By Natasha Lomas
Nokia (NYSE:NOK) is running ads in Europe for its new Windows Phone 8 devices, the Lumia 920 and 820, emblazoned with the legend 'everyone loves a comeback'. You can't accuse the once mighty king of mobile of not having a sense of humor about its current lowly position in the smartphone rankings - more also-ran than undisputed champion. The 800lb gorilla in the room is of course Google's Android OS - which owned a full three-quarters (75%) of the global market in Q3, according to IDC estimates - versus a fractional 2% for Windows Phone (plus Microsoft's older Windows Mobile OS combined). That figure incorporates all OEMs using Windows Phone, not just Nokia - shaving a tiny bit more off Nokia's tiny share of the market. Nokia's legacy OS Symbian accounted for just 2.3% of the market - still more than Windows Phone.
Still, Q3 fell just before the launch of Windows Phone 8 so it was never going to be a stellar quarter for the OS, or for Nokia - left with a portfolio of orphaned Windows Phone 7.5 devices to sell. So while times are undeniably tough for Nokia, tough, fighting talk is the order of the day from Conor Pierce, the company's VP of Western Europe. With shiny new Windows Phone 8 hardware to sell, Nokia is spinning that it's stooped to - ultimately - conquer.
The more Windows Phone OEMs, the merrier
Pierce says Nokia is convinced it's weathered the worst of WP. After spending a year or so in the doldrums - sweating away at the platform largely on its own - Pierce says the fact other phone makers are suddenly getting involved again is a sign fairer winds will soon be lifting Windows Phone's sails. Sales of its new WP8 Lumias are off to "a really solid start after many, many months of planning", he tells TechCrunch. "There's never been more excitement for our devices and the Windows ecosystem as there is now. It's good to see our competitors coming to the table because that will really help to spread the word and the awareness of the ecosystem. There's a lot of work to be done but it's looking good."
"We're only at the beginning of what we believe is the opportunity for Windows Phone. Now the competition has come to the market that of course will bring pressure - healthy pressure because it'll force all players to innovate to the benefit of the consumer and the market," he adds.
Pierce even goes so far as to suggest Nokia wouldn't so much as wrinkle its brow if Microsoft (NASDAQ:MSFT) launched its own Windows Phone handset - the rumoured 'Surface phone' - sticking to his line that "the more players in this ecosystem the healthier it is for people because they have more choice" when asked if Nokia has a strategy prepared should Microsoft decide to unbox its own phone hardware. Although, in a follow up comment, he makes what sounds like a between-the-lines appeal-cum-sales-pitch to Microsoft not to get into the phone making business.
"What we need to do is make sure that we continue driving innovation in the [Windows Phone] ecosystem within our portfolio, continue to drive that confidence within Microsoft that we will only do our best, best work for WP8 - that's what our vision is," he says. "We don't have, unlike our other competitors, any distraction behind that. We'll continue driving - and what you've seen on the [Lumia] 920 and 820 is only the beginning in terms of the differentiation that we bring."
Windows 8 makes WP8 "vastly different"
The biggest blast of energy blowing in Nokia's direction right now is the launch of Windows 8 - which, unlike Windows 7 + Windows Phone 7 - shares look (tiles) and feel (touch) with Windows Phone 8. "Globally in the next 12 months we expect 300 or 400 million people to experience the Windows tiled interface through Windows upgrades or new phone sales or tablets etc so that's vastly different to what we've experience in the past," notes Pierce.
He also reckons Windows Phone 7 has effectively warmed up the carriers to get them pumped for selling Windows Phone 8. "The people within stores and call centres now have a much stronger, deeper familiarity and acceptance of what we're doing so we have broken the back of that and now we're in a position to build that momentum," he claims, adding: "It's in [carriers'] interests [to sell Windows Phone 8 devices] because it's in the interest of people to have a strong third alternative. It's not a healthy market or in any industry for it to be driven by two overly strong players. It stifles innovation, it stifles choice."
"When you're trying to establish something brand new in any industry it doesn't happen in a day," he adds. "We know now the amount of effort that is required to build awareness to consideration and consideration to preference. It takes a huge amount of effort and obviously Nokia has been doing all the heavy lifting in the last 12 months as a manufacturer."
This third ecosystem argument was made before, when Windows Phone 7 launched into a market dominated by Android and iOS, and still they dominate. But Pierce reckons the launch of Window 8 changes the game - giving carriers a more straightforward story to sell. He also notes that Nokia is being deliberately selective in its messaging and how it's choosing to focus resources on Windows Phone 8 - opting for some carrier exclusives for its flagship Lumia 920, for instance, which might seem like the last thing a company with a volume problem needs right now.
"It's all about simplifying the message"
"We know where we stand. We know how much work has yet to be done to make this the success that we all aspire it to be so in that launch strategy across the world we have to be very selective - as would any player, any challenger in any industry - so we've been very focused and selective in which markets we went into and within those markets we also worked with the partners who we feel are most committed and who we feel offer the biggest opportunity not just for the launch but also for the long tail," he says when asked about why it's revisited carrier exclusives.
