What could be more disastrous for a company introducing its new flagship product than to get exposed for filming a fake ad? A few days ago, Nokia (NYSE:NOK) management made one of its biggest mistakes ever by releasing an advertisement that shouldn't have been aired. The ad featured the company's new flagship phone Lumia 920, and it included a video supposedly taken with the phone. That turned out not to be the case, and the company ended up admitting its mistake and apologizing. But the damage is already done, and it will be awhile before many people trust Nokia again. I have no idea why Nokia's management made such a huge mistake at a time when the company desperately needs all the positive attention it can get.
When a company's very survival depends on a specific product, it should do a much better job at marketing that product. In the video shot by Nokia, there is a young girl riding her bicycle being videotaped by someone else reportedly using a Lumia 920. At one point the reflection of a van with a camera crew inside appears and the viewers can clearly see that the video was not taken by a Lumia 920. This is truly outrageous and amateurish. I don't even know why Nokia had to resort to this. The company has already demonstrated the quality and capabilities of the Pureview technology. The competency of the camera was already well-known in the technology community. It didn't have to come up with such an "interesting" way to market its product. Nokia then produced another video to prove the Lumia 920's video recording capabilities. Why did the company choose the wrong path when it didn't even have to prove anything about the phone the first place? This shows me that at least some people in Nokia's management are completely clueless.
What if there was a misunderstanding and the whole thing isn't fake at all? Then Nokia will have to come up with a satisfactory explanation to end all the doubt and concerns. So far, the company hasn't done much beyond apologizing for the mistake. Those who have read my previous articles know that I've been very supportive of Nokia management for months. I was supportive of management even when everyone else was bashing them. Now it's a different story. I'm still long Nokia; however, I just don't understand how a company can fail at marketing on multiple levels when its products are so good. How can a company do such a bad job that its great product is overshadowed by its terrible marketing efforts?
Nokia later announced that this was just a "simulation" of the Lumia 920's video recording capabilities. No one really knows what the company meant by that. If it was just a simulation, why wasn't the video labeled as a simulation?
The company was advertising its optical image stabilization (OIS) technology, which helps cameras record high quality images in conditions that are less than perfect, such as an environment with low light or during significant motion. Apart from the botched marketing, the technology is considered revolutionary for a mobile phone. If successful, this technology can easily replace point-and-shoot cameras.
The best possible outcome from this unfortunate event is that Nokia learns its lesson and consumers forget about it. The worst possible outcome is that consumers never trust Nokia and its marketing efforts again. Sometimes the tiniest mistakes can hurt the very existence of a company. There are already some doubts about the company's current marketing efforts. For example, some websites claim that the company's marketing photos might not be completely untouched.
Once Lumia 920s come into the market and people start buying these phones, the quality of the phones will speak for themselves. Until then, there will be a lot of speculation regarding what these phones are actually capable of doing, and most of this speculation will stem from the company's poor marketing efforts. If only Nokia was as good at marketing as it is at building high-quality phones -- the company's survivability wouldn't have been in question today.
Nokia's new phone will probably not steal many consumers from Apple (NASDAQ:AAPL) and Samsung; however, it is likely to get many existing low-end Nokia users to upgrade to a high-end Nokia phone. Nokia's goal in the next decade is to upgrade 1 billion people from low-end phones to high-end phones. In order to do this, the company has to do everything right, including the marketing.
Let's hope that Nokia has learned its lesson from past mistakes and that consumers can put Nokia's past marketing mistakes behind it. If this is the case, Nokia can have a great future because the company is really good at building great phones.
Disclosure: I am long AAPL, NOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.