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.