Nokia & Microsoft: Features Alone Can’t Win the Smartphone War

9/5/12Follow @curtwoodward

After a long debut party in New York, the latest best chance for Nokia and Microsoft to make a dent in the smartphone market is finally upon us.

From afar, the list of features and ideas packed into the two new Nokia phones looked pretty impressive. In a world of iPhone clones, Windows Phone remains the most original take yet on a smartphone operating system.

All of that stuff matters, but it won’t make a real difference. To climb back from the dead and make smartphones into something more than a two-horse race, Microsoft and Nokia will have to turn to blunt-force marketing and drop the feature worship that’s being used to court reviewers.

That has to make all of the Harvard MBAs and brilliant engineers at both companies cringe, but it’s the truth. At this point, Apple and Samsung/Android have such a lead in smartphones that no amount of augmented reality apps, mitten-enabled touchscreens, and tiny camera-stabilizing springs will break into the top tier.

Analyst firm IDC estimates that Samsung shipped more than 50 million smartphones last quarter, while Apple shipped 26 million. Nokia is in third place with some 10 million units shipped—but only 4 million of those were next-generation Lumia devices. The balance were based on operating systems that are being slowly killed off.

So what will make the difference for Nokia and Microsoft? The advertising equivalent of carpet bombing—hugely expensive, relatively indiscriminate, and simply relentless.

This is not really a new point—there’s no shortage of evidence about the difficulties faced by late entrants and third-place upstarts in an entrenched market. But the point deserves to be made again to counterbalance the flood of new-gadget press that has been unleashed by today’s unveiling of the new Nokia Lumia phones.

In the end, there are three principles that will govern whether broad numbers of consumers decide to grab a new Nokia Lumia 920 or 820 when they go phone shopping. If you read a lot of the technology industry’s press and blogosphere, you may have encountered these principles before. But all three tie directly into today’s news, and the uphill battle that Nokia and Microsoft face if they hope to compete in smartphones.

Specs Are Dead. Tech investor and columnist MG Siegler put this thesis together last November. Specs, in industry speak, are the technical specifications and whiz-bang elements that are supposed to make people fork over their cash.

I couldn’t get that idea out of my head watching the webcast of the Nokia and Microsoft phone rollout. I’d argue that his thesis now applies beyond the typical rundown of how well the guts of a device work, and extends to many of the one-off product features built into a new device. Trying to understand all of that stuff makes buying a product too complicated—consumers want their new toy to work without having to learn a bunch of new names and explanations.

At the Nokia unveiling, a wide cast of characters from both companies went through exhaustive lists of new features, technological advancements, and statistics meant to convey the technical superiority of the new high-end Lumia 920.

There was the PureView camera. The City Lens augmented reality app. The Pure Motion HD+ display. The Fatboy Charging Pillow. Even that old impressive-sounding standby, Carl Zeiss Optics.

Gearheads and insiders will love all of this stuff, but most consumers have no idea what any of the alphabet soup of brand names means. The broad mass of American consumers doesn’t care about all of those features, and won’t waste time trying to learn about them. People are busy, don’t have as much money as they used to, and just want to get the best phone available on their carrier for the money. That’s about it.

As Siegler wrote, the mainstreaming of computing made possible by the iPhone revolution has relegated feature obsession to the hobbyists and specialists—the only people who ever really cared about that stuff anyway.

The then-new Kindle Fire tablet was a prime example of this trend: “By pretty much all accounts, this is a cheaply built device. Spec-wise, it’s pretty ho-hum. But it’s a cheaply built device that comes at a cheap price. That matters more—especially when paired with Amazon.com,” and the retailer’s digital media and shopping options.

People Don’t Buy Things, They’re Sold Things. Windows Phone general manager-turned entrepreneur Charlie Kindel made this point in a presentation last week at ThinkSpace in Redmond. He expanded the idea in a blog post this week on GeekWire.

The idea is pretty simple: Mass markets in the U.S. are reached by tons of effective marketing. “Even if you go and buy a commodity like cereal, you buy the one that was sold to you on TV, like it or not,” Kindel said.

