Ina Fried, writing for Re/code, reports that “As early as next year, the company aims to rejoin the phone market”. It’s no surprise to industry watchers. There seemed to be some foreshadowing from i) the fairly short-term clause (with Microsoft) prohibiting Nokia smartphones; ii) the Android launcher and tablet that Nokia recently produced.
Many questions come to mind, but seven in particular:
1. LEADERSHIP: Who is the leader that will set product direction?
2. TALENT: How talent-constrained will they be? I’m sure the team at Nokia Technologies is outstanding, but many high-performing employees either already work for Microsoft or have found positions elsewhere. This doesn’t affect the ability to have products, or market products; it affects the ability to create *superb* products or to create *superb* marketing.
For instance, Nokia excelled at design and hardware engineering. Can it re-constitute that capability?
3. IDENTITY: Is their priority to produce Low Cost products, or Differentiated products? (You really don’t want “both” as the answer.)
4. TECHNOLOGY: How much proprietary hardware and software does Nokia possess? (In terms of patents (just one angle to this), the company kept its portfolio, rather than sell it to Microsoft.) This applies more to differentiated products than to low cost products. By the way, a planned return to smartphones might be one factor behind why the maps division, HERE, is for sale.
4a) More specifically, what are Nokia’s apps and services ambitions? (There’s no doubt the OS will be Android.)
5. PRODUCT SET: How focused will the initial portfolio be? We’ve seen a tablet, now this rumor concerns smartphones, and there’s also talk of virtual reality. And, of course, the actual next wave of mobile devices is wearables. For smartphones, at some point, I wouldn’t be surprised at all to see them emulate Motorola’s portfolio clarity: phablet, flagship, low-tier model, and very low-tier model. (Nexus 6, Moto X, Moto G, Moto E.)
6. SALES & MARKETING: What sort of marketing and selling approach will Nokia prioritize? We’ve seen Xiaomi spearhead the use of on-line distribution. What will be Nokia’s approach? Brands have a funny life; they can wane, but they can also be re-vitalized. The right leader here will be critical
7. CONSUMER BASE: In part related to 6), how many current and former Nokia consumers can new Nokia attract? In the minds of many people, “Nokia” evokes many good sentiments.
Nokia has a fair chance of *being* in the smartphone industry again. But the odds of turning a profit, let alone being a top 5 player, are low. At this stage of the smartphone industry, a good product (the aspect Nokia is best-geared for) is not enough. Marketing and distribution are critical. Nokia has some brand recognition, but that’s not the same as, say, $500M+ in advertising spend or thousands of sales agents in a market. You really need a marketing and distribution system — a machine of sorts — to make mobile devices a profitable business at the scale that Nokia is likely aiming for.
One might say “Well, look at how far Xiaomi has come in three years.” Xiaomi’s a special case: A Chinese company, very in-tune with its home market, capitalizing on the growth of smartphones, e-commerce, and Chinese consumer confidence. It’s also not a great example, either, because in two other metrics: profit and growth outside of China, it’s not clear that Xiaomi is doing very well.
If you’ve got thoughts, email me.
