Nokia: Take It Direct to the USA
As many of you know, I work for Nokia. No, I don’t work for a part of Nokia that directly handles phones, but I work for Nokia all the same, just like Tommi does. There are a lot of things I really like about Nokia. One thing I have continually been frustrated with is our lack of presence in the US mobile phone market, which Tommi mentioned in his blog. The following musings are my opinion and likely don’t reflect Nokia’s official word on the matter.
I recently sat in a large meeting that was attempting to rationalize some of the layoffs that had recently occured in Enterprise Solutions. I didn’t disagree with any of the rationalizations logically. However, the one nagging question that came to mind in all of this was: how in the heck are we supposed to sell any phones in North America when:
- North America buys their cell phones almost exclusively through mobile carrier outlets
- We barely have a presence in any of the major carriers
At the end of last month, I did a survey of the 4 major mobile carriers in the US, which are (roughly):
- Cingular (GSM): 60 million
- Verizon Wireless (CDMA): 56.7 million
- Sprint (CDMA/iDEN): 51 million
- T-Mobile (GSM): 24.1 million
There are a number of smaller, regional carriers as well, most of which are CDMA also. In Canada, the only GSM carrier is Rogers. Everyone else is either CDMA or iDEN. And if you follow the industry, you probably are aware that Nokia does not make a whole lot of CDMA phones. The ones they do make are low-end ones. My guess is that this has a lot to do with the ongoing disputes between Nokia and Qualcomm.
The results of my survey last month, based on my own experience in carrier and indirect stores, was no surprise:
- On T-Mobile.com, for instance, of the ~30 phones listed for sale, three of them are ours and they are generally lower-end phones.
- On Sprint.com, of the ~30 phones listed for sale, NONE of them are Nokia phones.
- On VerizonWireless.com, of the 35 phones, two are Nokia.
- On Cingular.com, of the ~45 phones, three are Nokia.
In the meeting this past week, I got a rare opportunity to ask someone in management a point-blank question. While I can’t write everything he said, I can share an interesting fact that was mentioned in his response.Carrier customizations take a lot of work, especially in the US. US carriers have some rather unique requirements for handsets. And even if the work is done to meet those very specific requirements, the carrier can come back and say “we’re not going to carry the phone.” While I don’t have any exact figures on what that some of that work runs, it’s wasted money all the same. I suspect that was one of the reasons that phones take so long to come out here in the US, if they come out at all, is carrier customizations for the US market.
Another interesting fact is that there are essentially two levels of approval a carrier can give a phone–approve non-carry, and approve and stock. Anything that you see in a carrier store with carrier branding and the like is considered a completely approved device that the carrier will stock. An approve non-carry is for a device the carriers approve for use on their network, but the carriers will not carry the device in their stores. There are substantial differences between the two sets of requirements, the approve non-stock requirements obviously being much less.
Because of how the CDMA carriers work in the US, the only devices you can effectively use on their networks are approve and stock devices. Because of how GSM is implemented, namely with a SIM card, you can easily use any GSM device on the network, approved or not. I’ve heard rumors that the GSM carriers could easily filter unapproved IMEIs from accessing the network, but I’ve never heard of that happening.
Despite the roadblocks put up by the carriers, or Nokia’s inability to go through these roadblocks depending on your point of view, Nokia has respectable market share in the US market. To gain more market share, one of two things has to happen:
- Nokia needs to spend more money on developing handsets specifically geared at the US market
- Nokia needs to sell handsets in North America through alternate, non-carrier channels
It’s possible that #1 will happen, but that will take time for those efforts to bear fruit. On the other hand, I suspect that #2 can be done with less cost and effort and provide better results. To me, this means selling more Nokia phones in more places, such as:
- More online retailers
- More physical shops (target indirect resellers)
- Direct from nokiausa.com, which I’ve seen done with some phones at least
- In Nokia Flagshp Stores
- Put some mobile phone vending machines out there
Of course, I’d like to see more Nokia Flagship Stores, too. Maybe the existing “Experience Centers” can be turned into Flagship Stores? Bottom line–Nokia needs to increase their presence in the US market. There are plenty of places other than a carrier store through which we can sell phones. And if we make compelling enough products, people will buy them, whether or not they come with all that lovely carrier branding. People in the US already do by these phones, but Nokia can certainly make this whole process easier.
