Just who is pulling Nokia’s strings?

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Michael Garwood attempts to make sense of Nokia’s IT distribution strategy after it handed its supply contracts to Micro-P and Ingram Micro

When Nokia decided to gamble its smartphone portfolio on the Windows Phone platform in February, opinion was divided. Some were unsure of the move, convinced it was shifting from one troubled operating system in Symbian, to another that had so far, arguably, failed to establish itself in the mobile space.

It was a bold move from Nokia and one that had to be made, because the feeling is Nokia has completely lost focus on what is important today. Its global market share may paint a bright picture, but the coffers tell a different story. Smartphones are where the big bucks lie, and Nokia isn’t even on the podium.

So the Microsoft deal seemed like a move in the right direction, but due to Microsoft’s size and Nokia’s demise, it has been fuelled with rumours of a power struggle. There has even been speculation that the giant IT company is testing the waters before buying the one-time dominant Finnish manufacturer.

But the recent decision to ditch established handset distributors Data Select and 20:20 Mobile in favour of two, albeit very well respected and established distributors in the IT space, suggests Microsoft is perhaps now pulling the strings.

Common sense would suggest keeping both Data Select and 20:20 Mobile, or indeed any other mobile distributor it feels deserved a crack, and adding one or two IT players to the mix. It couldn’t go wrong.

No brainer?
To those without considerable mobile distribution knowledge, attacking the IT sector perhaps seems like a no-brainer. At present, give or take, there are between 800 and 1,000 mobile dealers in the UK – a crowd that continues to consolidate. Compare this with the IT crowd and it’s about 6,000 fewer. So the opportunity is clearly there.

Problem is, it’s not that simple. ‘Convergence’ may be a buzzword that has been bandied around the industry for the past couple of years but most of the IT guys aren’t embracing mobile. This is due to the complexity in the long process of signing up customers, only to receive minimal revenues (which may get clawed back), when they can earn more sterling from selling print cartridges or installing servers.

Micro-P has worked well with Samsung, and since its entry in to the mobile space, has made impressive strides. Its abilities, as are those that Ingram Micro possesses, are unquestioned.

But the biggest hurdle for this to work surrounds their selective customer base. Micro-P MD Gerry O’Keeffe recently told Mobile News he was uninterested in growing the company’s mobile distribution to a level that sees it compete with the likes of 20:20 Mobile and Data Select.

And O’Keeffe admitted at the time the majority of his mobile customers originated from the IT side in the first place, so it’s safe to suggest its strategy that to date at least, is not one that focussed on meeting the demands of the traditional mobile dealer.

Inevitably the likes of 20:20 and Data Select will continue to stock Nokia devices in some capacity, through buying off rivals but their need to push them has now gone. Most dealers in the UK source their devices from Brightpoint, Data Select and 20:20 Mobile, with the same faces typically appearing at each of their own dealer events. Will those dealers be expected to make a fourth or even fifth trip? Distribution suddenly feels a bit crowded again.

20:20 has been vocal with its comments regarding Nokia and its strategy – albeit amicably and undoubtedly doesn’t want to create too much of a storm should its plans fall flat. A smart move.

Hard hit
For 20:20 Mobile, Nokia is no longer the key to success. Some suggest around 15 per cent of its business compared with a lofty 75-80 per cent a few years back. It has BlackBerry manufacturer RIM to fall back on, a device that remains strong in the B2B market and one it could not gamble on to suit Nokia’s untried and untested new Windows range.

Data Select will undoubtedly be hit the hardest. It doesn’t have the likes of RIM to fall back on as a direct partner, so it could spell some worrying times. Whether commercial director Roy Taylor will continue his pursuit of buying the business may now be in question. Chairman Peter Jones will certainly feel the impact in his pocket as the asking price will surely be significantly less.

Nokia possibly thinks its name is too tarnished in the traditional B2B space and is trying to become some sort of leader in IT. This looks a real opportunity, but the industry needs to play its part heavily for this to happen, and that is a gamble.

No room to move
But what else can it do? If reports seeping from 20:20 Mobile suggest monthly sales have dropped at alarming speed over the past 12-18 months are true, you can look at this two ways. 20:20 is not pushing the product, or demand from consumers is simply not there, due to less than impressive devices. Based on the continued feedback from dealers and as consumers ourselves, the latter seems more likely.

Microsoft is a master of the IT segment, of course, but it doesn’t know mass-market mobile. It’s never had a strong hold and the dominance of operating systems with its Windows variants, and with Android, Apple, BlackBerry there is little room for it to manoeuvre in.

Some have billed the Microsoft partnership as the last chance for Nokia to remain an established and respected brand in all ends of the market, particularly the smartphone sector.

Companies like Huawei, which 20:20 Mobile cited as an opportunity to fill the gap left by Nokia, will now smell blood. 20:20 Mobile MD James Browning claims the phone has been off the hook already from its existing partners looking to boost productivity, and the same can surely be said of Data Select.

Of course, if Nokia’s plans work, then the distribution channel as we know it will undoubtedly change. If it fails, the damage could see its name wiped from B2B conversations.

1 COMMENT

  1. This is a well observed article. Nokia seem to have followed an IT consultancy backed lead, and their new UK Management have gambled on it. The IT channel does not sell mobile, it will not sell mobile, and the likes of MicroP and Ingram are seeing the mobile channel as their future, as they lose revenue and share from their traditional PC and server markets. Talking about the IT Channel allows companies like Brightstar, Micro-P and Ingram the opportunity to open up vendor relations, but they soon realise that the only sales to be made are in the overcrowded mobile market. Mobile vendors should stick with mobile partners, they have the relevant knowledge and customer base, and should be valued by their vendors. Overdistribution simply leads to a lack of money to be made in distribution – that results in a lack of investment, and requires the vendors to make the effort directly.

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