Matthew Chapman
Sep 04, 2013

Nokia and the 'death' of the pure-play mobile brand

The sale of Nokia's handset business to Microsoft could mark the end of the pure-play mobile brand

Nokia and the 'death' of the pure-play mobile brand

As HTC continues to struggle and BlackBerry puts itself up for sale, the once mighty titans of the mobile industry are shadows of their former selves.

Samsung and Apple remain the only companies that are able to make a profit from handset sales alone, due to their sheer scale.

So where does the future of the mobile market lie?

Kevin Chesters, the executive planning director of McGarryBowen and former planner on the Nokia account at Wieden + Kennedy, claims Nokia’s position is a "cautionary tale".

Dominant companies can fall from grace quickly in the technology space, with Chesters citing the example of Netscape, which used to have around 85% of the browser market share in 1997, before being sold for a dollar about six years later.

Chesters said: "Nokia’s position today is a cautionary tale because everyone thinks if they are at the top now, they will be at the top forever.

"There were many moments where Nokia could have turned this around. They had their record quarter in smartphones less than three years ago. There was a little touch of arrogance and believing they will always be there."

Nitin Bhas, senior analyst with Juniper Research, pointed out that Nokia’s downfall came about from not carrying its iconic phone brand into the smartphone market, resulting in Nokia having an estimated 54.72% decrease in smartphone shipments in 2012 compared to 2010.

Bhas said: "This does effectively mark the end of the pure-play mobile brand. Nokia has been struggling to position itself going forward against the likes of Samsung and Apple."

The success of mobile brands now lies in the ecosystem. Chesters pointed out Nokia failed to keep up with the cyclical nature of the mobile industry.

He argues that 20 years ago, consumers cared most about the network, with young people choosing Orange and businessmen choosing Cellnet.

Later, Motorola revolutionised this when people started making their decisions primarily on the phone manufacturer rather than the network, while now the operating system is the key factor.

The rise of the mobile internet in mid 2011 drove the rising dominance of operating systems such as Android or iOS.

Chesters said: "History will show if Nokia had invested in its Symbian operating system it would have done better than what it has done."

Martin Garner, vice-president of CCS Insight, said HTC could be the next acquisition target as traditional mobile companies struggle.

He said: "Now more than ever it is important to compete as a bigger ecosystem. If you are a pure play manufacturer, that’s a little harder to do."

Nokia’s handset business will benefit from being part of Microsoft believes Garner, because they will be able to "do more joined-up marketing and put more money behind it".

Questions remain over the Nokia brand itself. Microsoft has a ten-year licensing agreement to carry the Nokia name on handsets running off Windows Phone.

However, it is unclear what will happen to the parts of the Nokia business that have not been bought by Microsoft and whether there will be a clash of brand names when the ten-year licence deal runs out.

Garner said: "Microsoft would be mad to ditch the Nokia brand in the short term because there are very strong brand values attached to it."

The mobile market is an unpredictable place, so it is hard to second-guess what will happen to the Nokia brand, but the mobile market is set to be revolutionised again.

Expect handsets to now drive ecommerce sales rather than be a means to an end themselves, with Amazon and its loss-leading Kindle device the classic example of how commerce companies will lead the future of mobile devices.

The article first appeared on www.marketingmagazine.co.uk

 

Source:
Campaign India
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