Microsoft: How to best leverage the Nokia deal

Microsoft: How to best leverage the Nokia deal

Summary: Microsoft will be a full-fledged hardware company when the ink dries on the Nokia device purchase. Here's how it can make the best of the acquisition.

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Windows Phone no Nokia

Microsoft is learning how to surprise the tech world like that fruity company. First there was the big announcement that the folks from Redmond would make their own line of tablets to compete with, well, their partners. Now comes the surprise unveiling of the purchase of Nokia's device business. That deal won't be consummated until early next year and Microsoft will need to hit the ground sprinting to make the big deal work. I have some suggestions how that might be done.

Own the brand

As a software licensor Microsoft has always had the luxury of leaving the crucial branding up to its partners. At the time of the acqusition Nokia accounts for over 80 percent of the market share in Windows Phone. That means that Microsoft basically owns almost the entire platform and brand with the purchase of Nokia's phone business.

Lumia 1020
Image credit: Nokia

What needs to be done is to leverage that fully right away. That means take over the brand of Windows Phone and lose the Lumia brand of Nokia. With Nokia basically being Microsoft, and Windows Phone firmly belonging to Microsoft, take over the brand completely. Make it clear that Nokia phones are now simply Windows Phones built by Microsoft.

This will be far better than the branding Nokia has been doing with its phones. Take a look at the Lumia 1020 in the image above. You only see a simple Nokia at the top and a Windows button at the bottom. Where's the clear Lumia branding or Windows Phone branding on the front of that phone? It's not there, a failure of branding.

Global coverage: Nokia Interim CEO: Microsoft deal makes us stronger | Even with Nokia devices, Microsoft wants to license Windows Phone to other makers | Does its Nokia buy thwart or fuel a possible Microsoft break-up? | Microsoft shows how to flush decades of Nokia goodwill away | Microsoft gets less than $10 per Windows Phone unit | Microsoft-Nokia deal: Reaction from the Twitter trenches | Elop drops Nokia CEO role to lead devices team under Microsoft deal | Microsoft-Nokia deal: 11 quick facts | Microsoft to buy Nokia's devices, services unit for $7.2B

Nokia is rumored to be readying a Windows RT tablet for market and if that's the case use the existing Surface brand. You want to keep things simple in consumers' minds so stick with Surface. Tack whatever you want after Surface but keep the Surface brand for the entire tablet line.

Microsoft wants to be a devices and services company, so make it clear from day one that's the case. The shiny new Windows Phone is exactly that, and a product of Microsoft.

Drop Windows Phone licensing

The most important task for Elop is to make him accountable for the success of Windows Phone.

It flies in the face with long-time corporate culture but it's time to stop licensing Windows Phone to other companies. The partners haven't done Windows Phone, and thus Microsoft, any favors with the few handsets they've released running your software. You owe them no favors in return.

As part of owning the brand, meet quietly with partners currently licensing Windows Phone and make it clear you'll keep supporting existing products but that's it. They're likely not going to drop Android and go Windows Phone given the competition from Microsoft anyway, so formalize the shut-down.

Run a massive advertising blitz

Hand-in-hand with owning the brand is raising awareness with the buying public that Windows Phone, handsets formerly from Nokia, and Microsoft are now the newest smartphone game in town. This advertising blitz should be everywhere in the US and Europe at first.

Everywhere they look, prospective buyers should see flashy ads that build a compelling use case for Windows Phone. If they turn on the TV for a while, they should see at least one Windows Phone ad. If they read a newspaper or magazine, the ads should be right there.

This campaign is going to be expensive but it is absolutely mandatory to increase awareness of the new phones from Microsoft. Compared to the purchase price of the Nokia business the expense of the advertising will be tolerable.

The objective is to drive home that Windows Phone does the things people want to do and that it's from Microsoft.

Task Elop with a concise plan for Windows Phone

Make it clear starting now that the Nokia business is gone and it's all Microsoft going forward. This will be hard for the former Nokia staff but this is business. Take the single brand seriously and leave no doubt that everything will be Microsoft and Windows Phone from now on.

