A rose by any other name still smells as sweet.
Finnish-based Nokia Corp. hopes the same holds true for cellular telephones.
The company’s Nokia Mobile Phones Inc. announced late last month it will focus its marketing efforts in the United States on one brand name. The result: Nokia is in; Technophone is out.
Nokia said it will gradually phase out U.S. sales of its Technophone brand of phones and ancillary products and integrate them with the Nokia brand. Service and support of Technophone products will continue, however.
Nokia will set up a support center for North and South America at Technophone Corp.’s existing headquarters in Melbourne, Fla., to handle Nokia’s original equipment manufacturer sales, accessory sales and technical support for both Nokia and Technophone products.
Nokia acquired Technophone Corp. in 1991 for $66 million. The U.K.-based Technophone, which was formed in 1984, had had only lukewarm success up until then, selling phones mostly in smaller niche markets and Third World countries. Nokia, which today is the second largest maker of cellular phones in the world, has positioned the Technophone brand successfully in nearly 20 countries and niche markets throughout the world.
But increases in sales and market demand for the Nokia brand is changing the way the parent views its own brand identity.
“Nokia is firmly committed to establishing a brand name in a consumer driven business,” said Lauri Kivinen, vice president of communications for Nokia Mobile Phones. “The industry is getting bigger; companies are getting bigger. For us it’s a focusing.”
Kivinen said Nokia’s presence in the marketplace has grown considerably in the past two years, and that customer awareness of one brand name can be much stronger than with two. He pointed out the decision to discontinue the Technophone brand in the United States was in line with Nokia’s global plans.
“It’s not a phasing out; it’s putting the forces in the right direction,” Kivinen said.
Any decision to phase out the Technophone brand in other markets will be handled on a country-by-country basis, he said.
No jobs are expected to be lost as a result of the decision. In fact, according to Nokia, more positions will be added at the newly created support center in Melbourne.
Larry Paulson, president of Technophone, will manage the businesses based at the center as well as Nokia’s OEM and accessory sales activities. Paul Chellgren, president of Nokia Mobile Phones Inc., will have sales and marketing responsibility for Nokia branded cellular products.
“Although we’re disappointed about losing the Technophone brand after putting everything we’ve put into it here, it makes sense for Nokia to focus its energy under one name,” said Paulson. “There’s a lot of logic behind the decision. It’s the best utilization of resources.”
“I would just like to say `thank you’ to all our loyal Technophone customers,” he added.
“We see cellular telephones, and other forms of wireless communications, rapidly becoming a consumer market,” said Kari-Pekka Wilska, president of Nokia Inc. “To effectively compete in today’s market, we must have high-volume production, low costs, economies of scale, good marketing and brand awareness to meet upcoming challenges. By combining our common support operations…we are creating a stronger customer support organization and preparing ourselves for the future,” he said.
However, not everyone agrees with Nokia’s vision.
“It’s a very serious strategic mistake,” said Herschel Shosteck of Wheaton, Md.-based Herschel Shosteck Associates Ltd. “They will undo the reason they bought Technophone in the first place,” he said, explaining that there are advantages in having different brand names for different channels of distribution. Shosteck pointed out that manufacturers use different brand names-such as Mitsubishi-DiamondTel and General Electric-Ericsson brands-to increase sales, or to sell phones to both the A-side and B-side carriers in the same market.
“I understand (Nokia) wants to challenge Motorola (Inc.) head-to-head as the dominant supplier of cellular phones,” he said, “but that’s a very ambitious plan.”
Technophone, which employees about 80 people at its Melbourne facility, reported revenue of $81.5 million from its U.S. operations in 1992. That figure increased to $104 million in 1993. Nokia’s total net revenue for 1993 surpassed $4.4 billion.