Nokia retains a massive share of the global mobile phone market, but cracks are beginning to appear in its once-impenetrable leadership.
In particular, the electronics brand is struggling to defend its lead in smartphones – the fastest-growing and most profitable part of the mobile phone business.
As Apple drops the price of iPhones and expands services, its share of the smartphone market is growing at Nokia’s expense. Meanwhile, Research in Motion has the business segments stitched up with its BlackBerry devices.
After a decade thoroughly trouncing the likes of Sony Ericsson and Motorola, Nokia suddenly finds itself in need of a different game to take on different competitors.
So far, there have not been many good signs. It seems that barely a day goes by without a Finnish executive popping up somewhere around the world and confidently announcing a new strategic direction for Nokia – but each of these strategies seems to contradict and dilute the last.
Chief executive Olli-Pekka Kallasvuo was unequivocal about the company’s future at the Nokia World conference in Stuttgart two weeks ago. ‘We want to create the biggest delivery platform for services,’ he said in his keynote address. ‘We consider it critical. There is no turning back, and we will not fail.’
Despite this apparent focus on software, Juha-Pekka Sipponen, the director of Nokia’s N-Series Division, seems intent on maintaining the lead in smartphone hardware. ‘It is about becoming the undisputed number-one,’ he insisted.
As Sipponen aimed to lead the smartphone category, Tuula Rytilä-Uotila, Nokia’s vice-president of products, was telling an audience in New Delhi about her vision to democratize it. ‘We want to take smartphones to a wider audience by bringing down the prices of such phones,’ she said. ‘The strategy is to be present in all price ranges.’
Meanwhile, back in Europe, Kai Oistamo, vice-president for devices, announced the launch of the Booklet 3G laptop computer, signalling a different direction for the brand. Oistamo boasted of ‘redefining the segment’, ‘bringing unique insight’ and ‘making the personal computer more social, more helpful and more personal.’
In New York, another Nokia executive was laying out yet another strategic direction with equal gusto. Tero Ojanperä addressed music executives with the proclamation: ‘I am claiming now that we will quickly be the world’s biggest entertainment media network.’
So what will it be? Software or smartphones? Laptops or entertainment network? Nokia is trying to be all of the above, but in my opinion is unlikely to achieve any of them. While competitors such as BlackBerry and Apple show the power of focus, Nokia wants to be all things to all people, all over the world, all the time. As marketers, we know how that dream usually ends.
Indeed, it may already be ending. Nokia has sold only 500,000 of its latest smartphone, the N97, since its launch in June. In contrast, Apple’s 3G iPhone sold 1m units in its first weekend. Meanwhile, there is Ovi, the internet portal that allows users to access the services that Nokia’s future hinges on. Since its May launch, it has attracted only 1.7m users and 10m downloads – a fraction of the 200m downloads iTunes achieved in its first three months.
Two-and-a-half years ago, Kallasvuo said he ‘welcomed’ the launch of the iPhone and concluded that it would not in ‘any way necessitate us changing our thinking’. Perhaps he is ready to leave a new message now.
The Blake Project Can Help: Accelerate B2C and B2B Brand Growth Through Powerful Emotional Connections
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education
2 comments
twitter.com/justinbasini
April 6, 2010 at 5:54 am
Great post. Nokia is such an interesting company. They have a long term planning capability that has worked over many decades to keep them at the top of their industries.
However I wonder whether at the moment they have lost their strategic focus.
I think they are missing a trick in not exploring the development of their brand as a force for social good as well as for commercial gain. They have many powerful claims in this area such as the efforts they are putting into eco-phone design which I think could move them onto a powerful new brand landscape.
I’ve called this competing on social imperatives as well as the commercial. You can read more here if you are interested:
[deleted]
Thanks again for the stimulating blog on Nokia strategy.
John Mullinax
April 6, 2010 at 10:53 am
I always enjoy your posts, but I’m not sure I agree with your analysis here. Or maybe I just don’t understand it?
You’ve compared Nokia to Apple and RIM in the hopes of showing the power of focus, but counter to your argument, Apple actually strikes me as the poster child for wanting to be all things to all people… laptop, desktop, or tablet? software or hardware? smartphone or media player? entertainment network or bookstore? They are all of these things, of course –
I think one could read the announcements from the various Nokia executives you outlined as a recognition by the company that hardware systems, software systems, and entertainment networks need to be thought through together and should all work together. In other words, maybe the different announcements are not different strategies but all part of the same strategy: Nokia will make software that consumes a wide range of their own (as well as 3rd party) apps, services, and entertainment content across a range of devices, price points, and market tiers. Perhaps the execs that were quoted are simply emphasizing the part they are responsible for, and that they think is most interesting to the audience they are speaking to?
Now, there’s a very legitimate question about whether or not this is a good strategy for Nokia, but at least it would seem to build on their strength in feature phones and give them a way to reduce consumer loss as consumers grow toward smarter phones. For example, if you have apps and content that you’ve purchased for a lower or mid-tier Nokia device, and you can take it with you to a smarter device, that seems like an incentive for consumers to stick with Nokia.
Of course, there’s also a question as to whether or not the different groups in Nokia are actually working together effectively, and actually delivering a cohesive ecosystem of devices, software, and entertainment content delivery. The ability to execute always matters, too.
Comments are closed.