Give Elop clear instructions to integrate the acquired Nokia organization as quickly as possible. It's a given that many of the adopted 32,000 Nokia employees will overlap with Microsoft's organization so quickly cut as many as possible. There's no sense continuing the massive staff costs so cut it fast. Have Elop do that smartly and by integrating as many of the best employees as possible into the Microsoft devices management structure.

Nokia has produced several Lumia handsets of varying capabilities and prices. Change the philosophy that Elop obviously had in this regard and drop down to just two handsets. You only need one high-end Windows Phone with a great camera and top-notch hardware. The other should be a more entry-level model with cheap components and a cheap price to match. The scattergun approach of having lots of devices with different features and capabilities just confuses the buyer. Avoid this at all costs.

The most important task for Elop is to make him accountable for the success of Windows Phone. That may sound harsh but let's face it, Microsoft has invested at least $10 billion dollars in Nokia at this point, and largely with Elop. Give him aggressive growth targets and make him hit them. Support him to help him get there but make it happen.

Distance the brand from feature phones

Contrary to official statements about feature phones they do not promote the Windows Phone brand. Sales numbers make it impossible to get rid of feature phones but do not sully the smartphone line by including them. Keep the branding far removed from Microsoft and Windows Phone. Perhaps it makes sense to continue the Asha brand.

Don't kid yourselves, feature phones will not lead customers to upgrade to Windows Phone smartphones. That misguided view reminds me of the "marijuana use leads to hard drug abuse". Sure some progress that way but I suspect the vast majority don't. Keep the smartphone business separate and distanced from the feature phone stuff.

Offer package deals

Attracting new customers is never easy but one tried and true method is the package deal. Make a shiny new Windows Phone hard to pass up when a Surface tablet is purchased. That means a very special price for the phone just for buying a tablet.

To avoid the carrier hurdle the phone should be unlocked if possible and advertising should explain it's all about choice. Otherwise make deals with the big four carriers (in the US) to give the customer options. This will make it clear that Microsoft has the customer's back as they can take the Windows Phone to any carrier they wish. Also show how the Windows Phone can be used to get that new Surface tablet online almost anywhere (tethering), and how easy that is to do.

Simplistic view?

These suggestions may seem simple on the surface but it will be a big task to do them properly. It will take a massive, concerted effort of a solid team to make them work but that's what will be needed to take full advantage of the big Nokia purchase.

Microsoft, take these suggestions in the vein in which they're offered. I want to see Windows Phone take off and be the major player in the smartphone space it should be. Competition is good and you're the best shot we have for that.

Elop will be under the gun as he should be. He's been a firm ally of Microsoft to be sure, but he's not achieved any significant level of success. It's time to hold his feet to the fire and make Windows Phone a household brand.

Topics: The Microsoft-Nokia Deal, Microsoft, Mobility, Nokia, Smartphones, Tablets

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35 comments
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  • Close but...

    Most of the ideas put forth are relatively straight forward and sound. But limiting the phone to two models is really not sound. Presently the 520 is the reason that in some markets WP is in second place displacing IOS. But in other countries / markets not everyone wants a low end phone. Just as everyone does not want a phone that can compete with a lower end DSLR.

    So IMHO there needs to be at least a minimum of three tiers a low, medium and high. The problem is the exclusivity that is given to carriers in the U.S. Which ends up creating multiple models with almost the same features.
    MrCaddy
    • I agree

      You have to have more than two phones because each country presents different consumer wants.
      rmark@...
    • One thing I hope this accelerates is the switch

      from arm to Intel socs inside windows phones.
      Johnny Vegas
    • Nokia

      is a strong brand outside the USA. It has a reputation for good quality phones, as well as cheap phones, which don't compromise on the build quality. They last "forever". I still see people running around with 7 or 8 year old Nokias.

      The cheap phones are also necessary, especiall in markets where people don't buy on contract. When you are faced with an Android or WP phone for under 200 Euros and the iPhone starts at around 700 Euros, that is a huge difference for most people.
      wright_is
    • 520 loss leader

      "520 displacing IOS", because the phone is being given away for nothing, and the Cell contract is cheap.

      Wining market share in the battle, the war is to make a profit - which Apple and Samsung are doing hand over fist, to the detriment of Nokia, Blackberry, Sony, HTC, Lenovo, Acer etc..

