Disappointed Buyer = Returned Lumia = Salespeople Avoid = Growing Nokia Retail Problem

When Stephen Elop announced Nokia's Microsoft Strategy on February 11, 2011, I said immediately that this was great for Microsoft and a disaster for Nokia. I wrote a series of blog articles examining the early prospects. I concluded that the Microsoft smartphone strategy for Nokia was a huge gamble - it would hurt Nokia intensely in the short run - and that it was very likely to fail in the long run - but I did write that it was possible Nokia could succeed with this option. I did not say it cannot succeed, only that I felt it unlikely to succeed.

UPDATE (March 21) has more stunning info, see at end of story


During 2011 I monitored the developments at Nokia's new Lumia project and the parallel developments of Windows Phone over at Microsoft to try to evaluate the prospects for Nokia's Microsoft-based smartphones. I said it many times that Nokia had only one chance to make it all work, the launch of Lumia had to be executed perfectly. Because Nokia was bleeding market share, this was a one-shot chance to turn the gamble into a success. This is in US professional football analogies, the 'Hail Mary Pass' - you are at the end of the game, and only a touch-down can win you the game, and on the last play, your quarterback sends all receivers to the goal line, and you throw the long pass, and say your 'Hail Mary' prayers...

IRON GRIP OF RETAIL CHANNEL

How is Elop's Hail Mary doing? I have written many articles on this blog to explain the retail side of the mobile handset business. The mobile phone business is totally different from other high tech and consumer industries, like TVs, PCs, videogaming consoles, DVD players, digital cameras, MP3 players etc - where in those industries if you make a good product and sell it at a competitive price, you tend to have market performance commensurate with the 'merits' of your device and its price. That is not true in mobile phones. In this industry, the success of any handset brand is primarily controlled by the carriers/operators of the world. Look at the iPhone. Early on it sold only on one network in many markets such as AT&T in the USA, O2 in Britain, Softbank in Japan etc. When the iPhone expanded to more carriers, it achieved far bigger sales. And look at the Microsoft Kin youth phones. Even as these were highly praised and were expected big sellers, the sudden collapse of carrier support resulted in the phones being discontinued - in only six weeks. This even though Microsoft is the global IT giant who has thousands of resellers to its brand. When the carriers refused the Kin, no matter how 'great' Microsoft was, the handset was doomed.

In mobile phones, the success of any single phone is most determined by the support of the carriers/operators and their stores. In mobile phones, different from any other major home electronics or consumer high tech, there is a gatekeeper that decides who wins and who loses. It is the reseller channel, mostly controlled by the carriers/operators.

 

SO A CUSTOMER WALKS INTO A STORE

Lets take a random customer to a mobile phone store. Lets go to Nokia's traditional strongest market, Europe. The average replacement cycle for all mobile phones is about 18 months. So right now, in March of 2012, the typical customer walking into a phone store wanting a new phone, bought his or her current phone in about August, September or October of 2010. IDC told us in the summer of 2010 that Nokia was the bestselling mobile phone brand with 33% (Samsung was second). IDC also told us, that Nokia's European market share specifically for smartphones was even better than that, at 40% (Apple was second). Europe is no longer a growing unique users in its mobile phone market (ahead of the USA which still adds unique users), Europe has been past 100% penetration rate per capita for many years now, so these are not first-time buyers except when parents come in to buy a first phone for a child perhaps. (Europe still keeps growing total subscribers, but those sales are now second or third accounts and phones to people who already have one).

Lets start with those iPhone users. You know there is no going back. Apple has by far the best loyalty of any smartphone brand, so almost any iPhone owner will not even give the Lumia a second look in the store. They want the latest iPhone. What of Nokia? Remember, one third of Europeans who bought a new phone in 2010, have a Nokia brand. We have a survey of 1,780 mobile phone owners in 2010 from Britain by Right Mobile Phone, reported in The Telegraph, which found that the average loyalty for any phone brand in Britain was 32% but for Nokia it was over 50% (Nokia's loyalty was the highest in the survey). These customers have never heard of any 'Burning Platforms' or what Nokia CEO Stephen Elop has said about the Nokia handsets. They bought a Nokia in 2010, have probably bought Nokia phones for most of the past decade, and now walk into a phone store asking to buy a new Nokia. What happens?

What happens? The customer is at the mercy of the sales guy. I have seen internal surveys from several countries, that the sales guy's personal sales effort can change the mind of the customer - when they already had a preference - in more than 50% of the time. If you walk in asking for a random mobile phone brand, a Motorola or LG or HTC, in half of those cases, if the sales guy wants to sell you something different, they can do it. Obviously the sales guys have incentives to drive them to push certain phones over others - such as phones on promotion with the carrier/operator, phones that support certain services that the carrier/operator offers, etc. This all makes sense.

INSIDE THE MIND OF THE SALES GUY

The random European consumer didn't know anything about who or what is a Stephenelop, or what or when were there any Burning Platforms. One in three European buyers today walks in with a Nokia branded phone, and they tended to be satisfied with their purchase in the past, and they now want to replace that phone. So they ask to see what new is in Nokia phones. If the sales guy wants to make an 'easy' sale, pushing a new Nokia (Lumia) phone at this customer is the fastest way to make a sale. The 'default' setting in the mind of the salesguy is to sell what the customer asked for, as long as the store has it in stock, etc.

What would have to happen that the sales rep takes the extra effort to push another brand phone? Something has to have happened. This goes against all the training and experience of the sales guy. The customer asks for brand X, if you have it in stock, of course you offer the customer branx X, maybe then suggesting some alternatives too for consideration. What would have to happen to change this equation? Maybe the store manager has seen they have a big load of some brand of phone from last week's special promotion that wasn't all sold, and the store manager has added a sales bonus to push selling those phones out. Or one of the handset makers may have some special sales campaign (sales contests are often popular, take some of the best sales reps to an international travel trip as a reward, for example). But what if there is a 'toxic' phone? What if there is a mobile phone with exceptional return rates? That is a phone model that any sane salesguy will immediately try to avoid selling. Why?

