This post is a follow-up to Monday’s “Why can’t Nokia sell phones to Americans?”
Nokia, the world’s largest mobile gadget maker, sells as many phones as its next four competitors combined. Nearly 2 of every 5 mobile phones bought last year were Nokias. Yet the Nokia brand is almost invisible in the United States.
After I wrote about it on Monday for the opening of the Mobile World Congress conference in Barcelona, Spain, analysts and a lone ex-employee came out to say that Nokia has no one to blame but Nokia. The company, they say, made two strategic decisions that locked itself out of the U.S. market.
Yesterday I listed my own researched reasons for Nokia’s disappearance from America a few years ago. First, the company demanded too much from U.S. operators, who have far more entrenched clout than their counterparts elsewhere. Furthermore, I wrote, Nokia’s phones no longer lead the field, neither on sexy hardware design nor in genius features like Apple’s gesture-driven touchscreen or Google’s Nexus One with its noise-canceling, voice-enhancing microphone system.
My critics say no, Nokia cut itself out of the U.S. market through two bad decisions. First, the company chose not to build phones that work on two of the four largest American wireless networks. Second, Nokia chose to try a novel — for America — sales strategy that failed.
NPD analyst Ross Rubin blamed “a series of failed strategies around CDMA,” a wireless network technology used by Verizon, American’s biggest carrier, and fourth-place Sprint. “That has resulted in few handsets using CDMA,” Rubin said. “This largely kept Nokia out of the portfolios of Verizon Wireless and Sprint. Verizon’s switch to the LTE standard should help Nokia’s competitiveness there in the next few years.”
“Nokia neglected CDMA in America,” agreed independent analyst Greg Sterling. “But Nokia also decided to bring its standard sales mode to the States. Instead of encouraging buyers to sign up for a two-year contract with, say, Verizon to get a sweet deal on a high-end Nokia, the company tried to sell the phones directly to consumers, “unlocked” in industry jargon. That means the phone isn’t hardware-bound to one specific carrier.
“Outside the U.S.,” Sterling wrote, “Nokia can sell directly to the end user and doesn’t have to work with carriers in the same way. Until very recently the U.S. market was dominated totally by carriers. Nokia took a more generic global approach that wasn’t really tailored to the US market.”
The reason I didn’t list CDMA as a show-stopper in yesterday’s post is that Nokia today has plenty of CDMA models, from the affordable 1006 sold by MetroPCS to the 7705 Twist developed with and sold by Verizon.
Nokia’s market research arm is huge, experienced, and highly paid. But even the best talent can sometimes make a decision that fails. That seems to be what happened here: Nokia management came to the conclusion that it was better to sell unlocked non-CDMA phones directly to American consumers, rather than compromising on partnerships with the big network operators.
Had Nokia researched these decisions online, they would probably have come to the conclusion that Americans are begging to pay more for an unlocked phone not subsidized by a phone company. Look at all the posts! No one ever tweets about how awesome it is to sign up for two years with T-Mobile in exchange for a free BlackBerry.
I’m sure Nokia didn’t just Google for data. They did plenty of expensive boots-on-the-ground research on American soil. Yet the end result was a product offering that even the bloggers won’t buy.