping, but his efforts to kill Huawei’s business produced friendly fire, hitting companies based in allied nations.

This is the unintended and unavoidable consequence of a targeting a single company or country with sanctions and tariffs, the US’ version of an economic dirty-bomb; such are the complexities and wide-spread nature of today’s global supply chains, you are going to cause damage to innocent parties. We suspect Trump does not care, as long as his objectives are achieved, but here we’re going to have a look at the indirect friendly-fire.

The Nikkei Asian Review has broken down Huawei’s latest smartphone, the P30, listing off the individual components of the device and also giving an estimation of cost. Japan supplies the largest proportion of components for the device, 53.2% or 869 parts, while the US supplies 0.9% of the components and South Korea provides 34.4%. Interestingly enough the costs tell a slightly different story.

The financial output from Huawei is an interesting split. It is estimated that a P30 costs $363.83 to manufacture, with 38.1% of the expenditure remaining with Chinese suppliers. The 15 parts supplied by US firms account for $59.36 per device with Micron Technology collecting $40.96 for its DRAM chipset. Japanese suppliers gain $83.71 for every device manufactured, while $28 heads to South Korea and $28.85 to Taiwan.

What is important to consider when you are assessing the friendly-fire is the direct and indirect impact of Trump’s actions. The direct impact is easily measured; by banning US companies from working with Huawei you can see the financial detriment of losing a customer. If you go one stage further, you can see the indirect impact. By taking a shot at Huawei, less devices are being sold, therefore less cash is being paid out to every supplier.

The table below gives an overview of some of the international organizations which have been impacted by Trump aggression towards China:

Company Country Component Supplied Cost
Micron Technology US DRAM $40.96
Samsung South Korea NANDflash memory $28.16
Sony Japan Rear camera $15.15
Sony Japan Front camera $12.16
Skyworks Solutions US Communication semiconductor $8
Sony Japan Rear camera $7.6
Qorvo US Communication semiconductor $3
Alps Electric and Alps Alpine Japan Touch panel $3
Corning US Cover glass $2.7

Estimates courtesy of Nikkei Asian Review

What is worth noting is the aggression towards Huawei is temporarily on hold. At the G20 Summit this weekend, the US and China have made positive statements about getting trade talks back on track, though this would mean Trump would have to stop his campaign of terror against Huawei. Suppliers to the firm will be relieved, but you have to wonder whether the damage has already been done to the smartphone business.

Just like the telcos for networking equipment, consumers will want assurances the devices will continue to work over the lifetime of the product. As Google is a US firm, and therefore subject to the Entity ban, consumers were much less likely to buy a Huawei device when there is no guarantee Android will work as effectively and securely as it should.

The statements from the two Premiers are all well and good, but considering Trump’s opinion seems to change as often as the tides, how can anyone guarantee the effectiveness of the Android operating system over the course of the device’s lifetime? There are other factors to consider here, Huawei’s homegrown OS for example, but this is an unknown factor and consumers rarely trust the unknown en-masse.

This is where we believe the damage has already been dealt; it takes a lot to earn consumers trust but not much to lose it. Huawei has been gathering momentum in the smartphone market for years, and entry onto the Entity List might have set it back to the beginning. Rumours have emerged suggesting the company is preparing for a 40-60% decline in shipments for the remainder of 2019; how long will it take the firm to recapture these customers?

Apple’s design chief decides to call it a day

Jony Ive, Apple’s Chief Design Officer, has announced that he is leaving the company at the end of the year and will set up LoveFrom, his own creative business, with Apple as its first client.

Sir Jonathan “Jony” Ive has been instrumental in giving the world a string of iconic Apple products over the last two decades. Among them the most influential ones should be the iPod, which turned the recorded music industry upside down, the iPhone, which redefined what mobile handsets are and do, and the iPad, which practically created the tablet market. In addition, he was also behind the Mac computers and the Apple Watch, the success of which has been more muted.