RETURNS ARE HATED

A customer wanting to return a phone is triple the work for no more money. If the salesguy sells a new phone to a customer, and the customer has regrets, and returns that phone within the legal period for returns, the salesguy has to accept the phone back without questions, with a box that is opened, inventory that all accessories are there too like the battery recharger etc, process the return paperwork for the store, which will automatically deduct his earned sales commission, now removed from his paycheck. Then the sales guy has to sell another phone to this same customer, to get a second commission, which will end up being essentially the same as the original commission (as the customer will have typically a budget, so they will replace the returned phone with something of roughly same price range). In the worst case, the salesguy has to throw in some extras just to keep the customer happy, which comes out of his commission. Three times the work, for no more money. That is a textbook example of a "fool's errand". The moment this pattern emerges for some phone model, the sales staff will desert that phone and its sales in that market is doomed. Sales people talk to each other, and this type of pattern is very easy to spot early, when you work in a phone store. You go to the back room and see other return boxes and frustrated salesguys with the same problem - with the same phone model.

Trust me, I have been in sales for most of my life. Later in my career in telecoms, I was in sales management specifically with mobile telecoms sales and trained and motivated in-store sales staff for many years, and was quite successful at it too - under my leadership we set a world record for taking markets share from the incumbent in Finland in the 1990s when I worked for Elisa Group (Helsinki Telephone, Radiolinja etc) and Finnet. My third book is much about all this, how you win in the wars, and that is often getting to the soul of the sales guys and gals in the stores and the calling centers. Incidentially that third book, 3G Marketing, was the fastest-selling telecoms book of all time, already translated and in multiple printings, so its not like my theories are something weird and wild.

 

Back to Lumia. I said last year that Nokia had one chance to make this work. I warned that some early signs were troubling. But now we have the Lumia handsets in the wild and now it really is in the hands of the retail channel. They are now deciding is Nokia Lumia going to succeed in the market or not. And that comes back to those pesky returns.

BUILT TO DISAPPOINT

The Lumia series is no iPhone-killer, not by a long-shot. It looks nice, in particular the Lumia 800 and Lumia 900 - as their look was copied from the highly desirable genuine flagship phone the Nokia N9 running MeeGo, from last year. But even in the store, any current iPhone owner will almost immediately turn away from the Lumia and stick to the iPhone. Same with Blackberry owners. Bizarrely as we have already seen four Lumia models, and Nokia has traditionally been very strong in QWERTY based phones - the Lumia series even after four models has not offered even one QWERTY variant. So anyone who loves their QWERTY keyboards (I am obviously talking of consumers who send 100 mobile messages per day or more. I am not talking of enterprise/corporate buyers who don't go to consumer stores to buy any phone, they are limited to what phones their employer will offer) like Blackberry owners will not even consider the Lumia as a Blackberry replacement.

But existing Nokia owners then? The current Lumia 800 is a disaster as a pretend-flagship smartphone. It is a severe downgrade of past Nokia flagship phones like the N95, the E90 Communicator, the N86, the N900 the N8, the E7 and the N9. Take the N8, which started selling almost 18 months ago. Compared to 2010 flagship N8, the Lumia 800 sees a downgrade in its primary camera from 12 megapixels to 8. It doesn't record full HD video like the N8 did. There is no second forward-facing camera. The flash is not Xenon 'real flash' like on the N8, now the flash is only the lame LED flash. There is no facility to read microSD cards. There is no TV out. There is no HDMI out. There is no FM transmitter. And on and on and on and on. For any existing Nokia owner, the Lumia 800 is a severe disappointment.

That all is obvious already in the store. But note, many of the problems with the Lumia 800 are not obvious in the store! The messaging function on the Windows Phone OS is horrid. Nokia has traditionally had the best messaging abilities of any brand this side of a Blackberry. Always. And thus many heavy-messaging mobile users prefer the Nokia brand. It is why most Nokia flagship phones have either had a full QWERTY keyboard like the E90 Communicator and the N900, or if the flagship was a pure touch-screen form factor smartphone like the N8 (on Symbian) or N9 (on MeeGo), there has been a sister phone of nearly identical specs with a slider-QWERTY like the E7 (on Symbian) and N950 (on MeeGo).

But Microsoft's Windows Phone OS was designed in California where they didn't get the memo about SMS being the most used function of a mobile phone everywhere on the planet (more used than voice calls even). SMS is by far the most important functionality of a modern phone - even with pure smartphone users in the USA - their number 1 most used feature is not apps or the mobile web, it is SMS text messaging said a 2011 survey over 10,000 smartphone users by Zokem. Not only that, but 9 out of 10 US consumers with smartphones surveyed by Cloudtalk in 2011 found that their most preferred improvement to their current smartphones was - better messaging! But how is SMS text messaging on a Lumia? You can't even save draft text messages! When do you notice this? Not in the store. You don't even notice it the first day or two using the phone. But suddenly you do, and you are mad when you notice this (if you are a heavy user of SMS text messaging, and Nokia owners are more likely to be that).

To really REALLY annoy messaging users, then there is the Microsoft design flaw in Windows Phone. The Windows Phone OS has a bug that if any Windows Phone owner receives a specific string of characters sent as an SMS text message, it will cripple the phone. Remember, this is not like email viruses, that you have to 'open' and click on the link to make them do their damage. No. SMS is received on your phone when it is sent from the network and you have no control about it. It does not wait for you to go read the SMS. You can have no warning. What happens? Your phone is locked. The only solutoin is to wipe the phone. All saved pictures, all saved messages, all saved phonebook entries etc are erased in that process. This is a problem Microsoft has admitted it has and is trying to fix. But how many times do you think you would accept this to happen on your own primary phone? I bet most would not accept this to happen once, losing all the precious saved content on your phone. You'd be returning your Lumia 800 immediately.

