Renewed Hope for Nokia

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Have They Done Enough?
Keep in mind my earlier point that this market is still in its infancy. Again, with a myopic point of view, it is easy to think the smartphone battle has been won by Google and Apple. That, however, is not the case. Making the point, again: We are still very early in maturing smartphones as a category and there is still time for current and even new players to compete.

There are several keys for Nokia’s success: continued innovation in design, creating core and differentiating experiences on Windows Phone, and a successful rejuvenation of their brand in the United States. I’ll touch quickly on all three points.

(MORE: Nokia Outfits Man’s Prosthetic Arm with a Smartphone Dock)

When it comes to design, Nokia is a very interesting company. They have very strong design roots and much of their design philosophy and strengths have come to bear in many of the products they released this week. Design is one of the central things that factor into the buying process of consumers. Companies who have strength in designing products that are objects of desire have a bright future in consumer electronics.

When it comes to differentiation, this is one of the key issues facing any hardware or device maker who ships someone else’s operating system. When your competitors can and do ship the same operating system as you, it makes it hard to differentiate as, in essence, it creates what I like to call the “Sea of Sameness.” Conquering the Sea of Sameness will be critical for Nokia. To the point above, design differentiation will help Nokia, but it can not be the only thing they do different.

Rejuvenating their brand and entering the U.S. market in a relevant way may be Nokia’s biggest challenge. Nokia has a strong brand in many parts of the world and in those markets they sell a ton of handsets. The handsets they are selling in massive volumes are not smartphones, though. Nokia’s only chance of success in North America is with smart phones, a category they are brand new in. What’s more, the company they partnered with, Microsoft, is not the market leader in smartphones. Microsoft, itself, is trying to resurrect its presence in mobile. In fact, my colleagues at IDC forecast that by 2015, Windows Phone market share would be around 10%.

Nokia, however, could be a wild card in the U.S. market that many may underestimate. This would be a mistake, as, internally, Nokia has the philosophies and the talent to be a competitive force. It will all come down to execution, and that is the area we will watch closely. Nokia and Microsoft face steep challenges ahead, but it’s still early. The global smartphone market segment is still wide open and anyone’s game.

MORE: Nokia and Microsoft Partner to Build Windows Phone 7 Devices

Ben Bajarin is the Director of Consumer Technology Analysis and Research at Creative Strategies, Inc, a technology industry analysis and market intelligence firm located in Silicon Valley.

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