Why Nokia’s platform is still burning…

I fondly remember my first mobile phone, that chunky Nokia 1100, which I bought in 2000. It was a good phone and well designed for that era and the only popular app it had was a game of Snake. Nokia was on a roll then, and was seen as one of the most innovative companies in the world. It held a market share of over 30% globally. Its had a constant stream of new phones being launched, and each new mmodel was greeted with much consumer excitement. It was a case study in business strategy and marketing. But by 2010 Nokia was no more cool.

Nokia, despite its litany of woes has been the number 1 seller of mobile phones since 1998, but finally relinquished this lead to Samsung in Q1 of 2012. Samsung now has a 21% global market share against Nokia’s 20%. But what makes the situation worse for Nokia is that smartphones contribute to only 16% of its total sales, whereas they contribute to 43% to Samsung’s revenue. Smartphone is where the margins are and where growth is- iPhones with only  8% share globally, makes an incredible 50% of the total mobile industry’s operating profits (followed by Samsung at 29%). Because of this poor skew, and thus lower margins and lower growth, Nokia is shedding jobs like a sinking ship jettisoning all excess weight. Till 5 years ago Nokia was in the top 5 most valuable brands in the world and had  slipped to 14th place last year, and this year it will be lucky to be in the top 50. Nokia has now become a case study in how not to do things.

Invitation to Apple’s WWDC, where iPhone was unveiled

The Downfall
On 9th Jan 2007 it all changed for Nokia. Leading upto that date, Apple posted an intriguing image on their website, and the apple rumour mills were going into an overdrive trying to figure out what it meant – could it be an apple TV? but the rectangle was not the standard dimension of a TV. It could not be a phone for sure since market for phones was mature, and the entry barriers seemed high for any for fresh entrant, and apple had no previous experience etc. This was the day Steve Jobs unveiled his creation, the iPhone. It was a spectacular design, and for the first time ever people queued up to be the first ones to get their hands on a phone. By adapting the iOS for the phone, Apple jumped ahead of Nokia by a few generations. Apple changed concept of phone and its user interface completely with one launch. Google’s Android followed suite soon. The world shifted with such rapidity, that Nokia lost its bearing. It has been a series of mis-steps since then for Nokia.

 Platform burns on

Fire still rages on the Nokia platfrom

I think the downfall for Nokia started with wrongly defining the context of the challenge they faced in 2010, which led them to picking a weak strategy. Nokia decided to call it a ‘three horse race’ between iOS, Nokia and Android – it need not have. Nokia could have approached it with less ego, and could even have decided to become a software neutral platform maybe. Android was a free platform available for the taking. Microsoft was on a weak footing at that time since it had never succeeded on the mobile platform (still hasnt). All of Nokia sales were on Symbian platform and when it decided to abandon it, it abandoned all its consumers in one go, and they have never come back to it. I last owned a Nokia  three years ago, and have switched to Android since (HTC wildfire).

Nokia avoided Android using the argument that adopting android wont allow it to differentiate. But that was a wrong call too. Samsung commands as share of 40% of all android based phones, while no other brand using Android has more than 10% market share. With a commoditised platform one would expect the shares of all players to be much closer – so obviously Samsung is adding more value to the Android platform that the others. These choices were available to Nokia. This is also not just hindsight bias – staking the ENTIRE future on one unproven platform was poor risk management any way you look at it. Markets saw this, and the stock plummeted by 14% on the announcement of Nokia’s tieiup with Windows.

On top of it, it approached the market with a bit of arrogance. There was a  funny comment from  one senior product executive at Nokia  saying that more young people are turning to Windows Phone 7 as an alternative to the overly-complicated Android and the no-longer-fashionable iPhone. This was a PR disaster, and there was much ridicule of it worldwide. Such thinking is pretty common in most corporate  headquarters, where the glory of the brand is preached like a religious discourse to all the employees.

The lack of Magic

Following the poor strategic choice, the entire marketing effort has been uninspiring. Lumia 800/900 are well designed products. The consumers of Lumia seem to be pretty strong advocates of the product too. But unfortunately Nokia has not been able to create enough buzz about the product in the wider user community – the magic is missing in all their communication, and as a result these products have not proved to be the blockbuster hits that Nokia so desperately needed to survive.

When the world of digital marketing has moved beyond imagery, Nokia chose to go with an ambiguous ‘amazing

everyday’ accompanied by some generic visuals. This could have been a tagline for a health supplement that a mother feeds her kids, and seems to be lacking any  consumer insight in it. I can imagine an advertising agency infusing meaning into this basically meaningless phrase by backing this slogan with a few hundred creative storyboards, semi hypnotising the marketing guys at HQ to think that they have a great campaign, and that the world is just waiting for the launch now. Well, unfortunately the rest of the world hasn’t quite seen the meaning in it yet. And then the atrocious campaign for Lumia 900 trying to take pot shots at all competitors is totally out of touch with reality.

Steve Jobs has reset the rules for marketing in the consumer electronics space. He single-handedly made product attributes the most sexy part of the communication – which most marketers hate, wrongly thinking that it reduces the product to a commodity. Steve jobs convinced us that we want to own his phones because of the metallic buffed finish, the battery life, the skip protection on his iPods, the beviled edges, retina display screen, the special scratch proof glass, the iTunes store, etc. The way he personally showcased the device and would wax eloquent about each feature and how it fits into the life of the consumer isnt something most brand manager have the courage or charisma to do.

The fight for Survival

Bad news everyday

Seems like Microsoft has other plans with its windows mobile platform. Windows 8 upgrade wont be available for the existing Lumia phones already in the market. The Nokia smart phone users have been abandoned again, and the entire Lumia community up in arms. Also, The fear of commoditisation will come back to haunt Nokia when the same feature set will start appearing on Samsung phones now.

Nokia is fighting for survival, but I think there is hope. It needs to urgently get its product users/advocates to talk about their experiences with the Lumia range, but needs to do it on a massive scale. It needs to get the  pricing  right to get into the consideration set of new smart phone buyers; Nokia is not seen as a premium brand now, and just pricing a phone high wont help it get there. It should drop its ego and adopt Android and restart their own R&D on Meego or Symbian platform or whatever (they did have the expertise once). It needs to better explain to the world what Tiles are, and how its Nokia store is more interesting than iTunes.

There will be a million things that it needs to do right, but for a revival it first needs to approach the market with an open mind and with a bit more humility.

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  1. Why Nokia platform is still burning – http://t.co/jkz00Aa3

  2. What do you think Nokia done wrong to lose its #1 position in mobile phones sales to Samsung? My thoughts – http://t.co/jkz00Aa3

  3. http://t.co/m48VpI4K @tomiahonen @2shar @rajivmakhni Read Nokia going down via @blogadda

  4. ES says:

    Do you remember the Nokia nGage? It was and is the best gaming phone ever made in the history of mobile phones. I loved it as long as it lasted. I wish Nokia or anyone else would manufacture a gaming phone like that. It will become an instant hit. nGage was simply awesome. It was much better than playing games in PC!!! C’mon Nokia, bring back nGage………….

  5. Rahul Balyan says:

    Thanks for connecting.

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