Back to those loyal Nokia customers. Most will not have bought an N8, they will probably have phones from prior to that, say a 5800 Xpress Music or an N86 or N97 or some other N or E Series. So they look at their music library they have on their previous Nokia phone. How can you move your music library from the previous Nokia phone to the Lumia 800? With the microSD card of course! Like for years past, with Nokia phones. But there is no slot for the microSD ! What about Bluetooth. The sales guy in the store assured that this phone has Bluetooth. And yes it does. And then after an hour or two of struggling with the brand new Lumia, its Bluetooth simply refusing to transfer files, the owner reads through the fine print in the user's manual, and discovers - to utter dismay - that the Bluetooth function only allows a wireless headphone to be used, but will not do Bluetooth File Transfer!

What moron at Nokia approved this crippling of a standard Nokia feature that goes back more than a decade! Of course it was not a decision made at Nokia, it is a Microsoft decision, common to all Windows Phone handsets. Again its those incompetent American designers who don't understand global consumers. Bluetooth is the most used data transfer method in many countries especially in nations with censorship and social mores that make some types of file transfers 'sensitive' - so for example the youth in the Middle East prefer to use bluetooth to transfer some files, just so they are not monitored on the network, in countries where they still have arranged marriages etc. So. Back to Lumia. Past Nokia smartphones were compatible with not just all previous Nokia phones that supported Bluetooth (more than one Billion such Nokia branded handsets - smart and dumbphones - in use worldwide) but of course Bluetooth file transfer is supported by almost all other brands of mobile phones from premium Blackberries and Samsung Galaxies to low-cost handsets from ZTE and Huawei and G'Five and Mi-Fone and Micromax. Thats 4.8 Billion handsets. Well more than half of them - and almost all high-end phones among them - support Bluetooth. Lets just say 2.4 Billion phones. So every friend who has any kind of Samsung or LG or Blackberry or SonyEricsson or Motorola or older Nokia can do Bluetooth transfers but your brand new 'exciting' Lumia .. cannot. You are, of course, disappointed in your purchase. In the worst case, your friends will jeer you for making a dumb purchase.

 

Now Nokia has made itself incompatible with the industry, with this Lumia series. This is something the buyer will not see in the store. Even if the buyer is smart enough to think about it, the box will say that this phone supports Bluetooth. The little summary description in the store will have the tick box, that says this Lumia model does do Bluetooth. If the buyer actually asks the sales rep, the salesguy is likely to say that yes, this phone does have Bluetooth and may even be 'helpful' to show how it allows the connection of the cool new wireless headsets. As the buyer has an older Nokia that has supported Bluetooth file transfer for many past models through the years, it does not occur to ask 'but does this new phone still support file transfers with Bluetooth'? That question is totally beyond the normal consumer's frame of reference. Until he or she tries to send the cool picture from this Lumia phone to the friend's SonyEricsson phone. Why doesn't it work...

I could go on and on and on. The Lumia 800 is a nice student experiment by the West Coast novice handset designers from the USA, who have a history of disasterously failing phones for the world market (Microsoft Kin, Palm, Motorola Rokr etc), but its a brave attempt. Part of its best aspects are copied from a far superior Nokia flagship phone, the N9. Part of the wow-factor in the first impression of the Lumia is the tiles of Windows Phone. But once a new proud owner of a Lumia 800 tries to live with the smartphone, it produces one disappointment after another. And worst of all, for any loyal Nokia owner, it seems like the phone was designed to disappoint any Nokia return customers and to scare them away.

Note, the Lumia 710 is worse, the Lumia 900 is almost no better.

 

TOMI IS BEING PETTY

 

Am I? The Lumia 800 was just reviewed in Australia by The Australian, on 6 March. Australia is one of the world's most advanced smartphone markets - ranked 4th highest in smartphone penetration rate per capita (for contrast, the USA is ranked 16th). Australia has had the MeeGo based N9 and now they make the painful comparison several times pointing out that the Lumia 800 is a severe step back from the highly rated N9. The Australian takes this flagship Nokia Lumia 800 and gives it a rating of 7 out of 10. In the review the newspaper repeatedly compares the Lumia 800 in failing terms to its contemporaries from rivals including naming by name and model, like the HTC Titan, the Samsung Galaxy S2 and the iPhone. And like I said, The Lumia 800 fails compared to last year's Nokia N9. This is not what you want when you are launching the Lumia 800 in one of the world's most advanced smartphone markets.

Maybe its better in the emerging world markets? Didn't Nokia say that the Lumia model range was being developed right now to be attractive in the Emerging World where Nokia's 'next billion' customers live? Lets read from the Economic Times of India. They reviewed the Lumia 710 just now, on March 12. They conclude "you are better off with the Samsung Omnia W that offers a better Amoled display, better build quality, a superior 5mp camera and better battery life." Ouch indeed.

 

The reviews are pretty much the same everywhere. Engadget ran a big Lumia 800 review, and concluded that first of all for most users, an Android smartphone or an iPhone will be a better fit. Then among Windows Phone handsets, Engadget recommends comparing the HTC Titan with its better camera and bigger screen. And throughout the review, Engadget keeps pointing out that the Lumia 800 is the crippled weaker spec little brother to the N9.

