Nokia and Windows Phone: Game over or game on?
16th Nov 2012 | 18:28
We take a look at the fortunes of the Finnish firm
It's been a year today that the first Windows Phone bearing the Nokia name landed in the UK – so are there any signs that Nokia's made the right move?
In that time Nokia has created the Lumia brand, re-thought its design strategy and, apparently, had a big influence on the direction Windows Phone is taking – a big move away from the firm than spammed high street phone retailers with every style of handsets imaginable.
'Last year we didn't have the Lumia brand, Nokia was [essentially] a new player in the smartphone space, especially in the UK,' Conor Pierce, Nokia's Western Europe general manager, told TechRadar. 'We were resurrecting Windows Phone in its own right, which is a big challenge for any company – especially one that's in the turnaround we're in. We have to think differently.'
There's no doubt that Nokia led the charge in the Windows Phone space over the last 12 months. In the relatively short amount of time since the likes of Stephen Fry took to the stage to proclaim Microsoft's rebooted phone platform was a worthy contender to the likes of Android or iOS, the sales of HTC, Samsung and others' Windows Phone handsets were mediocre to say the least, with around 8 million handsets sold worldwide before Nokia jumped in.
It was also good to hear Pierce talking about Nokia 'thinking differently'. From an industry point of view, one of the biggest problems the Finnish firm had pre-Windows Phone was promising amazing handsets that didn't deliver, complete with over the top events and advertising forcing the message down the throats of consumers.
Memories of sitting through a 30 minute 'lecture' in 2010 by Nokia executives on how important it was for consumers to be able to hook your N8 up to a big screen TV and play 5.1 surround sound still rankle – cries from those assembled that this was pointless without content (as well as not addressing the fact the UI was so poor) fell on deaf ears.
It was this thinking, this stubborn refusal to notice that handsets running Symbian paled in comparison to the likes of the technically-inferior iPhone 3GS in the eyes of consumers that caused CEO Stephen Elop to send that memo, talking of Nokia's 'burning platform'.
While Nokia's stance may not have changed completely in Elop's reign (Nokia World 2012 was far too heavily skewed towards extolling the unlimited virtues of the Lumia 920 without revealing the key details on price and release date) the last year has clearly been a worthwhile learning experience for the brand.
"The likes of the Lumia 800, 610 and 900 have been great starts and given us good momentum in the UK,' said Pierce. "We're proud of what we've achieved. Would we like to be somewhere else in terms of growth? Of course we would. Have we learnt a lot? Yes we have. Are we a different company? We now have this start-up mentality whereby where we are hungry to add value, to listen to people and become a leaner organisation that makes sure the feedback lands in the right place."
But let's not forget the task Nokia was faced with this time last year: essentially giving up on its mature-yet-flawed Symbian OS and starting from scratch with the Windows Phone brand, with only its strong retail channels and brand awareness for company.
And while Nokia was responsible for increasing the share of Windows Phone worldwide, around 10 million Lumia handsets sold in those 12 months isn't a strong number at all, considering Apple sold over double that amount of iPhones in the last quarter alone.
While you can't expect a company even of Nokia's magnitude to come in and start selling phones at a frantic enough pace to start troubling the big players, it still showed the scale of the journey ahead.
And to compound that, the launch of Windows Phone 8 didn't help things in terms of timing; consumer awareness of a new range of handsets coming in November contributed to slow sales of the Lumia brand in Q3.
Pierce was quick to jump on that point, suggesting that the Windows Phone 7-powered range of Nokia handsets had become another retail choice:
"The Nokia Lumia 610 and 800 have never been selling better than they are now; they're positioned very competitively and [retail staff] are more happy selling it now as they can enhance the messages that it all the benefits in terms of SkyDrive, Office, Xbox [that Windows Phone 8] has. Early signs, in terms of sales, show there's strong interest in that.'
It's been widely reported that Nokia was forced to slash the price of its Windows Phone 7 handsets in the lead-up to the next iteration of the OS in order to clear the surplus stocks – cuts of up to 15% on handsets now mean it has strong propositions in the PAYG space with the aforementioned phones.
But these handsets could present a headache a few months down the line, when they're stuck on Windows Phone 7.8 (which has still yet to launch – Pierce tells us that isn't stifling sales 'And when it comes, a huge base will be able to upgrade') and the flagship phones will be running Windows Phone 8, with many apps that will only run on the newer platform.
With Windows Phone being such a nascent platform though, this kind of division is necessary to propel it forward – every OS has a history of abandoning the early adopters when it attempts to become more mainstream, and Nokia was forced to ride the same current.
But how is this once-great brand attempting to offer something unique in the face of the merciless competition? Ideas like polycarbonate shells, innovative camera optics and inbuilt music services help give it an edge over the Windows Phone competition, and give consumers something different to consider when browsing at their local phone emporium.
It's a strategy to be commended; aside from the obvious benefit of not being accused of copying the designs of another firm, which can be costly even when innocent, Nokia is working to prove that not everyone clamours for the shiny aluminium phone, that there are millions looking to differentiate themselves more.
However, therein lies the company's biggest failure since its rebirth. While alternative and colourful designs will attract many, there are far more consumers out there swayed by the super-svelte, the impossibly thin, the brushed aluminium designs that can still house all of Nokia's impressive technology.
By stubbornly refusing to go down this path, Nokia is creating a rod for its own back – instead of consumers being attracted to a design then asking for reasons to buy it, Nokia is being forced to spend many hours educating retail staff in the benefits of Windows Phone and its technology, especially when the weighty 920 is compared to the lighter-than-air iPhone 5 or Samsung Galaxy S3 by the uncaring customers.
If you have to tell people why your product is brilliant, you're already at a disadvantage in these hyper-competitive smarpthone wars.
With its strong feature phone market share being eroded quickly by super-cheap Android phones, and net cash shrinking with each round of financial results, Nokia (obviously) needs to make sure its Windows Phone strategy is a success
So how to sum up the last 12 months? Pierce himself stated that the brand would have liked to have seen better sales and more market share by now, and while early sales of the Lumia 920 have been promising, it's still locked as an exclusive to the EE network at a high tariff thanks to the 4G connection.
So 2013 will be a critical year for Nokia if it's going to start cutting swathes in the smartphone market, and Pierce believes the current focus is precisely geared for that: "Nokia is in a new position; we're driving towards a new goal and you'll see lots more coming with some very exciting things in the pipeline. But the most important thing is that we focus now."
That focus needs to be laser pointed on delivering what the consumer wants, not what the Finnish firm thinks it needs. The next phone needs to be something that compares with the Samsung Galaxy S4 on price, specs and design, not just one of those. It needs to say 'Nokia is back' in a way that doesn't rely on the benefits of Xbox integration or Skype to make the sale.
In short, Nokia has quietly impressed over the last year, getting itself in a position to really make a strong play for consumers' affections. Now it needs to deliver a phone that can capture that.