How Microsoft and Nokia can avoid smothering their spark

30 Jan 2012

At CES this month, Microsoft finally accomplished the impossible. Suddenly, everyone was talking about the Windows Phone. Of course, Microsoft owes much to Nokia for that result, given their gift of the acclaimed N9 hardware in the form of the Lumia 800. Unfortunately, nearly as soon as Microsoft/Nokia found traction, they immediately began to piss it away by introducing a raft of additional models with no release dates and vague technical differences. No sooner had they gain the limelight than they committed the cardinal sin of the mobile phone industry, ambiguous product line growth. I’m hoping it’s not too late for them to recover.

It’s my humble opinion that the N9/Lumia is the most beautiful phone hardware outside the iPhone. I’m intimately familiar with what Android has to offer, owning several Nexus-series phones myself, but their recent trend of monolithic form factors and hacky case tumors means the award for best design was very much up for grabs. The Lumia is not flawless, it still has quirks, but it’s a beautiful device only requiring iterative improvement rather than a ground up redesign. And it’s largely because of the release of the Lumia 800 that Microsoft is finally getting some of the smartphone market mindshare.

The 800’s availability is pretty sparse, with no American carriers (Microsoft will begin selling it unlocked next month from their stores). So to even have the level of excitement for an essentially unreleased phone is an accomplishment in itself. When they announced the 800, they also announced its chubby younger brother, the 710, which targeted the lower end of the smart phone market. This was their first infraction, but with only two devices that look drastically different, they could be excused.

But at the same conference, while the attendees were having their very first hands on with the 800, Nokia went and announced the next version, the Lumia 900, with no date (it’s rumored to be March), effectively killing any chance all but the most wallet heavy of potential early adopters will be picking up an 800.

While the replacement of the 800’s pentile screen on the 900 is a welcome fix, the fledgling Windows Phone market would have been happily served by the 800 for at least a few more months. Don’t let the tech spec nerds fool you, LTE just does not have the coverage to be a deal breaker at the moment.

And then today, only weeks after CES, they slipped another model into the pipeline: the 910, rumored to be released only another two months later in May. The difference? An additional 4 megapixels on the camera.

In a matter of weeks, Nokia went from having the flagship Microsoft phone brand to having a technically ambiguous family of 4 models, half of which aren’t released nor do they have confirmed dates. As a result, any brand awareness for the Lumia 800 is in danger of becoming completely diluted.

The tendency for consumer electronics companies to do this is shocking. But their insistence on a massive catalog of indistinguishable devices is one of the primary reasons that these manufacturers continue to lose ground to Apple.

Admittedly, some companies are realizing their mistake. HTC, one of the worst offenders (you’re forgiven if you don’t know the difference between the HTC Bland, HTC Dull, and HTC Generic) as well as Acer have both said that the low-quality, many-variations strategy is not working. The confusion introduced by so many competing products with minor (if any) technical differences is a classic example of the paradox of choice.

Handset manufactures (as well as most large scale consumer electronics companies) need not rely only on Apple as the only model of success. Take a look at any car manufacturer. Any given company has a limited number of models, but with high value brand names. For example, the Honda Civic. Everyone knows what to expect from a Civic because it has decades of brand credibility. The average person can probably pick the Honda Civic out of a line up of all Honda cars. They also can give a reasonably informed explanation to how it differs from, say, the Honda Accord. No one, outside the editor of your favorite gadget blog, is going to be able to differentiate between the 51 different HTC models.

Not surprisingly, the name of the product caries a lot of value with it. Consumers start to recognize it in multiple contexts: people on the street, friends that own it, TV ads and product placements, online buzz, and eventually, comparison shopping their next phone purchase. The name can also support minor technical variations: You can always customize your Honda Civic or your Macbook Air.

Now, here’s the trick. If you do it right, you end up with a recognizable brand name that has a lot of consumer value that you can then use to drive sales as you release hardware updates. What you don’t want to do is suddenly try and use that brand to sell a dozen of different devices, as you completely dilute the importance of the brand; it’ll go from “Awesome product a few of my friends have and love” to “generic term for every product that company sells”. Just look at the Motorola RAZR. It was launched in 2004 and was a massive success before smartphones began to take over. But the brand became diluted with half a dozen different models in various configurations, not to mention hangers-on in the form of the KRZR and ROKR (the ill-fated predecessor to the iPhone).

If you do it right, with each hardware update, you’re moving the legacy of that name forward. You don’t need to do a massive press conference the way Apple, but make a big deal that the new one is coming and why it’s better than the previous model (and it does have to be improved – a slightly updated camera doesn’t cut it). Samsung is actually getting the hang of this with the Galaxy. Microsoft needs to follow suit.

For Microsoft and Nokia, the recovery is easy: kill the multi model strategy and build brand recognition around a name or family of names.

• First, Pick the name for your flagship. Lumia doesn’t completely suck and already has some value.
• Second, make it clear that the 710 is the “budget” brand. The MacBook vs MacBook Pro. The Civic vs the Accord. Lumia 710 vs 910 is too subtle.
• Third, pay attention to the reviews of the 710. They’re certainly not all positive, but the reviewers are giving a lot of concrete and addressable feedback. Fix the problems, add the features that are obviously missing, and learn from the mistakes.
• Finally, bet big. They may have gained some buzz, but Microsoft and Nokia still need to bet big to compete against the dual titans of iOS and Android. Given that you can’t even get the Lumia 800 from any US carrier, it’s obvious they still need to figure out all the partnerships and marketing. They’re going to need to be aggressive to get customer and carrier traction. Microsoft should be giving these to any developer that asks and Nokia should be cutting margins to get these into as many hands as possible. They need to be aggressive (On being aggressive in a crowded hardware market, see the Kindle).

All signs indicate that Nokia and Microsoft have finally found their breakthrough device, their spark. For anyone that’s tried to start a bonfire before, you know how easy to smother that early flame. But with a focused strategy, they have the potential to grow the Lumia into a roaring fire.