 

Or how about Nokia's home market? In Finland the tech magazine Tietokone reviewed the Lumia 800 and concluded its an ok smarpthone but the reviewer suggests either buying the MeeGo based N9 as a better Nokia phone now, or if you want a Windows Phone now, buy one from HTC or Samsung instead (double-ouch) or wait until Nokia can make better Lumia phones in the future. Finnish daily newspaper Ilta-Sanomat said in its Lumia 800 review, that the N9 is the better smartphone from Nokia. And in Finland, MTV3 the TV broadcaster ran its review and came to the same conclusion, that the N9 is the better smartphone.

 

This is not rocket science. This is a clear pattern. The Nokia Lumia 800 is perceived as a supposed flagship (even as it is not) and thus it will be compared to the top models by rival makers and the Lumia 800 fails miserably in those comparisons. (And I told you so on this blog that this would happen, you should not be surprised.) Meanwhile Nokia's brand image suffers and the customers are exposed to the faults in the Lumia. And the Lumia 800 suffers severely in any comparison even with its older N9 sibling in anything from no idle screen camera function that many Nokia owners love, to a lame memory allotment with no expansion ability, to no ability to use the Lumia 800 as a WiFi hotspot router. Then we have the user experiences.

OVER TIME YOU GROW TO HATE THE LUMIA

The situation gets far worse once you have lived with the Lumia for a little while. The Lumia 800 was not even manufactured in Nokia's own factories. Stephen Elop outsourced its manufacturing to Compal of Taiwan, so in reality it is not a Nokia quality device. The Lumia 800 is a badge-engineered no-brand Windows device, from a big third-party manufacturer who mass-produce handsets and other electronics. And does that matter? You betcha! The Lumia 800 was shipped with a major battery fault - something Nokia has admitted to and is trying to fix. The battery sometimes does not charge, or it displays wrong charging status information or turns itself off without warnings. This is first of all a manufacturing defect due to not using Nokia's own factories.

 

Many of the Lumia 800's shortcomings are like time-bombs, set to anger and upset you days, weeks even months after you bought the device. Like MMS. Nearly half of all mobile phone owners worldwide now use MMS. And the Lumia 800 does support MMS - for picture sharing. Only when you try to share a video - something you could do with past Nokia cameraphones easily - the Lumia 800 refuses to comply. Again. Why? Who was the first phone maker to allow music to be used as ringing tones? Nokia 14 years ago! So any - ANY - Nokia owner has been able to customize ringing tones and expects the Nokia to do so intelligently. The Lumia 800? Will not let you install your own songs as ringing tones! What? Yes, in this day and age. (I guess its Microsoft forcing you to buy new music from its store to use as ringing tones, arghhh). And if you live in parts of Africa or Asia where USSD is used for various interactive services, the Lumia 800 supports basic one-directional USSD, but not interactive USSD. Again, you think as this is the newest Nokia, and it has a feature you have liked, of course it works like before. But these are problems that arise only after you've taken the Lumia 800 home and used it for some time.

 

THEN THE RETURNS

 

And it leads to returns. The first reviews on paper are reasonably positive about the Lumia series, but the longer users live with the Lumia, the more they discover the annoying parts to it, and wish they can return it. The Guardian was the first major newspaper to write that they were so disgusted with the Lumia 800 that they returned their model just after Christmas. The German newsmagazine Der Stern in turn prefers the N9 so much ahead of the Lumia 800, that they recommend German consumers to drive to another country (!!!) - Switzerland or Austria - to go get their N9 (not sold in Germany) rather than buy the Lumia 800 sold there. This will be the pattern. Britain and Germany were among the first 5 launch countries for the Lumia. Now their major press says openly this is a phone you can't live with. In fact, you should return your Lumia. And now we come back to the retail.

STORE SALES WILL PUSH RIVAL PHONES

The worst effect is, if the returns are so frequent, that they exceed the norm for handsets (all handsets see some returns, even the iPhone gets some returns) and the sales people in the stores will start to push customers to rival phones. Stephen Elop already has admitted that in many countries the store sales staff are not happy to push Lumia anymore in early launch countries, like the UK. So. What prompted me to write this article. Its this next bit of truly revealing news.

Finland is Nokia's home market. Most Finns know someone who is currently employed, or has in the past been employed by Nokia. Nokia is Finland's largest corporation and supports large parts of the Finnish economy through not just direct employment, but indirect work via various subcontractors etc. Finns are proud of their Nokia. When Antero Kivi surveyed the Finnish mobile phone market in 2008 for the Helsinki University of Technology, in a very deep handset model specific measured survey from carrier/operator actual handset databases - not consumer surveys, this is one of the most deep installed base handset analyses ever done in this industry in any country and released into the public - he found Nokia handsets had 86% market share in the installed base. The first non-Nokia brand handset among the top 100 most used phone models in Finland came in ranked at 57th. Nokia's lead was even stronger in smartphones. So much so, that for example RIM didn't even bother to try to sell its Blackberries in Finland and Apple waited for a long time before releasing the iPhone for Finland. This pattern of sheer Nokia supremacy in Finland held until February of 2011, when after the Elop Effect, Nokia's rivals had started to eat up Nokia's past market share dominance even in Finland. But that means, that still today, most consumers who walk into a phone store in Finland, will walk in holding an older Nokia model which they intend to replace.

8 OUT OF 10 STORE SALES FEAR ALLOWING CONSUMER BUY LUMIA

MTV3 the Finnish TV broadcaster and news service ran a secret test of the Finnish handset retailers in the Helsinki and Tampere regions (the two largest cities of Finland). They sampled two stores from each of the three mobile carriers/operators, and two stores from the two largest independent phone resellers. The MTV3 journalists pretended to be normal consumers and visited ten stores and every time asked to see Nokia Lumia smartphones. In six out of ten stores, the sales people showed only rival phones (Androids mostly by Samsung) when the 'consumer' asked for Nokia Lumia !!! In another two cases the sales person came with several phones rather than just the Lumia and offered immediately a series of handsets to compare. Only in two cases out of ten, did the sales person show a Lumia on first request. Every store had the Lumia on display and in stock and the news story makes the point, that in most stores Lumia had the biggest sales displays at prominent places.

