It is my fearless forecast that Nokia (NYSE:NOK) Android phones will get commercial launch this year. The reported official date when Foxconn/HMD Global can sell Nokia-branded Android phones is October 26, 2016. I expect Foxconn/HMD Global to take advantage of this year's holiday shopping season to release two or three Nokia Android phones in a timely fashion.
This will be a momentous resurrection of the Nokia X Android phone idea that Microsoft (NASDAQ:MSFT) killed in 2014. Microsoft lost billions of dollars ($7.6 billion write-off) trying to convince people that Windows-on-Nokia phone is good. However, Foxconn/HMD Global is going to take advantage of the ubiquity of Android to make Nokia phones popular again.
Mike Wang, a senior executive in Nokia China, previously confirmed last August that there will be 3 or 4 Nokia-branded Android devices that will be unveiled this fourth quarter. Primate Labs GeekBench's site revealed that some individuals benchmarked a Nokia D1C Android phone last September 30.
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(Source: Primate Labs)
Investors should care about this recent development. I explained at my employer's website that the persistent bearish mood over NOK could change for the better after Foxconn/HMD Global starts selling Nokia-branded Android phones. Nokia needs to make a grand comeback on smartphones to attract the interest of investors. Owning Alcatel-Lucent and winning LTE infrastructure contracts are never going to be enough inspiration for investors.
NOK's negative YTD return is enough clue that many investors downgraded Nokia's stock as boring/uninteresting. The lingering costs of integrating/digesting the Alcatel-Lucent acquisition further aggravates this bearish sentiment.
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(Source: Google Finance)
It is true that buying Alcatel-Lucent propelled Nokia to the top of Gartner's Magic Quadrant for LTE Infrastructure. However, integrating Alcatel-Lucent is a long-term and costly undertaking for Nokia.
Gartner's Magic Quadrant For LTE Infrastructure
(Source: Gartner.com)
Android Smartphones To The Rescue
Nokia already got $7.2 billion from letting Microsoft experiment in putting Windows inside Lumia phones. Nokia will again benefit from licensing its brand on phones. It will receive licensing payments on every Android device that Foxconn/HMD Global sells. The release of Nokia-Android phones therefore could be an air freshener to the stinky reality of declining global LTE infrastructure deployments. IHS expects the LTE network infrastructure business to go through a five-year decline.
(Source: IHS)
Foxconn has the money to properly promote its Nokia-branded phones. With proper marketing support, my guesstimate is that Foxconn could sell 10 to 20 million Android devices every year. I do not know how much exactly Nokia is charging per device. My guesstimate is that it is between $10 and $30.
The potential benefit of Foxconn selling 20 million Android devices per year could be worth as much as $400 million to Nokia.
20 million x $20 (average licensing royalty fee) = $400 million
Investors could be interested again in NOK after they realize that Foxconn/HMD Global could contribute $400 million/year of easy licensing money to Nokia.
Why The Nokia D1C Could Be A Hit
It's important to note that the benchmarked Nokia D1C handset has Android 7.0 operating system. HMD Global selling its first Android phone with the latest mobile OS from Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) is already a great selling point. Most budget Android handsets are still stuck with the old Android 5.1 OS.
The Nokia D1C has 3GB of RAM and the MSM8937 octa-core System-on-a-Chip (SoC) is Qualcomm's (NASDAQ:QCOM) Snapdragon 430. The Snapdragon 430 is an entry-level SoC. However, Foxconn shrewdly matched it with a hefty 3GB of RAM. This bigger random access memory load will help improve performance during multi-window multi-tasking and gaming in Android 7.0 Nougat.
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(Source: Primate Labs)
The D1C will probably look like the iPhone 7 and still retail for less than $200. Foxconn copied the iPad Mini when it built the Nokia N1 8-inch Android tablet in 2014. I expect Foxconn to again copy the physical aesthetics of the iPhone 7. It will likely help Nokia-branded phones (to attract more customers) if they look like smartphones made by Apple (NASDAQ:AAPL). OnePlus, Xiaomi, Lenovo (OTCPK:LNVGY), and Huawei are just some of the successful firms that sell iPhone-looking Android phones.
The other potential selling point for the Nokia D1C is if it will come with Nokia's old PureView camera technology. Prior to the 2016 hype over the dual-camera systems of the Huawei P9 and the iPhone 7 Plus, the old Nokia PureView 808 and Lumia 1020 were already considered great replacements for standalone digital cameras.
Nokia Android Phones With PureView Cameras Are Awesome
It would be massive mistake of Foxconn/HMD Global if it did not license the right to use Nokia's PureView phone camera technology. The fake Bokeh effect from the iPhone 7 Plus is still no match against the 2012-era Nokia PureView 808's Bokeh effect.
Below is a real-world Bokeh (or blur-the-background effect) photo captured through the rear dual-camera system of the iPhone 7 Plus. Notice that the edge transition from the in-focus foreground to the blurred part of the background has a distasteful, unnatural effect. The iPhone 7 Plus has great cameras, but they are still not meant for doing Bokeh.
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(Source: petapixel.com)
Below is the Bokeh effect achieved by the 2012-era Nokia PureView 808. It is an outstanding example of how Nokia's old PureView camera technology can mimic real (not fake like Apple does) Bokeh photos from DSLR cameras.
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(Source: Don Rademacher)
Foxconn could better promote Nokia-branded Android phones if they could replicate the PureView 808's amazing photography features. The high-end versions of Nokia-branded phones should also match the Lumia 1020's even-more impressive Bokeh photography capability.
It is my firm belief that firms like Apple are hyping camera quality of their new phones because people consider their Android/iOS phone as their de facto camera/videography tool. Nokia's comeback on smartphones should therefore also emphasize the power of its old PureView camera technology.
Conclusion
It might be smart to go long on Nokia before Foxconn/HMD Global makes official announcement about new Nokia Android phones. BlackBerry's (NASDAQ:BBRY) announcement that it will also license its phone and software technology last week helped prop up BBRY's price. Compared to BlackBerry's new partner, BB Merah Putih, Foxconn is much bigger and therefore will be more effective vendor of Android phones/tablets.
My fearless forecast is that Nokia's stock could breach the $6 level again after HMD Global makes definitive reveal of its Foxconn-made Nokia phones and/or tablets. My other fearless forecast is commercial sales of Nokia Android will fare better than Elop-initiated Windows Lumia handsets. Unlike previous Nokia-made Windows handsets, Foxconn-made Android Nokia phones will gain access to more than 2.2 million apps of Alphabet's Google Play Store.
It is no secret that the small app ecosystem of Windows Phone contributed to the failure of Microsoft to make Windows Lumia smartphones popular. Android and iOS has a duopoly on mobile devices because app developers flocked to them. They largely ignored the BB and Windows phone platforms.
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(Source: Statista)
Disclosure: I am/we are long NOK, MSFT, GOOG, QCOM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Source: Fearless Forecast: Nokia Android Phones Are Going To Launch Before 2016 Ends
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