      A loss leader (like 5p/10c off gas) is a great idea, but you need to sell stuff on the back of it to make money (like a full weekly food shop). Same goes for 'free handsets'. on a 10GBP/$15 cell contact, you will struggle to even break even.
      neil.postlethwaite
    • Recommend Three Models of Windows Phone....

      The third model I would like to see is a fully featured "Ruggedized" (Water, Dust and Shock)
      Windows Phone. Not "ruggedized" by simply adding a Rubber Case but a truly Rugged
      Phone. Also I would like the following features to be standard on all new Windows Phones:
      1. At least a Quad core processor.
      2. A replaceable/removable battery.
      3. A micro SD memory Card Slot.
      This new Windows Phone should have all of the latest specs to be a successful standout. I do agree with the author in that the new Microsoft Windows Phones should be Carrier Agnostic by not having certain models being offered exclusively by any one Carrier.
      P.S. I would buy this phone in a heartbeat
      Altoid666
  • Straight, Simple and Good...

    This is a very good article. I agree to almost everything mentioned. I also agree to the comments of @MrCaddy, there needs to be 3 tiers (low, med, high) and more choice. They need to be simple about presenting choices to customers. Their tablet, their phone all running their Great Software... Its all there... They just got to brand them clear, streamline the sales/marketing and show how good these devices/PCs work together. They need to just connect the dots, as some analysts have said... The foundation, the technology and assets are all there; Now, the connecting job is majorly a corporate/management/sales/marketing effort.

    They will pull it off in style.

    But, I do not agree to the 'workforce cut' suggested by the author. They need to retain the great quality and workmanship of Nokia's employees, especially in Finland. And it's normally not an MS culture to make profit just by laying off people, and that's one of the non-trolled aspect that makes them great!!!
    sreesiv
    • Not advocating cutting the workforce

      To be clear, I am not advocating workforce cuts to trim the integrated Nokia staff. Just pointing out that due to redundancy in mergers like this there is almost always cuts mandated. I'm saying if so, do them quickly.

      My main point is to get the good Nokia people in key positions to make this work best.
      JamesKendrick
      • Clearly. You keep the talent, you eliminate

        duplicate bureaucracy, accounting, hr, etc.
        Johnny Vegas
  • Fully concur ... but

    Although being a very critical reader this article describes quite well what MSs options are.
    The whole deal is daring and will only come to fruition when running at full throttle.

    HOWEVER ... and now comes the disheartening part of the story ... as we know MS is not really a "speed-king". Ample are the reports of slow bureaucracy and indecisive mgmt.

    So, how can we expect grand strides and stringent measurements when we are actually in the know that these are not MS most favorable traits ? Uhm ...
    EnticingHavoc
  • Rumors had lumina tablet very near release

    Changing course on branding at this late date will delay the release and increase costs due to changing marketing materials. Nokia/Lumina has momentum NOW don't lose that.

    More choice is better than less choice... They should NOT try the choice limiting strategy of Apple. That would be a big mistake!
    greywolf7
    • I agree, they can't delay for branding

      MS and Nokia are both releasing new tablets this year, they are not going to for go the holiday season for that.
      rmark@...
      • The Nokia tablets will almost certainly be out

        well before the deal is approved and finalized so there's no way this gets done unless they put the release completely on hold. Not at all likely.
        Johnny Vegas
    • Warehouse Fillers

      Lumia Surface 2 RT tabs....

      ... Microsoft must have some warehouse space left that needs filling, next to the estimated 3 million Surface RT v1's they still have in stock.
      neil.postlethwaite
  • I don't agree with many of what was said :P

    While I want competition as a consumer and I do hope there will be more than just 2 strong players in mobile camp, I'm not sure if the strategy proposed by the author is good.

    Drop the Nokia brand:
    Really? Maybe for the US, but for the rest of the World it doesn't seem a smart move. Non Nokia WP phones are not selling, while it's true that Nokia is the only one really pushing windows, I strongly believe that without Nokia brand, WP would be long dead. In markets where WP is strong, symbian and Nokia used to be huge - that's a good sign of how important Nokia brand is for WP.