"It's all about execution, it's all about simplifying the message, making that message really relevant and resonating to a wider audience. And within that, like any company, we need to be very focused about where we place our investment," he adds.
Nokia's recent financial performance is arguably a rather more pressing reason for focus. Last month it posted another big loss in its Q3 quarter (of $754 million) and reported shrinking cash reserves, with net cash falling to $4.7 billion by the end of the quarter. The glory days of massive revenues and profits funding orchestral in-house software and hardware plays across multiple platforms are very much a thing of the past to the leaner, meaner and (mostly) Microsoft-powered Nokia of today.
Relations with Microsoft "very healthy"
Pierce describes Nokia's relationship with Microsoft as "very healthy" and claims Nokia suffered no detrimental effects when Redmond outed Windows Phone 8 in June - leaving it to flog a portfolio of apparently 'outdated' Windows Phone 7 handsets. Instead he talks diplomatically of any OS having a "natural evolution", and adding that "in fact I think [the WP8 news] gave [WP] an injection of confidence". Pierce also claims Nokia has actually sold more Windows Phone 7 handsets since the Windows 8 and WP8 launches. "Our current Lumia range - the 800 and the 610 in particular - has never been selling better than they are now," he claims.
(On that point it's worth noting Pierce fails to mention Nokia has had to discount WP7 devices such as the Lumia 800 in a variety of markets - so he looks to be glossing over another spot of Windows Phone-induced financial pain.)
Pierce continues: "We're working closely with Microsoft on several points: 1) partner engagement, 2) retail execution or channel execution - making sure that message is very simple because in this industry for Nokia and maybe all manufacturers we could probably write a long list of things we'd like to talk about. With Microsoft and the ecosystem of the platform they're bringing… there's an abundance of great things to talk about. The critical thing is how do we condense that down into a very solid, relevant message and target that towards the right audience - be that consumer or enterprise.
"On top of that we're also working very closely with them regarding the app ecosystem. We know that we have some work to be done regarding securing some of these killer apps on the marketplace, but because of the appetite of the developers to engage we're confident that we'll continue driving that forward."
Skidding over Surface
Pierce won't be drawn on rumors that Nokia has had to shelve plans for a Windows-powered tablet, in the wake of Microsoft's Surface launch - which, if true, would amount to another piece of Microsoft-fueled disruption to its business. "We have not and I'm not going to announce any tablet strategy on behalf of Nokia today. I'm not aware of that assertion [that Nokia's tablet plans were delayed by Surface]. We know where we're going, we have a very strong portfolio and anything that happens is not going to distract us from what we want to do," he says.
Asked about the future role of Window Phone 7 - and whether Nokia could expand its use of this version of WP, potentially even using it as a replacement for its Series 40 OS at the very low end of its smart device portfolio (where Nokia Asha devices currently sit), Pierce does not dismiss this idea out of hand but says no-frills Windows Phone is not a message Nokia or Microsoft wants to be sending out right now. "It's in the [WP] ecosystem's interests and Microsoft's interests that all OEMs continue to drive that experience to lower price points but most importantly that we do not jeopardise the quality of the experience: that's critical because right now building that momentum that's just going with people, with businesses is very important and that takes huge effort and focus."
Navigating the future of Windows Phone 8
So for now, as you'd expect, Nokia is focusing its remaining lasers on Windows Phone 8 - and on making sure its efforts stand out from the johnny-come-lately crowd.
Discussing how Nokia might evolve its WP differentiation efforts in the coming 12 months, Pierce drops some heavy hints about navigation - NB: this interview took place just before Nokia's announcement of Here Maps and its Earthmine acquisition - telling TechCrunch: "Outside of design… and some of the things we're doing on our display, we also have fantastic incredible imaging innovation through our PureView and the Carl Zeiss lens and some of the Nokia camera lenses that we're building into that, so if you take that type of technology and you couple that with our navigation - our Nokia maps platform - then we have something very solid to bring and we're only at the tip of the iceberg in terms of what that means for the consumer.
"On navigation, for example, four out of five cars are currently using Nokia Maps and we've had some very big players like Mercedes, Volkswagen, Ford (NYSE:F) etc buying into this and using Nokia Maps as their navigation platform, and then we also have - bearing in mind that within the entire Windows ecosystem Nokia Maps will be the navigation, the location commerce platform, which is really good, it's open to all players, be it OEMs, be it whatever device or software you want to buy but what's important is that we own that asset.
"And what we will do, what we will continue to drive is bringing these points of differentiation, be it on design, be it on imagining, and be it on navigation - so I suppose it's a matter of 'watch this space'. We will innovate, and out-maneuver, and outsell everyone, not just our competition, within the ecosystem because that's what's truly going to drive this ecosystem."