One Year Later Part II (as posted to FB 3/2/10)

Meanwhile...

Nokia in the U.S. - What happened?

The debate continues to rage over why and how Nokia lost its way in the North American market, where it once reigned supreme and now can boast at best single digit or low double digit market share, and that built on low end and feature (not necessarily "smart") phones. Needless to say, there's no one single answer, but one thing can be certain, mis-steps and missed opportunities were global, not North American.

Not long ago, over the holiday break, I read a NYT piece titled "Can Nokia Recapture its Glory Days" (http://www.nytimes.com/2009/12/13/business/13nokia.html?_r=1). A sobering read, particularly for those of us whose blood still runs a tad Nokia Blue. Moreover, a frustrating read, particularly for those of us who know the U.S. market intimately and have not-insignificant insight into Nokia's history here.

When the Times quoted a Nokia executive saying “We made wrong decisions in the American market,” and then the Times explained that "For instance, Nokia was slow to make the change to so-called clamshell phones, sticking with ‘monoblock’ models even as consumers abandoned them," I bristled, just a bit. While such decisions may have impacted first and hardest in the American market, they were not made in some North American vacuum. Indeed, I recall strident warnings from Nokia North America to global product gatekeepers in the early 2000's, advising that form factor and user-interface developments in the U.S. - ranging from flip to fold to thin to QWERTY to touch – would soon set global trends. Largely unheeded, such warnings were perhaps not strident enough...

Nevertheless, I was heartened to read another Nokia executive quoted: “We have not lost our ability to innovate; we have not lost our ability to truly understand the consumer and make intuitive solutions for them." I believe this.

But, as I read on, my frustration returned when Nokia's success-challenged "Comes With Music" and "a smartphone for next year that will update the company’s aging Symbian operating system" were referenced by the Times. While the reference was global, from a U.S. perspective, the former is an extremely long shot at best, and the latter, well, and globally, in an industry increasingly defined by real hand-held computers, Symbian is increasingly qualified as a high-end feature-phone OS, not a mobile computer OS.

And then I read that a crucial development in 2010 will be a bigger push for North American market share with Nokia working more closely with carriers and bringing out more smartphones. “We have not invested enough there...It’s a necessity for us.”

Okay. Sure. True. But, c'mon, it may be time to update the talking points - this one's getting a bit dusty. In fact, it's not really been a matter of not enough investment, rather, perhaps, mis-directed investment. The Times article rightly stated "according to both Nokia executives and industry experts, the company didn’t want to produce phones specifically tailored for American consumer tastes, and it resisted demands from the major carriers to come up with phones based around their brands and individual specifications." But, when I say "rightly," I mean 'rightly' as in, like, five years ago. Since then, outside of the brief period of Multimedia heresy and success in 2007, Nokia North America has been doing its utmost - granted, somewhat constrained by an organizational structure that favors scale-obsessed global product cookie-cutters - to build anything a U.S. carrier might want, tailored in any way they might desire, yet has simply not achieved sustainable success.

Should Nokia continue blithely down this same path in the U.S. - against competitors like LG and Samsung who have mastered the carrier kowtow, relative newcomers like Apple who've upended the carrier dominance model with device and services solutions, and the likes of Google which aims to do the same with both its Android OS and HTC-built Nexus married to its wealth of online solutions - it will very likely mean continued failure in the U.S.

Now, at this point, I should highlght that I don't claim to have any insight into Nokia's current global or U.S strategies, and I do wish them all the best in terms of the substance and execution of whatever that strategy may be. But with that said, if I may be so bold, if it were me, for whatever it may be worth, and with a very pure focus on Nokia in the U.S. only:

-- I'd stop following past, global, defensive or someone elses' rules and blueprints. It is time for risk and reinvention.
-- I'd outsource mainstream product for North American operators - find a manufacturing partner in Asia, maintain oversight of design and quality, but otherwise deliver Nokia-branded product 100%+ to U.S. operator demand, preference and spec.
-- I'd build such outsourced product on Android. Make a land grab where there is land to be grabbed.
-- I'd white label any Ovi services that any North American carrier might want. They're already losing control to third-party content, services and app stores - why not give them a solution instead of another headache? (And, frankly, Ovi by Nokia is effectively DOA in the U.S. anyway, at least in any near-term way).
-- Meanwhile, I'd dedicate Nokia's significant San Diego-based resources to design and produce an optimized-for-North America handset, specifically not borrowing from some global roadmap.
-- If Maemo (or now MeeGo, as married to Intel's Moblin) is truly stable - and we'll see what the N900 experience ultimately proves - I'd build that single, optimized-for-North America product on that OS.
-- And I'd sell that product direct to consumers, partnering with big box and other retail, as well as online. (Note: While this strategy might seem akin to Google's, it was in fact a strategic recommendation I made to Nokia executive management when I left a year ago). Oh, and if a carrier also happens to want the device, super, let 'em have it - but don't dither about heeding their customization demands - that's what the outsourced product is about.
-- I'd break the Nokia mold and invest in some noticeable branded marketing and advertisement in the U.S., specifically around that open market North American-optimized device and its related experiences.
-- Working with channel partners, I'd deploy innovative new retail models - device installment plans, for instance - to ameliorate the lack of subsidy.
-- And, I'd sell the device at, near or even below cost - a conscious land grab (yet another) in the mobile computer space.

I've no doubt that there are many who could poke solid holes in any element of such a strategy. Please do. Have at it. But be careful about arguing that it's just a matter of time for the current Nokia U.S. strategy to succeed. That's another tired talking point - it's been a few years now. Not only has it not succeeded, it's simply outdated in terms of the market’s evolution. I'd be equally wary of proclamations that the strategy has evolved -"just you wait and see" - that talking point's a bit tired now too. It's time for proof, taste, pudding.

In short, I believe, in order to succeed in the U.S. - and ultimately globally - it's time for Nokia to refresh, renew, re-engineer, replace, revive, and (re)discover. I wish them great luck and god-speed.