I have written on this blog that since the Elop Effect, the retail channel has put Nokia into a boycott (that has been independently reported from several European countries prior to my blog, and Nokia's own statements are consistent with at least a retail sales de-emphasis of the Nokia brand). I have also reported on a separate sales boycott of the Microsoft based smartphones that appeared after Microsoft bought Skype (carriers hate Skype). This was independently reported by several newspapers across the USA and at the end of 2011, a Microsoft Windows Phone ex-President admitted that Microsoft had very bad relationships with the carriers - and that Microsoft had been making them worse in 2011. No wonder Windows Phone sales fell by half during 2011 and Microsoft resorted to hiding their sales numbers by now combining Windows Phone sales with the sales numbers of the older and incompatible Windows Mobile.

 

I explained in the above, that the sales staff in the stores will decide which phone wins and which phone loses. I then explained why the Lumia series is poorly designed, and that it will not help land new non-Nokia customers, but it will disappoint existing Nokia owners. I have also shown how the problems with Lumia will build over time adding to the anger and frustration of the consumers. I have shown that the media early reviews of Nokia Lumia have been lukewarm and often suggest that rival phones are better and even the older N9 is a better value than the Lumia 800. But as people take the Lumia 800 home, the anger grows and there will be returns.

 

Now we have the evidence from Finland. If ever there was a reseller 'boycott' of any kind, official or unofficial, against Nokia branded phones - it would be least and last in Finland, Nokia's home market. Yet we have the evidence now. If the Lumia series produced satisfied customers, the sales people in Finnish mobile phone stores would eagerly sell Lumia handsets to existing Nokia owners who walk into the stores, asking for the Lumia. But that 8 out of 10 salespeople will not feel comfortable selling the Lumia - and six out of ten take the incredible step of not offering even one single Lumia model whatsoever when a customer requested Lumia by name. What do we know? The sales guy (gal) knows. The evidence is blatantly obvious. The Lumia series produces too many disappointed customers and the sales reps will not want to try to push the devices. They know Androids especially by Samsung produce far more satisfied customers - even in Finland, the home of Nokia, where almost every current mobile phone owner has owned something like 7 or 8 Nokia branded phones in the past decade, and many of them are on their fifth smartphone already.

LUMIA IS FAILING CONSUMERS

The proof is in the pudding. The retail sales will not push customers away from one brand to another, consistently, across rival stores and networks, unless there is a systematic problem. And there is. The Lumia is a magnet for returns. The sales guys hate that. They therefore pre-empt any such problems by selling phones that don't have such problems - and that is increasingly Samsung Galaxies instead of Nokia Lumias. Good job Stephen Elop. You are not only damaging Nokia, you are helping Samsung gain sales and new customers. And you said that you are not worried about Samsung taking Nokia customers? No wonder. You are pushing them to Samsung.

 

If you thought the Microsoft strategy would be a winner for Nokia's future, think again. If you even thought only that the Lumia strategy has a good chance of succeeding, now we have the evidence, it is not. The design by Elop's incompetent West Coast design team has produced a failing series of Lumia phones, that receive at best lukewarm early reviews and at worst push customers to rival phone makers. Longer user reviews based on owning and living with the Lumia actively suggest consumers should not just avoid the Lumia, but if they had bought one, the consumers should return their Lumias. And now we see the evidence in the stores. Even in Finland of all places, in 8 out of 10 cases in the biggest stores of the biggest phone sellers in the biggest cities of Finland, the sales people fear showing Nokia Lumia to their customers - who ask for Lumia - and will try to sell other brands right off the bat. The Stephen Elop strategy of creating the disappointing Lumia series is now boosting sales of Galaxies at Samsung.

As you read the reviews, it is obvious that the N9 running MeeGo would be a far better phone to offer globally. Its sister phone, the MeeGo powered N950 with its QWERTY slider keyboard would be particularly warmly received because the Lumia series has no QWERTY devices. The Nokia 808 PureView (which runs on Symbian) will not be sold in the USA where Nokia desperately wants to make a come-back. What moron CEO has a hit phone in his portfolio (the N9) and refuses to sell it. What incompetent CEO sees a premium priced handset that has such unique form factor, it cannot compete with his fave Lumia series, but would sell at a higher price point helping boost Nokia income closer to making a profit - but refuses to sell it. And where the 808 PureView won literally the handset of the show award in the biggest mobile industry event in Barcelona two weeks ago, and now the destructive CEO refuses to release it in the market where Nokia is aiming to recover. The N9 and N950 with MeeGo are far more desirable - and do not produce disappointed customers like the Lumia series.

The N9 and N950 should be sold in every market now, not so that Germans have to drive to another country to get theirs. The 808 PureView will start selling in April in some countries like the UK. It should be sold globally including in the USA. This would not be in conflict with the announced Microsoft strategy with Lumia. Samsung sells smartphones very profitably running on Android, Windows Phone, Windows Mobile and its own bada OS - on four separate operating systems. I am not suggesting Nokia to resurrect a dead OS or to launch a new one - Nokia today manufactures the MeeGo based N9 and is introducing a new Symbian based 808 PureView in addition to four Lumia models. Why can it not sell smartphones on all three platforms and see which succeeds the best?

Stephen Elop has bankrupted Nokia's future in smartphones. The Lumia strategy is totally doomed. Stephen Elop is incompetent to run Nokia and needs to be fired - now!


