All my favorite Nokia/S60 bloggers recently started ranting about Nokia’s USA situation. I call it a "situation" since the 4th quarter 2006 earnings report (read the pdf) presents some pretty troubling figures.
Before we can have a rational discussion, let us look at some numbers. The following charts have been extracted from the 4Q2006 Nokia Earnings Report PDF:
Nokia shipped 39.8% fewer phones in North America Q42006 than in Q42005. This is a substantial reduction in the number of handsets.
However, from the 3rd quarter of 2006 (July-September) to the 4th quarter of 2006 (October-December) there was a tiny 1.7% increase in sales. Sign of things to come or just a little blip in sales due to Christmas?
Here we can see that Nokia shed almost 800 jobs, or 12% or its North American workforce over the course of a year. Nokia is beginning to scale back. Wouldn’t you if your sales numbers were going thru the floor?
Ricky has the most extreme conclusion, that Nokia should just give up:
Nokia, you might as well simply pull out of the US market entirely. Don’t even bother sending crap to the FCC. I’m dead serious. This is getting ridiculous. First off, let it be known that I am a Nokia fanboy. If you’ve crossed me on Howardforums, you’ll know this, and you know that I’m not afraid to admit it. I started with the 5190, moved to the 8260, then to the 7160, up to the 3360, on to the 6340i. Heading into GSM I had the 3595, 6620, 3300, 6170, 6230, N-gage QD, 6682, N80, N73, 6102, 6102i, and E62 (in no particular order). I’ve never owned a cellphone for longer than a year, and I’ve converted as many people as I can into Nokia users.
HOWEVER, I’m completely embarassed at Nokia’s "presence" in the US Market. I put that in quotation marks because I don’t think you can call it a presence. They currently have 3 phones that they themselves produce and market. The 6030, an entry-level phone that’s 2 months away from EOL, the 6102(i)(3), a low-level flip that’s also close to EOL (and quite possibly the worst Nokia I’ve ever touched) and the 6133, a mid-level flip that was announced nearly a year ago.
Read the whole thing. You can feel the angst coming off your screen.
His argument is from the "so few models are sold in the USA" angle that is common among Howard Forums members. The problem in this situation is the operators. If you’ve ever used a locked phone in America then you understand that the level of castration a device endures in order for an operator to hit their bottom line is quite appalling. Nokia wants to sell its phones to Americans, there is no question about that. Operators are the middle man impeding sales.
Next up is Olly, a part time blogger, further adds to Ricky’s post:
1.) Despite your dispute with Qualcomm, and the fact that two of the major U.S. operators are in bed with them, there is still a good market for GSM devices here.
2.) Like it or not, the Carriers are _the_ distribution channel here… i know you know this, so dish them something more profound then the Nokia 3100 perhaps?
Finally, you need to realize that you are _handing_ the U.S. Market to Microsoft. For every LACK of U.S. variant of W-CDMA you fail on for Cingular (and I’m sure for T-Mobile) there is a WM5 (and now wm6) HSDPA device announced.
I _hate_ Windows Mobile, and I _love_ my Symbian/S60/Nokia devices… but you are lagging severely behind here, and I can’t afford to move to Europe. The infrastructure is here, so it’s time you took advantage of it.
This is the "Windows Mobile is stealing your market share!" claim that gets tossed around quite often.
The latest Canalys market research report has this little snippet:
In operating system terms, for the full year, Canalys estimates that Symbian had 67% share, up from 63% in 2005, Microsoft was in second with a slightly reduced 14% share, RIM came in third on 7% followed by Linux on 6% and ACCESS/PalmSource with the Garnet OS on 5%.
So Olly the reverse is happening. Symbian (foundation of S60, UIQ and NTT DoCoMo) is gaining market share while Windows Mobile is loosing it.
I know what you’re going to say … this conversation is about the USA. Let us refer to the first chart I posted labeled "Nokia Mobile Device Volume By Geographic Area." Nokia sold 105.5 million mobile phones in the 4th quarter of 2006. Of those only 5.9 million were sold in the North American continent. That means around 5.6% of the mobile phones Nokia sold made it to the USA and Canada. That’s a pretty tiny figure.
If you were the CEO, which market would you focus on? Europe and Asia account for 54% of the phones Nokia sold last quarter. Two continents are responsible for over half of the phones Nokia makes.
Simple economics really.
Darla Mack believes that Nokia thinks Americans can’t handle smart phones:
I refuse to believe that its the consumer market that have been brainwashed into thinking that the Motorola RAZR is the %@#%! Cingular store reps tend to push whats hot (commission wise) and I’m not saying all areas. But I’ve been doing secret shopping in my area and thats what I’ve noticed.
