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Nokia Must Conquer US Mobile Phone Mountain

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Nokia must retake the US market to cling on to its worldwide mobile phone leadership and stop its recent decline, says J Gerry Purdy

One of the big questions for mobile in 2012 is whether Nokia’s partnership with Microsoft will help Nokia regain a successful entry into the US market, where the Finnish company has been conspicuously absent for the past couple of years.

lot could be decided this month as reports surface that T-Mobile and Nokia plan to make the Lumia 710 smartphone Nokia’s first Windows Phone device available in the United States.

Past glories

It wasn’t too many years ago that Nokia was the market leader in the United States with their famous “candy bar” phones running the Wireless Application Protocol (WAP) browser. This provided the phones with a pre-defined list of apps that were embedded by the wireless operator and not updatable.

All this changed when Motorola stormed the market with the introduction of the clamshell Razr in 2004, the thinnest flip phone to come to market. This was followed by Apple launching the iPhone in 2007 with a sleek new interface while Research in Motion (RIM) kept rolling along with the BlackBerry Bold in 2009 which included a larger keyboard and display.

During each of these major introductions, Nokia saw their US market share drop as consumers flocked to these newer form factors and software platforms. With no response from Nokia, the company’s board decided it was time for major changes.

In 2010, Nokia hired Steven Elop from Microsoft. He put all of the software platforms under review, including Symbian and the MeeGo joint venture with Intel for a Linux-based OS for smartphones. The company considered keeping Symbian or migrating to either Google Android or Microsoft Phone 7.

Elop and Microsoft

Everyone knows by now that Nokia’s management team decided to create a major partnership with Microsoft. What most people don’t know is that the decision wasn’t a foregone conclusion simply because Elop came from Microsoft. Rather, it was reported later that Android was the leading contender until Microsoft swooped in and offered a far-ranging partnership that included the sharing of valuable intellectual property.

With the new Lumia Windows Phone 7 smartphone now shipping in Europe, the next big move by Nokia is to re-enter the North American market with Phone 7-based smartphones in 2012.

The stakes are high for Nokia as this market has already mainly converted  to smartphones. Feature phones are no longer seriously considered by most US buyers but sales in this market is still allowing Nokia to hold onto its substantial brand on brand leadership worldwide.

Other vendors, most notably Samsung and HTC have been manufacturing Windows Phone 7 smartphones for most of 2011 without much market adoption. Frost & Sullivan reports that Microsoft Phone 7 holds less than 10 percent of the North American smartphone market.

It looks as if Microsoft and Nokia may have an uphill battle to realise much success in the North American market. Frost & Sullivan reports that the iOS and Android platforms are already commanding a 19.6 percent and 23.2 percent respectively, or 42.8 percent of the market in total.

How is Nokia and its partner Microsoft going to succeed in the US market? It appears the outcome could have a tremendous effect on Nokia’s future. It’s possible that Nokia could continue operations without that market, but it makes their future much brighter if they can be successful there. The “centre of momentum” for smartphones is currently North America because the software running these devices is all produced there: by Google, Apple and Microsoft in the US and RIM in Canada.

Enterprising strategy

I believe that Nokia’s best opportunity is to focus (at least initially) on the enterprise market. RIM is in a precarious position right now. The BlackBerry has “owned” the enterprise market for years but both Apple, with iOS devices, and Android, with partners such as Samsung and HTC, are taking market share away from RIM.

Microsoft has a number of excellent resources it can bring to its relationship with Nokia in the effort to gain enterprise market share in North America including:

  • Easy synchronisation with Exchange servers
  • Local Outlook client that provides a familiar email user interface
  • Integration with the Office application suite including Word, PowerPoint and Excel
  • Access to Sharepoint files and folders providing secure access to enterprise information
  • Using Microsoft Office 365 for online access to email and documents
  • Providing VPN services to manage secure connectivity to the enterprise network

Once the email accounts have been set up on Windows Phone 7 devices (including Nokia and others), the employee has a really easy-to-use mobile device that works with the organisation’s network resources. It’s possible to set up these things using the iPhone or Android devices, but it’s more complex, takes more IT staff time and isn’t as seamless a solution.

Nokia needs to ensure that it has the best products available for the enterprise compared with other excellent suppliers, such as Samsung and HTC, to be successful in the enterprise market. Then, Nokia can re-address the consumer market and take advantage of Microsoft’s gaming, music and video services.