(Wireless Week) CHICAGO It's no secret that Nokia has been the leading mobile phone manufacturer in the world for years, shipping about one-third of the handsets sold globally. It's also not a secret that Nokia has been No. 2 in the United States behind Motorola.
So, if you were Nokia, what would you do? Maybe set up shop in your rival's hometown? That's what Nokia did June 24, opening its first retail store in the United States at 545 N. Michigan Ave. in Chicago.
It was a bold step for the Finnish manufacturer for several reasons. First, nearly all mobile phones sold in the United States are sold through carrier outlets. Also, the location not only is the city Motorola calls home, but also is just a few blocks from Motorola's new Destination Q store and, according to the Chicago Sun-Times, is close to the downtown home of Motorola Chairman Ed Zander.
RAZR SHARP DOMINATION Motorola, led by its popular RAZR models, is the dominant handset manufacturer in the United States. It had a 29-percent market share in the first quarter of 2006 in the United States, according to the NDP Group. NPD analyst Neil Strother says Nokia and
Samsung were tied for second, both with 18 percent, followed by LG at 15 percent. Motorola was particularly strong in Nokia's GSM domain, capturing 39 percent of that market versus Nokia's 24 percent, while LG led the CDMA market with 31 percent of the sales.
Nokia, which hasn't had much of a CDMA lineup, made a brief move earlier this year to shore up its fortunes in that area. But, after creating a joint venture with Japan's Sanyo to build as many as 35 million handsets annually, Nokia pulled the plug on the venture in late June. Nokia says Qualcomm offered the joint venture unacceptable licensing terms for CDMA chips. Qualcomm controls many of the patents on CDMA. Nokia will stop making CDMA handsets in 2007, but may continue selling them under its brand in North America using an original device manufacturer relationship.
Piper Jaffray also said in a research note that it expects Nokia's U.S. handset sales to pick up in the second half of 2006 because of new GSM models such as the clamshell 6126, the high-end 8800 series, and the new eSeries and nSeries phones. For the U.S. launch of the N91 music phone, Nokia took the unusual step of selling it first on the Internet rather than through a carrier.
UBS also said in a research note that it expects Nokia's new GSM handsets will improve its U.S. market share, but the investment bank still lowered its forecast for Nokia's North American market share for the remainder of 2006 from 21.3 percent to 18.8 percent.
BRANDING EMPHASIS Nokia admits it doesn't expect to sell a lot of phones out of its new Nokia Flagship stores in the United States. The Chicago store is the first, the next one is coming to New York City and two more will be announced.
Winston Wright, who once worked in Apple's retail channel marketing and now heads Nokia's Flagship rollouts in the Americas, says the goal of the retail stores is more about building the Nokia brand than it is about selling handsets.
"We know we've lost some brand awareness [in the United States]," Wright says. "Our goal is building interest and showing the product as the product, and not attached to any [carrier] plan."
That said, most phones sold out of a Flagship store will be sold with activation on a network, he says, because "the best brand-building is to put an activated phone in the hands of the consumer."
Nokia's aim is to create excitement around the devices and the applications that run on them, Wright says, so the retail experience is going to be more about showing customers what is available than about actual sales.
People who visit the Flagship stores may wait to buy a handset, Wright says, which is why Nokia doesn't think it is competing with carrier stores but rather is increasing broad interest.
"We feel strongly that it is a benefit to the category and the industry, so that everybody will see a benefit," he says. "We're getting to the point in the U.S. market where the phone is a commodity. We want to position our products and show them directly to the consumer."
Keith Nowak, a Nokia spokesman, says the Flagship store also is a kind of retail lab for handsets. Anything Nokia learns about consumer sales will be shared with the operators, he says.
About three dozen Nokia handsets will be shown at the Flagship stores, including all nSeries devices, which will be the only models sold without carrier activation.
The company already has 24 Nokia Experience stores open in the United States. Those stores, which don't sell handsets, are used for display and education only. They'll continue in operation, although one near the Chicago Flagship store will be moved.
The Chicago store is the second global Flagship store to open, following the December 2005 opening of a store in Moscow. A total of 18 Flagship stores are planned, with Hong Kong, New York City, Helsinki and Mexico City next in queue. The New York store will be located on 57th Street between Madison and Fifth Avenue.
It was just happenstance that Nokia's first U.S. Flagship store is just blocks away from Motorola's Destination Q store, which opened on June 8. Destination Q, called a "pop-up" because it can be closed quickly and pop up somewhere else, is a cooperative effort with Verizon Wireless and is aimed mostly at the Motorola Q smartphone.
Tim Whiting, senior marketing director for Motorola Mobile Phones, says Destination Q is "experiential" because consumers can get a "deep dive" into all the functions and applications available on the phone, including Verizon Wireless' EV-DO network. Inside the store, consumers wander among zones that show different uses for the Q, allowing them to try out the applications themselves.
"We're trying to create marketing that reflects our brand," Whiting says. "We're coming in with something that is fresh. We'll keep it fresh, but after the summer is over, we'll see how the market responds and maybe we'll close it down and pop up elsewhere with something different."
Source : The Associated Press 2006 |
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