    Stop relationship with other makers:
    Even Apple is having trouble keeping important share with that strategy. But while Apple enjoys huge profits, the same is not true for Nokia Lumia. Recent studies concluded that the cheap Lumias are the ones being sold mainly. Nokia profit margins falling sharply - in the last quarter it's said to be down 20% from the previous one.
    Having said that, it will be very hard for Microsoft to keep interest on the platform, OEMs will probably shut-down the deal before MS.

    Advertising:
    Marketing is important, but is the lack of advertising the reason why WP or windows 8 or surface are doing poorly - I don't think so.

    Elop:
    They guy was brilliant as a mole inside Nokia making a mass devaluation or was among the worst CEOs of all time. Bad CEOs don't have a place in companies. If he was a mole, current Nokia employers will not be happy with him around. While I don't believe he was trying to ruin Nokia by a failing WP strategy, I believe he was working in the interests of mainly MS - if the strategy worked, great WP would be a success, if they failed (as it happened), great too, they could buy Nokia on the cheap (very cheap actually). Either way he could be not the most dear person to current Nokia staff.

    Distance the brand from feature phones:
    While that will happen naturally, accelerating doesn't seem wise. As reported many WP buyers are coming from feature phones, many probably Nokia branded - let it stay like that.

    Merge divisions:
    Yes it must be done, but many Nokia employees must be really sad today, they are the best asset for Microsoft. Let make them happy again, not even more mad.

    Package deals:
    Nothing against, but how is that going to work? Someone buying a cheap Lumia 520 will get a very expensive surface tablet or a XBox equal expensive console? Not an easy task...

    Deals with carriers:
    Yes that is very important in the US (and not just), but with 500k units (down from 600k a year ago) being sold there during Q2, I wonder if it's not best to focus on other regions and consider US a lost cause for Nokia.

    Well good luck to them.
    AleMartin
  • Microsoft: How to best leverage the Nokia deal

    All good ideas except the licensing issue. They should continue to license Microsoft Windows Phone to others because its additional revenue for them. If the manufacturers can't make the most of Microsoft Windows Phone then its their own fault.
    Loverock-Davidson
  • They need more

    A person like me stays on windows phone and not android for 2 reasons... the ecosystem and better privacy policy than google. If MS takes Scroogled campaign awareness to the lower end market like India of what really happens with Google's privacy against their's there are a lotta potential customers they can have. Scroogled is a good campaign yet unknown to 99% android users in India. Additionally almost all people in India use PCs and not MACs.. far away are chromebooks or chromium based devices. If MS makes people aware about the sync benefit to the existing ecosystem... they still will have lot of buyers. Most people aren't simply aware of Windows phones + and - ses. They only buy android because they feel its the best as its best selling in the market.
    Nikhil Gangavane
  • Getting rid of Nokia brand, really?

    That is a very US centered opinion, and in a globalized economy, that is completely wrong! Unfortunately, I believe Microsoft execs share that completely flawed point of view. Just to give a simple example: Supposedly, Windows Phone is the number 2 platform in Latin America. If that is true, it is because people in Latin America (and all over the world, except for the US) love and trust the NOKIA brand, not Microsoft! While I understand the idea of having Microsoft branded phones, that is something you do when you have 30% of the market share, not 3%. At this point, getting rid of the NOKIA brand for Microsoft phones can potentially be suicidal! My opinion is that they should do what Google did with Motorola: make NOKIA a "Microsoft Company". Otherwise, in 30 months somebody else will license the NOKIA brand for Android smartphones and that will be the end of at least 80% of current Windows Phone customers... The best option would be to add a couple million Euros to the deal and license the NOKIA brand worldwide to identify Microsoft's phones from now on... NOKIA is a very strong and loved brand worldwide, Microsoft isn't...
    robferraro
    • No worries

      Microsoft has a 10-year license to the Nokia brand, from what I've heard. That means two things to me: 1. Most likely, nobody is going to license the Nokia brand to make Android phones anytime soon. 2. Microsoft wants to do something with that brand name for at least a little while.
      WebSiteManager
      • Might take a look at this

        http://www.zdnet.com/despite-the-microsoft-takeover-whats-left-of-nokia-can-still-make-mobile-phones-and-soon-7000020214/
        WebSiteManager