Nokia USA promises changes, but still misses the point

Steve Jurvetson, via Flickr (CC license)
Venture capitalist Steve Jurvetson had some nice things to say about the Nokia N95 in March 2007. Wonder what he thinks of the US service and support?..

Looks like Nokia USA is making some initial moves toward improving how it serves the US market. So far, these seem focused strictly on the hardware — and not the service, support, and availability problems American consumers face. These steps may improve Nokia’s chances in the US market in a year or two.

Well, it’s a start…

Still, there is MUCH more room for Nokia USA to improve significantly in the short term by offering better (i.e. reasonable) service terms for high-end phones. I’m puzzled why the company is not pursuing this low-hanging fruit. While the changes Nokia is planning for its hardware might please US carriers and retailers, the company is still shooting its US reputation in the foot among high-end US consumers with its abysmal US service and support.

This might end up being a surprisingly difficult market problem for Nokia USA. We high-end consumers — especially mobloggers and journalists (professional and amateur) — do talk! Right now, even though Nokia has the best mobile product on the market for our needs, more and more of us are frankly scared to buy or update a Nokia N-Series phone. Why? Because we suspect (with good evidence) that Nokia doesn’t really care much about our experience after we buy their phone.

We are willing to pay a premium price for a Nokia — but we’re not willing to risk being left twisting in the wind.

To catch up, here’s what Nokia USA has said it would do for the US market so far, and why (even though these are constructive steps) they’re still missing the point…

On May 1, while I was mega-busy at the NewsTools 2008 conference (which is why I didn’t blog it immediately), Nokia’s Conversations Blog ran a post optimistically titled Changing for the Better. There, James Beechinor-Collins wrote:

“Nokia is embarking on a raft of changes in the USA which are designed specifically to better cater for customers there. …Right now though, the focus is on ensuring the right products are in the right places. To do that Nokia has assigned 300 product managers each to AT&T and Verizon with a view to tailoring devices specifically for the US market. This means more phones designed with US customers in mind, and ultimately better experiences had by those customers.

Mark Louison, Nokia’s North America chief, is behind the changes which have seen staff moving closer to Verizon and AT&T’s offices as well as increased spending on R&D for US-specific products. Louison sums it up neatly: We are literally repositioning our entire approach to the US.”

Now, that might be a very good thing for US consumers — but my guess is it would be a year or two before consumers like me would see any practical results.

And then yesterday, Nokia offered this news:

“Head of design at Nokia, Alastair Curtis told Finnish paper Helsingin Sanomat that in the next few months ‘US operators will carry a lot of new products from us’.”

…That announcement elicited sharp criticism from Gizmodo: Nokia’s Plan to Conquer the U.S.: Product Spam

“[Nokia’s] master plan to grab a slice of our red, white and blue shores? A hot new phone everyone will talk about? An iPhone-killer? Nope. Just lots and lots of phones, hoping that if they toss enough at consumers, some of it will land in their pockets.”

Some comments to that Gizmodo post point out the deeper and more immediate problem in the US:

Razgriz417: “How about actually CARING about your US customers……we adopters of the N95-3 are STILL waiting for our updates…”

Monty: “Great news for those who prefer quantity over quality.”

LJKelley: “The problem isn’t the lack of available good phones like the N95 but more the lack of those phones subsidized from carriers. The average person worldwide buys their phone directly from the carrier and the awesome N95 isn’t available from a single US Carrier.”

Plus, here’s what some commenters to Nokia’s May 1 post on the US market had to say:

Ricky Cadden: “The biggest problem that Nokia faces is support… The U.S. warranty service is a joke, as well, as has been well documented across the internet.”

Antoine: “The N95-3 is a model that should have received a firmware update inline with the rest of the N95 line; as it stands, it would have been a heck of a choice for not just the blogging/journalists community, but also as a device that makes waves for the other devices to come.”

The Business Picture: Nokia USA is Hurting

I was puzzled why Nokia USA would bother doing a marketing push for its N-Series phones in the US at all if they don’t really seem prepared or willing to provide the kind of service users of these phones need.

Here’s some industry/market context from America’s Network that shows how so far Nokia has manged to get itself nearly shut out of the US market:

“In the U.S., [Nokia is] losing ground fast. Despite years of effort, the Finnish company’s share of the North American market has slid to just 7%, from 20% two years ago, according to researcher Strategy Analytics. On Apr. 17, Nokia reported the number of phones it sold in North America in the first quarter plummeted 46%, to 2.6 million. Nokia’s biggest problem has been the unusual nature of the U.S. market.

“…the major U.S. wireless carriers, AT&T (T) and Verizon Wireless, dominate the market to such an extent that phonemakers must work through them to succeed. Proud and innovative, Nokia has long been unwilling to yield as much control as its hungrier rivals. ‘It’s been frustrating for Nokia, and they have paid the price for not adapting,’ says Ross Rubin, director of industry analytics at market researcher NPD Group.

“…The company is shifting its strategy to develop phones in partnership with U.S. carriers, in part by assigning 300 product developers each to AT&T and Verizon. Nokia also has moved salespeople from its main office in Dallas to the cities in which the carriers are headquartered. And it has increased research and development spending for U.S.-specific products.

“‘Some companies are good listeners, and others are very focused and principled about what they do,’ says Jez Frampton, global CEO of Interbrand, which ranks Nokia among the top 10 most valuable global brands. ‘Nokia has been more the latter.’

“…Wireless customers have to hunt for Nokia mobile phones in the US today. Verizon doesn’t have a single model in stores now. AT&T has only a few.”

Nokia’s Self-Image Problem?

Mulling over all this information, it occurs to me that this may boil down to a mindset problem. That is, Nokia doesn’t view itself as a service company. At least, they don’t appear to. That could explain why the solutions they’ve proposed so far are product-focused — even though their products are not really the problem. Addressing product issues is within Nokia’s comfort zone; service issues, maybe not so much.

Nokia makes and sells phones — actual, physical devices. Based on its behavior in the US, Nokia doesn’t seem as comfortable viewing itself as a service company. That approach might make sense in other countries where good service and support seems to be provided through partners like cell carriers with many local outlets. But so far in the US, Nokia USA is the only support/service option for Nokia users, at least for high-end phones. If they want to be a real player in the US market, by default they must be a service company, too — at least for now.

For mobile devices, service and support are at least as important as hardware quality. Can Nokia really afford to overlook that, if they hope to make inroads into this market?

Whether you’re a person or a corporation, changing your self-image (including which role you think you’re supposed to play) can be daunting. If Nokia primarily sees itself as a product company and doesn’t really embrace being in the service business, then maybe a logical step would be to delegate that role in the US to capitalize on someone else’s strengths.

So maybe in the near term Nokia USA could partner with a proven US service organization that could support this market. I’d be curious to see if they’re considering that option, and making any moves in that direction.

…And of course, an immediate “PR tourniquet” solution would be for Nokia USA to upgrade its warranty for N Series phones with the following terms:

  • Timeliness. All repairs and replacements will be handled within seven days, including shipping. Don’t make us wait a month or more to get our phones back, as is now the case.
  • Responsibility. All phones damaged by Nokia’s firmware update process (which Nokia has acknowledged is flawed and has damaged phones) will be replaced for free, no questions asked, within seven days.

There’s definitely much more that Nokia could do on the service front, but these two steps would relieve US consumers’ immediate and considerable anxiety that we’ll be left twisting in the wind, wondering if and when our phones will be fixed and back in our hands.

It’ll be interesting to see what, if anything, Nokia is willing to do on the US service front. Stay tuned…

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