Last year Cingular changed their contract options from 1 year to 2. If we must lock ourselves into a 2 year contract then we need more device options. More options that we as consumers know about!! I hate to say this, but myself as well as other "editors" here in the US would love to get some feedback from Olli-Pekka Kallasvuo on this issue, just so that we can get an understanding.
Sure, its easy to say, just use the device that you are using and forget the providers… but thats not the right answer. There MUST be a solution of some kind. And dare I mention the warranty issue again, which does play an important factor.
What I have to say to Darla I’ve said to Ricky: Operators have the keys in their pocket and Nokia isn’t making any progress kissing their feet and respecting their wishes.
You’re also giving the standard American consumer too much credit. Walk in to any mall, Starbucks, or dare I say it … McDonald’s, and you’ll see that the RAZR is the phone to own right now … for the 4th year in a row. The American people have been brainwashed to believe this. The American people need phones that do what phones do best: make calls and send text messages.
I apologize for any broad stereotypes I’m about to make here, but from what I’ve observed at my University the only people who own smart phones are the Asian and Middle Eastern students. Most (75%) have Sony Ericsson’s due to their MP3 playing capability, and the rest have Nokia’s.
More than half of the Caucasians in my classes either have a RAZR or SLVR. The other portion uses Samsung. My friends are pretty much an even split between Samsung and Sony Ericsson’s with the exception of two girls: one has a RAZR in black, the other has one in pink. Greg has a Treo 700p.
While you give American’s credit, I don’t. They still think RAZR’s are cool, and don’t mind signing their soul away for 2 years at a time to have a phone that came out such a long time ago. RAZR’s are practically free now with contracts.
Jonathan Greene, video review extraordinaire, wonders why Nokia hasn’t made any phones that support the USA 850 MHz WCDMA frequency:
I’ve been enjoying reading the reports from 3GSM and there are some really nice things coming from the Fins, yet again — not a single device will work on the 3G capable US network. Where’s the love Nokia?
Simple. There is only one company right now who makes a triband 3G chip: Qualcomm. Nokia is to Qualcomm what Shiite’s are to Sunni’s right about now. The legal dispute is going to be down right dirty. Is it hurting Nokia’s product offering? Absolutely! I for one am disappointed that 3G in the E90 doesn’t work around the world. Not to mention the 3G in my Nokia E61 and N93 are useless where I live.
Tommi finally wraps things up by being confused:
Frankly, I think the situation sucks. Nokia wants to sell devices in the US, and people in the US want to buy our devices – but the seller and the buyer don’t meet. But why? Honestly, I don’t understand why. Of course, I have heard all kinds of reasons, but still, my mind refuses to understand it.
I have a possible solution:
Online shopping.
Forget the operators. Forget the flagship stores, which while nice … there are only 2 in the entire USA. $5 says Ricky is going to comment about the Nokia Experiance Stores. Personally I’ve only stepped inside one, in Las Vegas. They didn’t have the latest phones, and worst of all I couldn’t buy anything. People like to play, and if they like something, then they like to buy. Is it difficult to keep just a little back stock?
Anyways, back to my solution of Nokia launching an online store:
- Maintaining a warehouse is easier than maintaining a brick and mortar store.
- You can offer all your latest phones and best of all service them in case something happens.
- No more negotiating with the operators, you’re selling directly to the consumers.
- You can begin an ad campaign informing people about your product, why unlocked is the way to go, and telling them to go to nokia.com
- "We don’t sell minutes, we sell the most advanced cell phones on the planet" is quite a catchy phrase don’t you think? What happens if you start this and succeed? More mobile phone makers will begin selling unlocked devices to consumers directly and a chain reaction will occur. What happens if you fail? Just ship over the unsold stock to Europe and Asia.
- Advertising that centers around labeling operators as the middle man. Let people know that they can buy phones from the people who make them. We don’t buy our cars from Exxon, why should we buy our phones from operators?
- Offer to buy out peoples contracts. It may cost you in the beginning, but with more people totting Nokia’s then the more people will start noticing your brand. Every time I whip out the N93 practically all eyes are on me.
- Inform people that they don’t have to change their number, or their service, they merely have to swap that little piece of plastic that came with their phone.
- Start giving out phones to University students. The epitome of a low self esteem enviroment where any material product will raise your popularity a few notches. Give a few college atheletes or frat presidents a few of your latest N series devices and watch people start asking "wtf is that thing? I want it!" If this plan fails then at least we’ll have some pretty … interesting videos show up on youtube 😉
- Sponsor American Idol.
What do you guys think? Is this too bold of a step? I think the industry needs that swift kick in the ass I’ve been asking for since December of last year.