UPDATE (on 21 March) - I have been chronicling the problems that Nokia (and in parallel, unfortunately also Microsoft Windows Phone) have had with the retail channel, since the Elop Effect of last year. I just spotted a story at Finnish Talouselama where they did a survey of the major European markets where Lumia first launched. Right now in March, this is what Talouselama found (countries in order of smartphone market size):

Germany - at T-Mobile (Germany's largest mobile operator/carrier) Lumia 800 is ranked 9th bestselling smartphone. At Phonehouse (independent phone retailer) Lumia 800 is ranked 8th. Whereas on Amazon Germany, the Lumia 800 is not in the top 100 smartphones.

UK - at Vodafone (UK's largest operator/carrier) the Lumia 800 is not in the top 10. Amazon UK site lists Lumia 800 ranked 86th, behind Nokia dumbphone X1-01 ranked 20th bestselling phone.

France - at Orange (France's largest carrier/operator) the Lumia 800 is not listed among bestselling smartphones. With Phonehouse France, Lumia 800 is listed 9th bestselling smartphone. Amazon France does not find Lumia 800 among bestselling smartphones.

Netherlands - KPN (biggest operator/carrier) lists the Lumia 800 as the second bestselling smartphone.

First. If your phone model is consistently around 8th best or 10th best or so, across all sales channels of a country, your market share is about 2%-3%. Netherlands is one third the size of France and one fourth the size of Germany. The KPN news does not in any way balance the problems in Britain, Germany and France. 

Secondly, Nokia Lumia had under 2% market share in Q4 of 2011 (the Christmas Quarter) in these countries. The survey now by Talouselama suggests, Nokia's Lumia 800 has been falling in sales from Q4 into Q1, not improving. 

But there is the Lumia 710? Talouselama makes the point, that the alarming news is that in these countries where Lumia launched first, the Lumia 710 was the cheaper model - it should be selling more than the Lumia 800. In no case, did Talouselama find the Lumia 710 to be on any bestseller list. Not once. So it is selling even more poorly than its more expensive Lumia 800 brother. 


UPDATE 2 (on 22 March) - I have just added the logical follow-up article to this, the 'so how would you fix it' blog. I know Nokia will of course ignore it, but for those who are interested, here is my best insights of how to fix Nokia and restore it to profitability and a growth path.  

Comments

[Dan Thornton]

Interesting post, and interesting timing - I've still been using my N900, but the time is coming to change, particularly with the loss of Ovi Sharing to allow me to find ways to use web services which weren't developed for the N900.

I've kindly been offered a Lumia 800 to check out for a couple of weeks which is due to arrive any day, and it's coincided with my ex trading up from a dumbphone to a Samsung Galaxy Ace, so I've just experienced the set-up and operation of a relatively cheap Android handset from scratch. Plus having led development of a launch app for the N9, I knew it pretty well...

I'd definitely agree on the specs side - one of the reasons I've held off upgrading to Android is that I wanted to see what the new Nokias would be like in terms of cameras, video, and being able to connect and export out images and video content. I'd definitely be one of the people tempted by the PureView or the N9 as a device which takes great photos, sends texts, connects to the internet and occasionally takes a phone call with decent reception..

Plus I've also relied on the FM Transmitter in the N900 to let me listen to podcasts in the car and in the kitchen at home via my DAB radio without having to get an aux input kit for the car and trail wires everywhere...

I've seen choosing Nokia as a bit of a compromise - you don't necessarily get all the latest, coolest apps that you'd find for Android/iOS, but you do get the best hardware. Having started looking at WinMo apps, there's decent coverage for most things, but there's nothing exclusive and compelling besides Xbox Live integration, and although that's a big draw, I'm not sure the functionality is going to make me commit...

Still, we'll see how I get on shortly...

[Manish]

I have a Lumia 800 and it has a very nasty bug. And I am not the only one to experience it. A cursory google search will reveal the extent of the problem.

The bug is that if I initiate a call and end it after some time, the calls ends but the display keeps on showing "Ending". No amount of button pressing will make this go away. And then, after 4-5 minutes, the handset reboots automatically and returns to normal. No fix has been offered for it till now.

https://www.google.co.in/search?aq=0&oq=lumia+800+call&sourceid=chrome&ie=UTF-8&q=lumia+800+call+ending+problem

[King Solomon]

@TomiFan:

Read properly, Tomi says that even after 4 different models, Nokia has not yet come up with a keyboard-equipped Lumia. It's about choice, not a "if you don't have it you're doomed" feature, and that's why Tomi stresses that Nokia should have launched the N950 into the consumer market -- this is practically the N9 with hardware keyboard. Also note that there's only a single commercial MeeGo phone from Nokia, that's the N9. If MeeGo lived on, Nokia may have come up with a PureView MeeGo device instead of the Symbian-powered Nokia 808 PureView. That's the device that _could have been_ if it weren't for Elop's "strategy". Which leads me to the next point: Elop interfered the development of the N9 during its critical stages, which led to the unused front-facing camera in the first place. Yes, PR1.2 came out only recently with Gtalk video calling and no support for Skype video calls, but let's be fair: Skype for Windows Phone beta was released just two weeks ago! Prior to that, Windows Phones with front-facing cameras were as useless as the N9 was before PR1.2 software update. Also, do your research properly, the Nokia N950 does support microSD cards. Also, HDMI and FM transmitter capabilities may well have come in a future MeeGo device, had Elop not introduced his strategy.

Have a nice day everyone. Sincerely, the King of Solomon.

[Sander van der Wal]

The Nokia Communicator was a Nokia flagship device, but only in it's Series 80/9500/9300(i) incarnation. Especially the 9300i. After it got replaced with the S60 based E90 (I believe) it was only big, but not a flagship anymore. I won't even talk about the E7 as that is one horrible device. E61 was good too, E71 a lot better (only this year I replaced it and the iPod touch with the iPhone 4S), E72 worse. N95 good, N97 worse.