That’s clearly true in the mobile phone market. Along with being an amazingly capable hardware company and cunning dealmaker, Apple has presided over some of the most iconic advertising campaigns in a generation. Now ask yourself this: What’s the last Nokia commercial you remember seeing?

In the smartphone race, there’s another crucial element to marketing—the retail stores, controlled mostly by the carriers. As Kindel pointed out, controlling the retail counter is the crucial last mile in sales that can make all the difference in the world.

Kindel, who participated in deals with phone manufacturers and carriers during the development of Windows Phone 7, says that point-of-sale push matters more than anything—the developer ecosystem, the quality of the operating system, or the number of apps.

“When you walk into a retail store for Verizon to buy a smartphone, you’re steered towards Android or iPhone. Windows Phone is a third player,” he said.

The Consumer Reptile Brain. Professional blogger Robert Scoble pointed out this bit of amateur psychology in reply to an earlier post by Kindel about Windows Phone’s marketing problem.

Scoble digs into his past as a retail gadget salesman to unearth a tidbit about mass-market consumer behavior: Most people want to buy the thing they know about, the one that is “safe” to own, because it has the apps they’ve heard about and want, and also won’t make them stand out as a weirdo with the non-standard phone.

“No matter how hard I tried I couldn’t unload crappy products on consumers. They generally are smarter than that,” Scoble wrote. “One thing I learned working the counter at several Silicon Valley consumer electronics stores is that there’s only one thing people really care about when it comes to buying things: Not looking stupid.”

At this point, with some 100,000 apps in its ecosystem, Nokia is probably well into the territory of having just about anything a regular consumer would want in a smartphone. Sure, that’s still a slice of the total apps that iOS or Android can offer. But it’s good enough.

What Windows Phone doesn’t offer is the safety of the herd. People are generally going to fall into two camps when they go into a carrier retail store: People who want and can afford iPhones, and those who think iPhones are either too overhyped or too expensive. In the latter case, there are great, nice-looking Samsung phones running Android that some of their friends probably have. Sold.

Why would anyone take a chance on a Windows Phone in that situation? If a retail guy isn’t pushing it, and if the consumer hasn’t been pounded into submission by a really effective ad campaign, the chances are probably very low.

The new Nokia phones, the Lumia 920 and 820, looked pretty cool from what I could tell on the webcast today. They seem capable of some truly novel things that I can’t do on my iPhone. But if they don’t enter the consumer’s mind as a safe option, if they aren’t sold with brute force, then all the specs in the world won’t matter. They’ll get stuck in that sad death spiral of would-have-been challengers, products that more people would buy if only a bunch of other people would buy them first.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • Walt French

    “What Windows Phone doesn’t offer is the safety of the herd.”

    It’s worse than that: Microsoft and Nokia, by clamming up about upgrades from WP7, pretty well guaranteed that purchasers would feel ripped off when it turns out their phone won’t be able to run all the features that they were hoping would come down the road.

    This article emphasizes carpet-bombing ads, but marketing is a whole lot more. Who knows what Microsoft stands for in the consumer space? (I think there’re a LOT of old Plays4Sure, Zune, Kin and WP7 owners whose opinions get shared to a much wider circle than XBox owners’.)

    What do prospective customers know about a retail environment where you won’t get ripped off by a salesperson only thinking of the spiff he’s getting for selling you the promo item of the month?

    How sure are they that the Next Big Game that their friends try to share, will be on WP? How hard is it to transfer their contacts and calendars? How much are you out if you crack the screen? When NFC is all the rage next year, will today’s phones get all the other software upgrades in WP9 that COULD work on today’s devices, or is it another hard reboot? Is it true that Skype-to-Skype is still effectively useless on the device because an inbound call won’t wake up the phone?

    I’m sure Microsoft has good answers to most of these questions, but I’m just as sure that Microsoft has invested almost nothing in giving ordinary consumers a comfort level, comfort that they’ll get a good partner. They have no idea as to whether they’ll even get an honest deal.