Ive stressed that his departure from the company does not mean he will stop working with Apple. “While I will not be an [Apple] employee, I will still be very involved — I hope for many, many years to come,” Ive told the Financial Times in an interview. “This just seems like a natural and gentle time to make this change.” Tim Cook, Apple’s CEO, believed the company would continue the success of the Ive era, and was looking forward to the collaboration with Ive’s new venture. “We get to continue with the same team that we’ve had for a long time and have the pleasure of continuing to work with Jony,” Cook told the FT. “I can’t imagine a better result.” Apple will not announce a successor to fill Ive’s CDO position immediately. Instead, the managers of the design teams will report to Jeff Williams, Apple’s COO.

Ive’s decision to leave should not appear to have come out of the blue to those that have followed the industry, and the company, closely. He was the late Steve Jobs’ closest ally and, among other things, had been an active presence at product debuts, through video links. After Jobs passed away this patterned continued, up to the point when the Apple Watch was launched. Ive would appear at the events on pre-recorded videos, unveiling the products, in particular talking about the details. That has not happened since. In a 2015 feature by the New Yorker magazine, Ive said he had been “deeply tired”. In May that year he was appointed CDO, a position that would rid him of the day-to-day responsibilities to run the design team.

More recently it appears Ive has expand his interest beyond sleek consumer products. For example, his team were heavily involved in designing Apple’s new headquarters. This is also a vision he gives his new business. “There are products that we have been working on for a number of years,” Ive told the FT. “I’m beyond excited that I get to continue working on those, and there are some new projects as well that I’ll get to develop and contribute to.” He also denied that the weakened appeal of the iPhone, which has not been helped by the trade war with China, is a contributing factor to his decision. To tell from his reduced involvement in products over the last few years, the decision seems to have been long in the making.

Before he was knighted for “services to design and enterprise” by the Queen in 2012, Ive had already been hailed by Stephen Fry as one of the two Englishmen alive to have the most profound impact on people’s lives. The other, according to Fry, is Sir Tim Berners-Lee, the inventor of the World Wide Web.

Huawei UK tries to calm fears about Android support

The news that Google may stop supporting Android on Huawei phones has inevitably hit their sales. But in the UK at least Huawei is fighting back.

The US state is pressuring any company that wants to stay on its good side to sever all business ties with Huawei, which it has decided is an abject security risk due to its presumed obedience to the Chinese state. A month ago it emerged that Google had bowed to this pressure and was suspending some dealings with Huawei, which raised the prospect of Huawei smartphones no longer receiving updates or security support for their Android operating systems.

Understandably this is likely to have a profound effect on Huawei smartphone sales as who would want to buy a phone, however powerful and shiny, with compromised software? Huawei’s UK consumer group has moved to address these concerns with a new website called ‘Huawei Answers’, which is set up in an FAQ style, designed to address consumer concerns about its phones by debunking rumours.

The main concern most prospective Huawei smartphone punters will have is whether or not their devices will be updated to the latest version of Android when it becomes available. “Our most popular current devices, including the P30 series, will be able to access Android Q,” announces Huawei Answers in its preamble, before tackling other ‘common points of confusion’. You might as well see the lot here.

RUMOUR #1 – Huawei smartphones and tablets will no longer get software or security updates.

Ongoing security and software updates will continue to be provided to keep all Huawei smartphones and tablets secure and up-to-date.

RUMOUR #2 – Android will be automatically uninstalled from Huawei smartphones and tablets.

Android will not be automatically uninstalled from Huawei smartphones and tablets. We continue to work closely with our partners to ensure our consumers can always enjoy the best possible experience.

RUMOUR #3 – Huawei users will not be able to download or use apps like WhatsApp, Facebook or Instagram.

For all Huawei smartphones and tablets, WhatsApp, Facebook, and Instagram apps can be downloaded and used as normal.

RUMOUR #4 – Windows will no longer work on Huawei PCs.