So in my mind it is a time-honored Nokia tradition to replace a flagship device with something worse, not something that Elop is to blame for. A pity it is to see he's keeping that tradition, though.

[Afewgoodmen]

A great post. And it is obvious that a Lumia phone at best is a half feature Nokia phone! No Bluetooth file transfer. No Mass USB mode when tethered to PC. I'm really sad to see the direction that Nokia is going. for them to be bringing out phones that are less powerful than previous Symbian phones!

I am even more perturbed to understand that CEO Elop is ignorant when it comes to mobile. I felt that Microsoft allowed Nokia some leverage to Tweak Windows phone OS so as to include specific Nokia features. I'm just wondering why Nokia isn't taking the opportunity to add those much needed and basic functions that we've come to expect in the most basic Nokia phones to their Lumia line-up.

The earlier Nokia develops a strategy change and adopt more OS platforms actively other than WP, then the better their chances of survival!

[vladkr]

Hello Tomi,

Couple of times I tried to describe what I see here in Canada. There is no big promotion for Lumia products here, like those one can see in W-Europe (France Belgium for instance...) where marketing budget seems to be massive (with what result ?)

So Lumia 710 and 800 are offered only at two Canadian providers... unfortunately not those which are owned by biggest Canadian medias.

But even at carriers' retail stores Lumias are not easy to find. Last week I went to such a store at the most visited place of Montreal (second largest city in Canada) and Lumia wasn't even offered. Isn't that strange ?

Anyway, I still found some retailers, Costco and only one carrier-shop (out of ten) in the city where I live where Lumia were sold; when I asked about the Lumia, comments were quite positive... cool... what surprised me is when I asked the second time at the other places (3), comments were word to word exactly the same, as if it was a replay of the same video.

I also found out that sellers get a $10 bonus for each sale (They usually earn $9.65 an hour).

When I ask about how many were sold, it's hard to get an answer but I know it's quite low, much lower than the iPhones 4S sold in the only Apple Store of the city.

Now, another interesting fact. I watch Russian TV quite often, and since December some department stores promote Symbian based Nokia (500, 603, 701) much more than WP ones and it seems there is a true demand. In MTS (carrier) commercial, the Lumia 800 is shown but not even named.

Then, I think everyone here, who has a bank account, who uses transports, shops, travel etc. noticed all the "iPhone App available", "Android app available" and even Blackberry stickers... where are WP ones ?

Even if apps are not the most important thing in mobile, I think however these stickers still print peoples' mind; even if they don't download apps, they tend to trust most widespread systems more.

[vladkr]

ah, and I'm sorry to make two posts instead of one (I just forgot one thing)

There is one reason (out of a few) I chose a N9 instead of a Lumia 800 :

I use a mac... no Zune for me.

[Manish]

I am not sure if it qualifies as file transfer capability but I transferred all my contacts from N950 over to Lumia 800 using Bluetooth.

[vladkr]

@Jay : are you yourself "most of people" or have you asked all of them?

[elm70]

Situation for Windows Phone is dramatical.

Fact is that Windows Phone 7 or 7.x is total JUNK !

Since more then 1 year of introduction, since almost 4 months sales from Nokia, Windows Phone is not visible in any mobile usage from the gs.statcounter.com ... only visible at 1.5% in Germany and Italy (not growing) ... but interesting, 4.5% in Finland and growing.

So, who is using Windows Phone ? Only Finns, only Nokia people ... yes, Ballmer did win 120k customers, the Nokia employees LOL

Nokia have to hope on Windows Phone 8, and Elop is the criminal that commit Nokia to the smallest Mobile OS, the less mature with market decline. The timing was terrible too, 2 years before having any real product. Nokia with Windows Phone 7.x is a JOKE it is not a product.

I'm too tired to discuss if Elop is a moron or a criminal. Either way he should not be a CEO.

Nokia is sinking in the stock market, it is losing market share.
Before Elop, like it or not, Nokia was still the #1, #1 eco-system with Symbain and Ovi, #1 Smartphone sales, #1 Dump-phone sales. Yes it was #2 on making profic, second to Apple .. and so what ?
Yes, market share was declining, but unit sale and revenues was increasing ... so who care of market share? ... What matter is sales number in euros or dollars

Tchuss

e_lm_70

[King Solomon]

@manish: "I am not sure if it qualifies as file transfer capability but I transferred all my contacts from N950 over to Lumia 800 using Bluetooth."

This is because Nokia ships Lumia devices with Nokia Contacts Transfer app, and is part of the exclusive Windows Phone apps for Lumia devices. This is only available on Nokia Lumia devices and is limited to contacts transfer only; no file transfer capability, no Bluetooth synchronization, not even Bluetooth modem (DUN) functionality.

Sincerely, the King of Solomon.

[Tomi T Ahonen]

Wow 12 comments already. Cool..

I'll do replies in small sets

Hi Dan, TomiFan and Manish

Dan - thanks, let us know how you like it.

TomiFan - QWERTY? N9 has sister phone N950 with QWERTY designed exactly for that purpose. That N9 manages to outsell both Lumias 3 to 1 in Q4 of 2011 with only one model tells not how great MeeGo and N9 is, but how bad the Lumia Windows Phone pair are.

Lumia 800 is NOT a flagship, I make the clear point in this blog and before, that it is PERCEIVED as one. 8mp - N8 had 12mp. No Xenon, the N82 four years ago had Xenon. forward-facing camera, Nokia has had since 2005. Etc.

Manish - thanks. I hope an update with the bug-fix is soon to arrive. That sounds very annoying.

Thanks all, keep the comments coming

Tomi Ahonen :-)

[F.OO]

@Tomi "Disappointed Buyer = Returned Lumia = Salespeople Avoid = Growing Nokia Retail Problem"

This is just another mistake in a series that resulted in the biggest mismanagement case in modern history.

