Nokia is betting its smartphone future on Windows Phone 8, Microsoft’s mobile operating system that’s set to launch in the next month. Of all of Microsoft’s partners, Nokia is the most dependent on Windows Phone’s success. The once dominant phone maker isn’t producing hardware for any other mobile operating systems, and the company is facing significant quarterly losses and a declining stock price.
But amidst all the bad news, the Nokia is pushing forward with an optimistic outlook. The Finnish company has a strong location-based services platform, a profitable business making low-end phones for emerging markets, a sizable patent portfolio, and of course, the Windows Phone Lumia line to work with.
Wired sat down with Nokia CEO Stephen Elop to discuss the company’s business strategy and get some insight on how Nokia plans to compete in the mobile market.
Wired: Let’s start with Nokia strategy, especially with your Windows Phone Lumia devices.
Stephen Elop: It’s a really exciting time when we think about the strategy we set out 18 months ago. We basically said there were three pillars to the strategy. The first is the partnership with Microsoft with smartphones. On Sept. 5 we introduced the Lumia 920 and 820. Both you and others have been writing the stories about how differentiated these devices are for the photographers amongst us and the capabilities of these devices with optical image stabilization. So we’re pleased with that and entering into an exciting time where Windows Phone 8, new Lumia devices, Windows 8 for PCs and tablets, all with the same user experience, are coming into the market.
The second pillar of our strategy speaks to the delivery of what we call mobile phones, essentially lower-priced devices, most often for emerging markets. Just in the last couple of weeks we’ve introduced a series of new products in the Asha family. And even though people think about our lower tier devices as feature phones, the authorities on the subject, the people who keep score of the mobile industry, say these are smartphones. We’re very proud to be introducing at less than $100 devices that are smartphones.
The third pillar of our strategy is something called “future disruptions.” It’s about what’s the next step in things like materials, photography, battery technology — the things that we’re working on in order to drive the next disruptions.
Wired: Who exactly are you targeting Windows Phone to now? There’s a sense out there that consumers aren’t aware of Windows Phone. What is Nokia doing to change that?
Elop: We’re doing a number of things. First of all, we believe that one of the primary places, if not the primary place, to focus is in the retail environment. When someone walks into a store and says “I’m looking for my first smartphone” or “I’m looking for my next smartphone,” we have to work really hard to ensure — with how the devices are presented on the wall and how the sales people talk about things — that we’re in that consideration set. Because all of the work we’ve done says that if someone takes one of these devices and uses it and has that experience, then we’re very successful with that consumer…. But we have to break through in that way. We have got to get that message to them.
You will also see an advertising campaign supporting this. You will see a lot of emphasis on reviewers, on tech blogs, on everything to make sure there’s a lot of understanding on what sets these devices apart from the others. What’s why, if you look across the Internet right now, across the blogosphere, there are so many examples of the photography and location-based services where people are saying, “Here’s the iPhone 5. How does the 920 do? Oh, it beats it? Great!”
In terms of targeted consumers, you have to think very carefully about the demographics on a country-by country-basis. In countries like the United States, there are certain age ranges, for example, people in their late teens, early twenties, who are very much trendsetters. They may also be telling their friends, “Hey this is the product to get.” So we focus quite a bit there.
To give you an opposite extreme, I was just in Jakarta two weeks ago, and in Jakarta people are just getting 3G data networks. They are just beginning to have data access. They are just beginning to afford their first smartphone. In a market like that, it may be an Asha product focused on someone quite young. The next billion people who are going to connect to the Internet tend to be people who are 17, 18, 20 years old who are just beginning to get to the point where they can afford it.
Wired: In the U.S., somebody can walk into an Apple store and have an amazing retail experience. But since Nokia’s Lumia line…
Elop: They aren’t in the Apple store. [laughs]
Wired: Right, they are going to be at carriers where customers aren’t necessarily having the best experiences. How do you make sure that the customer is still having a good experience with Nokia even though it’s through these carriers?
Elop: It takes a lot of investment. So when we think about where we spend our dollars, money set aside to launch a product, there is a disproportionate share dedicated to training the retail sales associates in the stores. We have to make sure the presentation of devices is well done, to make sure that we set things up so that, if you want to demonstrate low-light photography, you have some sort of special enclosure. And of course we’ll create experiences like that in stores to help people experience this. It’s an area that gets a lot of investment.
It’s also the case that some of the senior executives from some of the U.S. operators are saying that there is a need for a third ecosystem. You’ve got Apple. You’ve got Android. We need this third one, which means there’s some special emphasis and support given so that we have access to the sales people, so we can put devices in their hands so that they can experience it. And all of that helps quite a bit. My experience is that as we’ve made more and more investments in training of retail people working with the operators, and the experience has improved quite a bit. We are going to keep doing that.