There were a number of priorities for me at this years CES. One of my top priorities was to better understand Nokia’s strategy for Windows Phone and the US Market. Secondarily to Nokia’s US strategy was Microsoft in general and whether Windows Phone can grow in market share in the US in 2012.
As I have written before, Nokia has again entered the conversation at large, but more importantly, they have become relevant in the US smart phone market. I have expressed my belief that they contain some fundamental strengths, like brand, quality design, and marketing smarts, to at least compete in the US.
For Nokia, this years CES bore two important and timely US events. The first was that their US presence was solidified when the US sales of their Lumia 710 officially became available at T-Mobile this week. The second was the announcement at this years CES of the Lumia 900 which will come to market on AT&T.
Both products are well designed and the Windows Phone experience is impressive. That being said, Nokia’s and Microsoft’s challenge is primarily convincing consumers that Windows Phone is an OS worth investing in.
I use that terminology because that is exactly what an OS platform is asking consumers to do. Not only invest but allow this most personal device to become a part of their life.
Currently, only a small fraction of consumers are convinced that they should buy into Windows Phone 7 and it will take quite a bit more convincing for most. Nokia and Windows Phone face stiff competition with the army of Android devices and the industry leader in Apple. If anything, Nokia and Windows Phone have a small window of opportunity to rise above what is the Android sea of sameness – but it is only a small window. This is because many more of Android’s core and loyal (on the surface) partners will continue to invest resources in Windows Phone over the next few years. If Microsoft and Nokia are successful the result should be that the market will contain not only a sea of Android devices but of Windows Phone devices as well.
This is why the battle will again turn to differentiation across the board on both the Android and Windows Phone platform. I have previously dared the industry to differentiate and this will need to be the focus going forward.
As I look at where we are right now, it appears that Nokia is faced with an unfortunate dilemma. Nokia now bears the difficult task of not only spending money to develop their brand in the US but to also help Microsoft convince consumers Windows Phone is the right platform for them.
Microsoft is unfortunately not building or investing in the Windows Phone consumer marketing as aggressively as they should on their own. So rather then be able to simply focus on their brand, Nokia must also invest in marketing Windows Phone. This will inevitably help Nokia but also their competitors in the long term.
All of this, however, presents Microsoft with what is the chance of a lifetime and it all relates to Windows 8. The importance of Windows 8 to Microsoft seems to be wildly shrugged off by many. But I believe that if Microsoft does not succeed in creating consumer demand with Windows 8, they will begin to loose OS market share even faster than they are right now.
Windows Phone’s success in 2012 can pave the way for Windows 8. If Microsoft can, at the very least, create some level of interest and ultimately generate demand for Windows Phone, it will almost certainly do the same for Windows 8. This is because once you have gotten used to the user experience of Windows Phone, it creates a seamless transition to the Windows 8 experience.
If Microsoft can generate some level of success for Windows Phone in 2012, it will build a needed level of momentum for Windows 8. Primarily because the Windows Phone and Windows 8 Metro UI are very similar. All of these steps are necessary for Microsoft to not only create demand for their OS platforms but to also create demand for their ecosystem. I have emphasized the importance of the ecosystem in past columns and Microsoft must leverage their assets to create loyal consumers.
So what is my conclusion for 2012? Simply put, and to use a sports analogy, it is a rebuilding year for Microsoft and Nokia. Both companies need to view 2012 as a “laying-a-foundation-for-the-future” year. I do expect Windows Phone and Nokia to grow in market share in the US but I am not sure if we can count on double digit growth. If both companies play their cards right in 2012, then 2013 will present them with the growth opportunities they both desire.