the air

For many years now, Nokia has and is the market leader for consumer wireless communication devices. In other words, Nokia is the market leader in cell phones. Most people in the United States do not look to Nokia as a trend-setting phone manufacturer simply because most US carriers do not offer a wide selection of Nokia phones. In addition, the US market is saturated with clam-shell (aka flip-phone) phones that have been pioneered by Motorola. In fact, Nokia has been very slow to the market with a clam-shell phone themselves; however, as of recent times, Nokia has introduced a handful of sleek clam-shell devices. Unfortunately for Nokia, most of their phones were not offered by US carriers because of the advanced features on the phones that were not compatible with US cellular services and technology. Isn’t that hard to believe?

Lately, the craze around the world has been revolving around the “slim” factor. One of the key reasons for the RAZR’s remarkable success is because of its extremely slim design. This is an area where Nokia has failed to properly shine since many of their newest phones are sleek and feature packed, but lack the slimness needed to appeal on a mass scale. The problem for Nokia here is the fact that they may not be able to see the same level of success Motorola did with the RAZR.

The risk for Nokia is that the effort comes too late. Coming out with a slim phone is a far cry from capturing the market share that Motorola’s RAZR commands. Samsung brought out a thin phone, for example, to little avail. And if the thin strategy stalls, such a setback would do damage in the U.S., the developed market where Nokia has always struggled to keep pace with Motorola. It’s in the U.S. that Nokia’s success has been largely confined to the low-margin, bottom end of the market.

The US market is a lucrative wireless market, but it is plagued with aging networks and limited bandwidth capacity. For the most part, US consumers have been slow to accept advanced mobile communication services such as text messaging, picture messaging, video messaging, mobile Internet browsing, etc. Due to this shortcoming, Nokia has had a tough time introducing more phones that compete with Motorola since most of Nokia’s portfolio caters to 3G users and beyond. Most of the Nokia phones available in the US are competing with the entry-level models from other competitors and Nokia, not surprisingly, is not enjoying that. Luckily for Nokia, they have a strong hold in both the Asian and African markets. Nokia is predicting that the African market will increase by 15% over the next few years compared to 10% for the rest of the world.

I’ve always preferred Nokia cell phones to any other manufacturer simply because of the wow factor. Many of Nokia’s phones are simply astounding and look much more exotic than any from Motorola and Samsung. Nokia needs to develop a “sexier” product portfolio for the US or it will see Motorola run away with the entire market. Motorola products have always suffered from RF issues and user-interface complaints. This is one area where Nokia has shined and proven itself to be one of the most versatile companies on the market. However, Nokia’s speed of introducing effective products has been disappointing and I am glad to see that Nokia is on its way back to focus more on design than simply pushing volumes out the door. Even analysts agree that Nokia can rebound and be on its way to be a leader in all markets.

Souce: BusinessWeek Article

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