Nokia to reboot U.S. efforts … again

Nokia Corp. (NOK) said this week that it wants to improve its business in the United States with plans to work more closely with operators and provide devices that meet the unique characteristics of the market.
This quest has been a near annual proclamation from the world’s largest handset vendor (see 2008, 2007, 2007 again, 2006, 2006 again, you get the picture) that despite its near 40% share of handsets shipped around the globe, continues to struggle with a low single-digit share in the United States.
“We are not happy with our situation in the U.S. and are looking for ways to bring more handsets to the market,” said Colin Giles, SVP and global head of sales for Nokia at the company’s Nokia World event in London.
“We were trying to run a business globally and not tailoring devices for the U.S.,” Giles explained. “The U.S. is a consumer driven market and we need to have products that are attractive to consumers.”
In an attempt to reverse the trend Giles said the company was looking to improve carrier collaboration and that it was prioritizing a number of device requirements specific to the U.S. market. When questioned later on what those requirements were, Giles noted they included different carrier requirements for network compatibility, branding and user interface.
Giles also noted that Nokia would be looking at designing specific hardware for the U.S. market and that it has set up a dedicated research and development office for the Unites States.
Giles, who admitted that he did not have a lot of experience with the U.S. market, added that he thought the devices the company was launching at this year’s Nokia World event would be attractive to U.S. consumers, though there was no announcement of an effort to market them in the U.S.
While Nokia’s previous attempts and failures to gain ground in the United States were downplayed due to its continued domination around the world, the current mobile device market is being driven by higher margined smart phones that currently see their biggest market in the United States.
“The smart phone segment has become very important to profitability,” explained Brad Akyuz, senior analyst for mobile devices at Current Analysis Inc. “Nokia has to regain share in the high end and the U.S. smart phone market is the biggest in the world.”
One limitation for Nokia’s renewed interest in the U.S. market is its continued focus on GSM-based devices, which limits its potential carrier partnerships to AT&T Mobility and T-Mobile USA Inc. While those operators serve more than 100 million customers combined, AT&T Mobility is currently heavily invested in its exclusive agreement to offer Apple Inc.’s iPhone as well as its strong sales of Research In Motion Ltd.’s BlackBerry devices, while T-Mobile USA is device heavy on smart phones powered by Google Inc.’s Android OS as well as BlackBerrys.
Nokia currently has four devices available through AT&T Mobility, a trio of low-end devices and a refurbished E71x smart phone, while at T-Mobile USA it also has four devices including a pair of low-end models, the E71 smart phone and perhaps its most compelling U.S. device, the 5230 Nuron touch screen smart phone.
“We are confident with what we have,” Giles noted in addressing questions about its ability to carve out a beachhead with AT&T Mobility. “We think we can partner with AT&T and bring phones to market. We have a strong portfolio in most markets. We believe we have a lot of attributes that we can bring.”
“The relationship with carriers has definitely been a stumbling block and something they still need to resolve if they want to see any growth in the U.S. market,” noted Ross Rubin, executive director of industry analysis at NPD Group.
Online retailer Wirefly released a ranking of its top selling devices for the summer that showed the top seven positions dominated by devices either running Google’s Android OS or a BlackBerry device. Nokia did manage to get one device on the list with the Nuron 5230 selling through T-Mobile USA.
As for its continued forgoing of the CDMA market, Giles said the company would continue with that plan and hope to bring CDMA-based operators into the fold once they begin moving towards LTE networks.
“If we are going to re-enter the U.S. market, for lack of a better word, we need to come in as a challenger,” Giles said. “It’s not the right approach to come in and do everything at once. … We do wideband CDMA really well. We will take that one first and that opens up a couple of operators for us. That’s not to say that we don’t understand CDMA operators, we do. We are looking more long term at LTE and hoping to bring operators in on the new generation of platforms. Take a step by step and then partner with LTE.”
Nokia has had a checkered past of trying to support CDMA operators through the years before finally abandoning the efforts.
Wooing developers
Nokia’s Giles noted that in addition to a closer relationship with carriers, the company is looking to broaden support for its Symbian and soon-to-launch MeeGo platforms from application developers.
“Creating the ecosystem with developers in particular that are interested in developing products for the U.S.,” Giles said, adding that it was trying to find a balance between bringing devices to market before the ecosystem was ready or letting the ecosystem develop before launching devices designed to take advantage of the opportunity.
Akyuz noted that these efforts could be Nokia’s best chance of penetrating further into the U.S. market as the company has a vast stash of service offerings in its Ovi portfolio that have yet to gain traction domestically, though a refocus is in the works.
“We are going to have to work hand-in-hand,” Giles explained. “It will be about rebuilding our brand. Building the developer backend systems that will allow is to build the ultimate consumer experience.”
Management shakeup
One recent move that shows Nokia may be more serious this time about the North American market was the announcement last week that long-time CEO and president Olli-Pekka Kallasvuo will leave the company on Sept. 20 and be replaced by current Microsoft Corp. executive Stephen Elop.
“This could be a testament to their new focus on the U.S. market,” noted Akyuz. “Elop has a software background and is from North America. I think this shows they are more serious about tackling that market and regaining lost ground.”