10 Things Nokia Must Consider Before Getting Back Into Smartphones

By Don Reisinger

The analysts and market researchers all seem to agree that being successful in the midrange of the smartphone market is extremely difficult. Apple is performing particularly well at the high end of the space while low-cost models do very well in emerging markets. It’s in the middle of the market where companies like HTC, Amazon, LG and Samsung are struggling to make money. Nokia should make sure its brand-name devices reach the right market segment.

No shocker here, Nokia will have to work around Apple if it actually gets back into the smartphone market in any significant way. The company sells more smartphones each quarter than any other single company and, according to recent data, tallies 92 percent of the operating profit worldwide from smartphone sales. In other words, there’s precious little of the market available to Nokia or any other company when it comes to actually making money.

Nokia fell by the wayside in the handset market in part because Samsung grabbed away significant market share. But since then, Samsung in turn has watched its market share start to slip away to competitors, and there is real concern in Korea that the company may have lost its way. Samsung, a highly diversified technology company, is still profitable, but it’s on the downturn. That could provide a business opportunity for Nokia if it plays its cards right.

Although Apple is winning on hardware and profits, when it comes to operating systems, Google’s Android is by far the most popular. The old days of Symbian being a top player are long gone, and even iOS is far behind Android. When it comes to operating systems, Android is a force to be reckoned with.

Although it may be tempting for Nokia to recommend its device partners go with a Windows Phone device, such a move would be ill-advised. At least so far, Windows Phone hasn’t proved popular and has only gained a small slice of the operating system market. Microsoft announced on July 8 that it was taking a $7.6 billion charge against its earnings to write down the value of its Nokia devices business, nearly the entire amount it paid for the unit in April 2014. The move highlights Microsoft’s failure to build a successful smartphone business.

So, what should Nokia do? Ultimately, it should pressure its vendor partners to go with Android. However, the company should not allow its partners to only offer a standard build of Google’s platform. Instead, they should consider creating a skin that would live atop Android that comes with interesting features and easy integration with popular apps. Other companies are doing it, and the plan seems to be working. Nokia should follow suit.

China may just be the most important component in any plan to build out a smartphone business. China is the world’s biggest consumer market, and customers there are picking up new devices by the boatloads. To be a major vendor in China is to be a major vendor worldwide.

Enterprise security is becoming increasingly important in a corporate world dominated by mobile devices. With that in mind, Nokia should push its mobile device partners to maximize the security of both the hardware and software bundled in the handset. Offering an alternative to Samsung’s Knox or BlackBerry’s enterprise services could provide a gateway for Nokia to enter the enterprise.

Here’s the sad reality about the mobile industry: Most handset makers can’t find a successful product design and marketing strategy. Companies like HTC try new things, like different casing materials and various software options. Yet they still lose market share to companies such as Apple and China’s Xiaomi. Nokia must work with its vendor partners carefully to analyze the market to find a successful go-to-market strategy. It’s a difficult task, and there is no guarantee of success.

Finally, Nokia should question whether it should even put its name on the device its partners would sell. Sure, Nokia is a well-known brand, but as its market share plummeted in the last decade, the company’s brand value has gone with it. Putting a “Nokia” stamp on a device wouldn’t make folks want the product more than any other. Nokia should acknowledge that and act accordingly.