Business Watch: Nokia’s failed flagships

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When you open a flagship store, it is a reflection of the confidence you have in the power of your brand. So news that Nokia is to close its flagship store in London’s Regent Street is symbolic to say the least.

This glittering, marble-floored technology emporium appeared to have all the glitz and pizzazz needed to seduce the West End punters o  the street and persuade them that Nokia is cool. But it had one big problem. Stroll across the street (taking care to mind the London traffic) and there, looming before you, is the allconquering Apple Store.

This open-plan, minimalist shrine to all things Apple is crammed, day and night, with iPhone and Mac fans, eager to worship, browse, surf and spend money.

A quick flick through the acerbic sociological book Stuff White People Like, would tell you that a Nokia flagship store was never going to generate the same appeal. Listed high in the book’s list of things that middle-class people love are ‘Apple Products’. Nokia is nowhere to be seen.

The same is true of Sony Ericsson, which recently closed its flagship store in Kensington High Street.

Nokia, which is rumoured to have splurged £4 million on the Regent Street store, suffered poor footfall and low sales at its top shop. It will maintain its other seven outlets in the UK and hopes to find other jobs for the 30 staff in Regent Street as it looks to revamp its retail network.

It looks like a rather expensive failed experiment that does at least reveal something about how consumers view different technology brands.

Of course, Nokia still dwarfs Apple in the handset market and sells vastly more devices every year. But it is losing share in the critical smartphone market to the Californian company, which has set the
mobile world alight since it launched the iPhone.

There has been criticism that Nokia’s smartphone devices – such as the touchscreen N97 – lack the ease-of-use and intuitiveness of the iPhone and Research in Motion’s bestselling BlackBerry range.

But now Nokia chief executive Olli-Pekka Kallasvuo (pictured) has come out fighting, insisting that the company will succeed with its bid to improve the user-friendliness of its smartphones.

“We will make the most of our assets and experience and outperform the competition,” he declared at Nokia’s annual investor day in Helsinki.

Investors have been alarmed to see the profi tability of Nokia’s handset business tumble this year. The fall has happened partly because its smartphones simply don’t make it easy enough to do things like send emails and listen to music.

Smartphones generate fatter profit margins
than basic devices because their additional features attract a high selling price.

So pressure is on Kallasvuo’s team to remedy the situation so he can report back to shareholders next time with improved results.

Full article in Mobile News issue 454 (December 16, 2009).

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