Many eyes in the brand world will be focused on Nokia tomorrow (February 11) when new Nokia CEO Stephen Elop announces a long-awaited turnaround plan for the struggling mobile phone giant. The event in London is a big deal because, quite frankly, the Nokia brand is on the brink. In smartphone market share and profits Nokia has been battered and bruised by iPhone and Android. Its brand has been hammered, too, virtually knocked off the map in the US.
A big announcement to address some big brand questions
From a brand perspective, the February 11 announcement will hopefully answer a multitude of pressing brand questions: What’s Nokia’s new brand vision? What’s the new brand strategy? How will Nokia lead its customers in ways that Apple and Google can’t match? Will the brand be energized to deliver a full suite of customer value, as a complete customer experience, or will it be downsized to the brand of a supplier? The latter would signal a major step down for a visionary market leader.
This was a brand problem from the get go
In my view Nokia needs a sweeping brand reformation because its many problems (and they’re very serious problems) stem from a gradual but deep dereliction of brand. Nokia’s troubles were a brand problem from the get go. There was no overriding brand vision to overcome the device-centric silo-ism that fragmented and smothered Nokia’s own forces of innovation. Without that vision to orient R&D to strategic customer outcomes, market opportunities were missed and massive development budgets accomplished little.
Mindset problems are brand problems
A common critique of Nokia is that it suffered from an insular, “prove it to me” mindset that shot down new ideas and thwarted initiative and change, enabling Apple and Google to run away with the smartphone market. I would argue that mindset problems are brand problems. They’re a “way” of preserving operational status quo. They can pull the plug on brand vision, and they can cripple the holistic view of the customer that products need to innovate successfully. A common result is products that frustrate users.
Elop: Nokia must now fight “a war of ecosystems”
Elop has laid out Nokia’s challenge in his fiercely blunt “burning platform” memo to employees. (Well worth reading in its entirety.) After citing the painful details of how Nokia lost its market leadership to the iPhone, Android and other competitors, Elop concludes:
The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, e-commerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem. [emphasis added]
So that’s Nokia’s newly defined task: how to build, catalyze or join an ecosystem. I find it a bit strange, though, that customers are not included in the ecosystems described. To me, customers are the most important part.
The brand as prime mover of the ecosystem
In the February 11 meeting I’d be looking for a more customer-focused concept of ecosystem to emerge, one with fewer elements than Elop lists, and one with deeper brand relationships. As I see it, the customer is the focus of the ecosystem, and the brand is the prime ecosystem mover. It’s brand vision and values that give the ecosystem meaning and direction, and make the ecosystem productive. And I would make it one ecosystem, not many. A multitude of ecosystems creates potential conflicts and might even generate debilitating intra-ecosystem rivalries.
Keep the ecosystem simple
The Apple iPhone ecosystem is hugely successful and not complicated. It exists for the benefit of customers, to make the purchase and use of iPhones as easy and delightful as possible. Apart from the wonderfully designed iPhone and iOS, the ecosystem is iTunes, the App Store, Apple retail stores, the developers who craft the apps, the apps, Apple customer service, and iPhone customers who provide feedback. Much of the ecosystem is embedded in the iPhone itself. The moving parts of the ecosystem are kept to a minimum. It’s through the focus and quality of the ecosystem that everything “just works.”
An alliance with Microsoft?
The latest rumors are that Nokia will announce an alliance with Microsoft to feature Windows Phone 7 mobile OS on Nokia smartphones. This would be a sea change for Nokia, which has heretofore produced both devices and software, and desired to own the full user experience. The Nokia brand has been the Nokia handset running custom Nokia software. Nokia’s Symbian OS is used worldwide, and its new MeeGo OS was slated for upcoming smartphones.
A prediction on what to expect on February 11
Horace Dediu of the highly respected Asymco blog has ventured his predictions of what the February 11 announcement might bring.
- There will be a multiple OS strategy
- The US market will be the first to see a new non-Nokia OS. I would guess Windows Phone with AT&T.
- Low end devices will remain with Symbian due to price considerations for the chipsets, components.
- MeeGo will be phased out in phone products but development will continue for tablets
This may seem like a radical departure, but in many ways it’s not. Nokia has nothing to lose in the US as its platforms have zero traction. By maintaining Symbian for low end devices, they can still aim for differentiation where Nokia feels it still has distribution and cost leverage. This strategy will also allow speed in time to market.
I would add that in the US a Nokia/Microsoft mobile phone alliance might be considered in last place behind iPhone, Android, RIM’s new Blackberry touchscreen OS and the new HP/Palm webOS phones and tablets.
Where does all this leave the Nokia brand?
Where does all this leave the Nokia brand? There are some serious brand implications in the above February 11 scenarios. Here are some key questions that the Nokia meeting will need to address:
- An agreement to use Windows Phone OS means that as a brand Nokia no longer owns the complete user experience. It’s now shared with Microsoft, at least in US smartphones. Doesn’t this diminish Nokia’s brand stature?
- A Nokia handset running a Microsoft OS is hardly a “Nokia smartphone.” It’s half Nokia, half Microsoft. Who owns the brand voice? Whose vision will lead customers?
- By giving up the smartphone OS Nokia apparently downgrades itself to a device supplier. As such, it’s no different than HTC, Samsung, LG, etc. Doesn’t this weaken Nokia’s potential hold on customers?
- If Nokia adopts Windows Phone OS for its smartphones, Nokia becomes dependent on Microsoft for smartphone OS innovation. The Nokia brand could be compromised if Microsoft fails to innovate as fast as iPhone and Android, to name only the top two competitors. How does the Nokia brand handle this?
- If Microsoft makes the OS and Nokia makes the device, who directs and manages the ecosystem? Whose ecosystem is it? For that matter, whose customer is it?