Production issues and tax regulations delayed launch of #Nokia phones

If you were following the HMD/Nokia story from the beginning, you know that the first lineup of Nokia smartphones made by HMD, the Nokia 3, 5 and 6, is breaking the promised deadline by which the phones should be available on the market.

In interviews before the devices were announced, HMD’s CEO Arto Nummela said that they will bring the phones to market in weeks after the announcement. At MWC2017, during the announcement of Nokia 3, 5 and 6, HMD officially unveiled that the phones will hit the shelves by the end of Q2 (30th June) this year.

Last few weeks we found out a lot of release dates for the new Nokia phones. In a lot of markets Nokia 3 is or will be available by the end of this month, that is June. The 5 and 6 should come in July, with the beautiful color options like Copper or Tempered Blue “later this summer”.

There are numerous reasons for such delays, and some of them have nothing to do with HMD. It’s fair to say that HMD is a young company that’s first time entering the smartphone market and doing so on a global scale, even though they have an experienced team.

IndiaToday received information from sources at Nokia that Foxconn, or better to say its company FIH Mobile faced production issues. FIH started the manufacturing process in India right in time of a new tax law implementation. IndiaToday says: “Sources within Nokia now say that all the teething problems are behind them now. The manufacturing processes have been set and infrastructure is ready and churning out phones.

But as noted earlier, GST is not the only reason behind the delay in Nokia 6 and Nokia 5 in India. All the new Nokia phones — Nokia 3, Nokia 6 and the Nokia 5 — are made in India phones. However, ramping up the production for the new Nokia phones also took its own time, especially considering the fact that HMD Global and its manufacturing partner Foxconn were doing it even as new tax regime was rolling out. For the production processes, HMD Global first aimed at setting up the supply lines for Nokia 3. The Nokia 6 and the Nokia 5 followed then.

We can conclude that FIH established its production line and started mass producing the announced Nokia phones. In India, there is still that tax problem. India’s government announced a new kind of tax called GST that will be enforced from July 1st. Retailers decided to wait for the new tax rules, before starting the sales of Nokia 5 and Nokia 6.

The prices of Nokia phones in India already include GST and the new tax rule won’t affect them.

I dare to say in the name of all Nokia fans that we are quite tired of waiting, but I understand that HMD faces different struggles as a new player in the smartphone market. We hope they will soon be available globally, as promised back in February.

Thanks Marty for the tip. 🙂

  • In fact, its said that, Under GST the phones will get a little bit cheaper as the tax rates for budget and mid range phones will be less. Whereas as there will be a small increase in the tax rates of flagship phones which will lead to a small increase in their prices.

  • I say, it is better to experience those kind of problems in early start and with low budget phones.

  • Just excuses. And GST is just taxing. What will change is/are the tax documents and amount of taxes you dispense to the Government. That should not affect
    the manufacturing processes. Plus, the delays are global. And it is not that the entire global production is being done in India. Delays are global.

    Foxconn has all the expertise one can expect. You cannot say that Foxconn had issues with manufacturing or setting up the things.

    I’d agree if somebody says HMD didn’t have enough cash or quantity orders for Foxconn to setup the manufacturing. Foxconn waited for the machines to idle out before starting with the Nokia phones because some other company had a bigger order than Nokia.

    HMD is a young company. They could not have the supplies prioritized due to low cash in hand and a non-existent goodwill to buy supplies on credit. In fact, if I’m right, Nokia has had these supplies problems in the good days too. My mind tells me something about Sharp failing to produce enough displays for a Nokia phone, resulting in delay of the same.

    • Muerte

      Hello. HMD was not the one taking the initial cost to produce these phones. It was FIH Mobile. And because of that, they issued a profit warning earlier this year:

      “Whilst the Board expects the Group’s turnover during the six months
      ending 30 June 2017 to increase (turnover is expected to exceed US$4.6
      billion, representing a significant increase by more than 99% as
      compared to US$2,306,561,000 for the six months ended 30 June 2016), it
      understands that the Group is likely to record a consolidated net loss
      for the six months ending 30 June 2017 primarily as a result of costs
      relating to a new business group within the Company under a
      collaboration agreement that the Company announced on 18 May 2016.”

      • Ah! Thank you. Then IDK what went wrong with them setting up the processes in time.