Nokia's Marketing Missteps Help Apple's Euro iPhone

Includes: AAPL, NOK
by: Yankee Group

By Carl Howe

Press and Bloggers alike are raving about Nokia's (NYSE:NOK) new music- and game-playing smartphones, as well as Nokia's Ovi music and game service to go with them. But what has undoubtedly gotten the most attention has been Nokia's touch screen phone video that bears a striking resemblance to Apple's iPhone. So is Nokia about to kill off Apple's (NASDAQ:AAPL) iPhone momentum in Europe before it even begins?

Not a chance. iPhone will be well established in Europe long before any Nokia touch-screen launches. The reason: marketing.

While Nokia's Anssi Vanjoki said "If there is something good in the world, then we copy with pride," he got his targets mixed up. Nokia meant to be copying Apple's iPhone marketing, but instead, they've been copying Microsoft's Zune. Some of the more blatant characteristic fingerprints of Microsoft-like techno-marketing masquerading as Apple consumer marketing were:

  • Pre-announcement of products and services long before availability. Try to buy any of the new Nokia phones and products at your friendly local carrier or Nokia store and you will be disappointed. In a play straight out of the Microsoft playbook of "announce, announce, announce, and someday ship," Nokia plans to begin shipping in the fourth quarter of 2007, the same time that the iPhone will hit Europe, yet none of these phones boast the touch-screen capabilities shown in the video.
  • Demo videos masquerading as products. Countless bloggers and commenters have been raving about how that new iPhone-like phone will eat Apple's lunch because it offers 3G, replaceable batteries, and countless other desirable features. Too bad it's not for sale -- the video is actually a mocked up demonstration only and is meant only to show the S60 software capabilities.
  • Competing with their carrier partners for services revenue. Microsoft originally built its music business by supplying music coding and decoding software while letting partners build hardware. But then it broke trust with those partners by introducing its own incompatible Zune hardware and music stores, which took millions of dollars in sales out of partners' pockets overnight. Nokia has just created the same Zune-like betrayal of its carrier partners by introducing its own music and games download stores; as a result, Nokia's carrier goodwill is likely to take a big hit.
  • Now Nokia has a huge piece of the handset market, just as Microsoft has a big piece of the music coding and decoding market. But marketing blunders like these just make it easier for more thoughtful competitors like Apple to steal away their customers with smart, well-designed products and good marketing. And with Apple actually negotiating a cut of service revenues with carriers because of their better marketing, poor marketing will not only hurt Nokia's brand in the short run, but will hurt its business in the future.

    Full disclosure: The author owns several Nokia phones and Apple shares.

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