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Comment by dziny
US market has lot of barriers even if you only sell GSM phones. The whole mess with frequencies where US GSM frequences are different from rest of the world, same with 3G. I guess that eventually there will be dual band 3G phones that would work both in EU and US, same way as 4 band GSM phones appeared. But it will take time and money. The question is whether Nokia really wants to fight for better share of US market, or they are content to be no.1 everywhere else.
I’m still amazed that somehow world has managed to come to agreement and wifi works more or less everywhere (with some minor differences in number of channels allowed).
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PhoneBoy’s thoughts on Nokia’s USA situation…
PhoneBoy: In the meeting this past week, I got a rare opportunity to ask someone in management a point-blank question. While I can’t write everything he said, I can share an interesting fact that was mentioned in his response.Carrier customizations…
Comment by Darla
Thanks for the input Phoneboy. Although, I’m interested in knowing just exactly what the carrier customizations is for? Just this past week the Nokia Flagship store in NYC finally started selling the N73. Now of course there might be Cingular reps and employees that swear the device will not work because its not “Cingular supported” but that isn’t true. It seems like there is some hidden secret that we as consumers aren’t supposed to know about. Isn’t Nokia a little bit worried or disturbed by this “Carrier Customization” roadblock?
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Taking It Directly To The USA – An Employee’s Perspective…
Recently, Ricky’s rant ended up as a discussion on Information Week. I’m happy to see the topic still going, but still confused about the solution. By way of a comment on my original post, I’ve come across an interesting article…
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Comment by Rcadden
Dameon,
Thanks for putting some Nokia backing on this rant, and for stepping up and asking the top brass. I’ve written up my response, which, ironically, is exactly what you suggest. I’d suggested it back in December as my 2007 New Years’ Wish (http://symbianguru.typepad.com/welcome/2006/12/my_2007_new_yea.html) and gave basically the exact same suggestions.
I’ve thought through it a bit more business-minded, though, you can find my informal submission on my site.
Great writeup, and thanks again for sharing what you could. I personally can’t wait for the day that I can walk into a Nokia Store and just buy a phone.
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How 4 P’s Will Save Nokia In The US…
This is what I get for taking a few days rest on the weekend. Darla has found a fantastic freakin blog called Phoneboy, by a guy who works at Nokia, though apparently not directly with handsets. However, he’s recently had…
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[...] asks the question. A lot of it boils down to the reasons presented in the Tim Wu paper. However, as I’ve said before, Nokia needs to make a better go at it in the US market by offering more opportunities for direct [...]
Comment by Lolo
Just my 5 cents..
I bet Nokia really doesn’t care that much about the market in North America. The market here is saturated, growing but mature. Take for example China and India. There is the future for Nokia. Market there is mostly consolidated and is exploding. It would be a waste of money to push phones in N.A. That leaves only Option 2) as phoneboy said. And I guess this is already happening, slowly. But Nokia is testing the market I guess with this distribution channel before rolling out on a larger scale.
And Europe – the advantage is that the cell phone market there is really withoug barriers and cheap. Like travelling. Travel for 19 bucks by air from London to Paris. You can’t afford to go to Niagara Falls from Toronto by bus for 20 bucks here.
In terms of carriers, I have Nokia e70. I wanted to change my plan. I went to Rogers (Canada) and when the Rogers guy saw my phone he said “this is not an approved phone… you must stop using it…”.
This is totally ridiculous with those providers in the US/Canada.
Comment by mathiastck
Responding to Lolo, there are ways Nokia could waste money in North America, I think Nokia has found and gone through most of those already. However releasing a single E series, 3G, handset, in North America, with a keyboard, after carefully making sure a major US GSM carrier (cough ATT), is a pretty safe bet.
I’m hoping the Nokia 6086 with T-Mobile’s hotspot at home will also perform well. I plan to get one, it would replace my landline, and allow all sorts of free calling. Fixed Mobile Convergence, in the states, with a Nokia. It would seem to be a big deal to me.
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