We can confirm that Huawei devices with Microsoft software will be upgraded and supported

RUMOUR #5 – If you reset your Huawei smartphone or tablet, you will lose access permanently to Android Services and Google Apps.

If you reset your Huawei smartphone or tablet to factory settings, Android Services and Google Apps can still be downloaded and used as normal.

RUMOUR #6 – The current situation impacts the warranty on Huawei smartphones and tablets.

Nothing has changed. Huawei provides after-sales service as before, in accordance with the existing warranty policy.

RUMOUR #7 – Huawei smartphones & tablets will offer reduced functionality.

All Huawei smartphones & tablets will continue to function as they currently do.

RUMOUR #8 – Huawei will no longer sell smartphones.

Huawei will continue to sell smartphones. Furthermore, we will continue to invest in research and development to deliver leading innovation and the best possible smartphone experience.

RUMOUR #9 – The P30 & the P30 Pro won’t get access to Android Q.

We are confident that our most popular devices, including the P30 series, will be able to access Android Q. We have been working with third parties for many months to ensure devices will be able to receive Android Q updates. Technical preparations and testing has already begun for over 17 devices. In fact our Mate 20 Pro has already been given approval to receive Android Q as and when it is released by Google.

Here is the list of the  products we have submitted to upgrade to Android Q

P30 Pro

P30

Mate 20

Mate 20 Pro

PORSCHE DESIGN Mate 20 RS

P30 lite

P smart 2019

P smart+ 2019

P smart Z

Mate 20 X

Mate 20 X (5G)

P20 Pro

P20

Mate 10 Pro

PORSCHE DESIGN Mate 10

Mate 10

Mate 20 Lite

It’s a game effort but, just as with broader concerns about security, Huawei is still asking people to take its word for this stuff. The use of hedging language such as ‘we continue to work closely’ and ‘we are confident that’ probably doesn’t help either.

This initiative is reminiscent of the Huawei Facts Twitter account, which also exists to present the company in a positive light. It recently revealed that, in spite of all this argie-bargie, Huawei has already shifted 100 million smartphone units this year. It managed over 200 million in the whole 2018 but it wouldn’t be surprising to see it fall short of that number this year as second half shipments fall off a cliff due to the above concerns.

Xiaomi is meeting Huawei domestic aggression head on

Smartphone manufacturer Xiaomi plans to increase the investment in channel and retail development in the Chinese market by $725 million, to improve its position and to counter the expected aggression from market leader Huawei.

Bloomberg cited its source at Xiaomi that the Chinese smartphone company has decided to invest CNY 5 billion ($725 million) over the next three years to shore up its channel and retail position in China’s contracting smartphone market. This will come on top of its current budget and will be spent on channel expansion, partner incentive, and sales force financing, according to the report.

The decision is also made in anticipation of Huawei’s aggressive channel and retail movements in China in the near future, the source told Bloomberg. Huawei, the smartphone market leader in China admitted recently that its business will suffer from the US sanctions and the severance of business relations by companies like Google. In the consumer segment, which now accounts for more than half of Huawei’s total revenue, the impact will mainly in the overseas market with the disappearance of Google services from its smartphones posing the biggest impediments to consumers’ purchasing decision. This will drive Huawei to further strengthen its grip on the Chinese market, where it is already supplying one out of ten of the smartphones being sold.

Xiaomi has reaped the benefits after investing heavily in the overseas markets in recent years, having broken into the top five in a number of European markets while also well received in growth markets like India. It has the ambition to become the market leader in its home market too, but so far, the company has been vying for the fourth position with Apple, trailing Huawei, OPPO, and Vivo.

Huawei and Xiaomi also adopt different retail strategies. In addition to smartphones, Huawei also sells its full line of consumer products in the retail outlets including PCs, tablets, and other consumer devices.  Xiaomi, on the other hand, has carried the “ecosystem” concept from online, which used to its exclusively channel, to offline retail. In addition to its own branded products, centred around the smartphones, partner products on its IoT ecosystem are also offered in the retail outlets, in line with its strategies.

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.