Considering that there was a possibility -- a small, remote possibility -- that plan A would not work, he *should have* a plan B. Even a "disaster recovery plan". But, what's Elop's plan B? "Plan B is that plan A must work".

Considering that Windows Phone had a small market share, and was shrinking; that Elop didn't have a product to show; and Windows 8 is a incognita; the possibility of failure was not small. Elop should have plans B, C, D, E...

But that's not Elop's style. No!!! He actively worked to destroy all alternatives to Windows Phone, all backup plans, anything that could stay in front of his amazing^Wdelusional vision.

[anobserver]

A thoroughly instructive post. It confirms what I already knew. Actually, it shows how much worse things are presently with WP than I thought.

In one aspect the analysis should be fine-tuned however. The lack of support for microSD cards, Bluetooth transfers, USB, HDMI, FM are probably the result of a deliberate policy from Microsoft, not a newcomer failure. The goal being that WP devices only talk to Microsoft infrastructure (Zune, Skydrive, whatever), never in a peer-to-peer fashion, and thus lock customers in a Microsoft world. Notice that Apple is doing exactly the same -- no microSD cards, no USB, crippled Bluetooth, no HDMI, no FM, and for the same reasons (lock people to talk exclusively through Apple products and networking/cloud infrastructure).

[King Solomon]

@anobserver: Actually, Apple is more lax than Microsoft when it comes to vendor lock-in. For example, the iPad Camera Connection Kit allows the use of regular SD cards for photo transfers and it also comes with an adapter for connecting to your digital camera with a standard USB cable. Apple also has a full portfolio of TV output solutions, not just HDMI: the Digital AV adapter with HDMI output, the VGA adapter as well as Composite AV and Component AV adapters for analogue video output. All aforementioned adapters are first party products (made by Apple) and work with the iPhone, iPod touch and iPad. I don't see how standard connections such as VGA and HDMI "lock people to talk exclusively through Apple products." Also, there is partial USB Mass Storage support in the iPhone for photo transfers.

Also, as Apple and Microsoft are moving towards cloud infrastructures, it should be noted that Apple currently has both a Mac and PC client for iCloud syncing. Microsoft does not yet have a Mac client app for SkyDrive, even though it has the Windows Phone 7 Connector app for Mac. Yes, there's an iPhone app for SkyDrive, but it doesn't let me sync my SkyDrive with my Mac, whereas iCloud supports both Mac and PC. To me, it looks like Microsoft is more brutally locking people to use its own systems than Apple.

Sincerely, the King of Solomon.

[cycnus]

@anobserver

Microsoft is not apple. Apple target market is the rich who don't really care about their surrounding, they just care that they look great with iphone, and if you want to connect with them, you got to have email or facebook, or twitter. they won't send file over bluetooth.

Whereas, as Steve Jobs said about Microsoft product, that Microsoft product lack of art, lack of cool stuff. and the one who already have iphone don't care about MS product because they believe apple = artistic = creative = cool. Whereas Microsoft = commoner = boring (the Metro UI is boring).

So, as it said many times in this blog, it would be wrong to create an iphone killer, as iphone did a great job in defining their phone for their user. and this is where android doing right. it didn't try to fight apple at their own game, but they create an alternative to iphone walled garden with open field.... actually this is an irony. because android and symbian has the same root of culture (Bluetooth file transfer, external memory, side loading apps, etc). This is also a reason that symbian user would feel at home with android, and the one that want iphone and their walled garden will not buy WP devices.

[F.OO]

Guys,

I propose one test.

I live in Amsterdam, and will walk from work to centrall station tonight, and ask for Nokia devices.

I'm curious to see if they will drive me to other cellphones; I will come back later and report the results.

I suggest that you do the same. :)

[King Solomon]

@F.OO: Actually... here's the sad news (you all expected it):

Nokia's flagship store in Helsinki carries only three N9 units, but more than 20 Lumia 800s... I've been there multiple times and once I asked the salesperson about the availability of the Nokia 808 PureView just after it was announced and he pretty much said: "who cares about PureView, it's Symbian, it's old, Lumia has a good camera already so why do you want PureView?"

Also, the salesmen at Musta Porssi in Kauppakeskus Sello (a big and very popular mall in Espoo) pretty much advised me to buy Samsung Galaxy S II instead of N9 or Lumia 800. Heck, the salesman also said that if I really wanted a Windows Phone, I should go for HTC Radar instead and save money.. True story. :/

Don't have proof of course so don't take my words as fact, try it yourself and see what happens. What I know from personal experience however is that Tomi is 100% correct about retailers' stance on Lumia.

Sincerely, the King of Solomon.

[F.OO]

Ok!

I just finished my mini-survey: I went to three different stores, asking for the Lumia 800.

I have good and bad news for Nokia.

The good news is that nobody tried to push another cell phone. The responses were generally positive, although not enthusiastically so ("it's a good phone").

The bad news is that, when I explicitly asked for a comparison, all the vendors pointed me to the Samsung Galaxy S II, saying that it is "better".

So: if you are determined to buy a Lumia 800, nobody will try to stop you. If you ask their opinion, they'll probably suggest a better alternative.

Disclaimer:

I don't have any practice doing this kind of survey; I didn't go through the buying process, when the seller could try to sell something else; the stores were in the center of Amsterdam and I don't speak Dutch -- all these factors could have some impact in the result of the survey.

It would be nice if you could try to repeat this experiment in your cities. :)

[cycnus]

First, disclaimer, I own 1 Nokia N9.

But.... Actually.... for general user....
Samsung Galaxy SII is a better phone than Nokia N9.
Because Nokia decide to pull plug on N9, (so for example.... if need what's app, you're not gonna get it).