Friday 11 June 2010

The Branding Wars in Smart Phones.

The media-hyped recent coverage of Steve Jobs, as he discussed the bells and whistles that adorn the 4g iPhone, stands in stark contrast to a sombre article that appeared on on 12 May. Entitled "Nokia Goes 'Back to the Future' in Attempt to Topple iPhone" and written by Diana ben-Aaron here, it discusses the appoint of Anssi Vanjoki as head of the company's smartphone unit. Vanjoki's mission: make Nokia competitive in the smartphone space. His challenge (as described by Carolina Milanesi of Gartner, Inc.): "It's a bit back to the future ... [and] he doesn't have much time, so Nokia needs to deliver."

The company's recent history in this area is grim. While the company worldwide is the largest manufacturer of handsets, it has become a laggard in the up-scale smartphone business. In a field with compressed timeframes and ferocious competition, how long ago March 2007 seems now. Then, Nokia launched the N95, the company's first handset with GPS. It reported sold more than 10 million units and enjoyed an operating profit of more than 21%. That was then, however.

In the face of the onslaught of the BlackBerry by Research in Motion, and the iPhone of Apple, not to mention Android-based devices such as those of HTC, Samsung and LG Electronics, operating margins plummeted to just over 10% in Q1 2010. There seems to have been a subsequet model N97, being a combination touchscreen and keyboard phone, but that model has not enabled Nokia to overcome the Blackberry or iPhone products.

Against this backdrop, analyst Tero Kuittnen (MKM Partners) has offered Nokia only luke-warm encouragement: "The stakes couldn't be higher. The iPhone is a luxury juggernaut that can no longer be defeated, but Nokia still have a shot at snuffing out the challenge of its Aisia midrange rivals." Another analyst, Ben Wood, of CCS Insight, was more pointed, observing that "[i]f these people don't suceed, they will be doing something different in three years."

The competition in the handset industry generally, and the smartphone
business, in particular, has been the subject of countless articles and is a favoured topic for business school case studies. I want to mention an IP-based one aspect that tends to be overlooked, namely the role of trade marks. We noted above that the N95 handset was eclipsed by the Blackberry and the iPhone and that the N97 failed to buck this trend. To counter this, Vanjoki plans to roll out a new slim touchscreen device. And what is the name for this new product? Are you ready for this ...? None other than the "N 8."

I simply don't get this branding move by Nokia. First, it is a mystery why a newer model bears a lower number than an earlier model. Weren't we all conditioned to expect that the 386 Intel chip would be an improvement on the 286 product, and that the 486 chip was in improvement on the 386. I know--Intel was unable to register these later chip models as trade marks, at least in the U.S., but that does not change the basic principle that consumers expect higher model numbers or numeric brand names to represent a more advanced product than its lower-numbered predecessor. If my assumption is correct, then the rationale for the progression from N95 to N8 remains a mystery.

Second, the very choice of the series of markets based on "N" plus a number seems odd. Compare it with the Blackberry name, which is a garden-variety (no pun intended) use of an arbitrary name that has planted deep branding roots in the consciousness of consumers. It does not really matter if the consumer knows that Research in Motion (or RIM), stands behind the product. It is enough that one asks for a Blackberry. It is a wonderfully strong arbitrary mark.

The selection of the iPhone suggests an antipodal branding strategy.

Here, Apple has built a stable of strong marks, each of which is comprised of the prefix "i" together with an arguably descirptive noun. Fear not--acquired distinctiveness has or will ensure that each of these family of marks can be protected in its own right, as well as being used together the Apple mark. Both the product name and the house mark come out as branding winners.

Now let's consider N8 (or N95 or N97). Unlike the Blackberry name, there is nothing distinctive about such an alphaneumeric combination. There is ready reason for a consumer to know (and remember) that iPhone is a telephone device and that iPad is a tablet device. The same cannot be said, in my humble opinion, for the N8 mark. This means either that Nokia will have to use N8 together with Nokia, so as least to take advantage of the strong value in Nokia, or settle for a product name that is doomed to be less effective than the names of its rivals. Either way, Nokia would seem to come out second best in the trade mark wars, and where it can ill afford to do so.


Jeremy said...

N8 doesn't do much for me. As a Londoner, I associate 'N8' with a not hugely exciting postal district.

Unknown said...

and Nokia were much more inventive in their earlier days. I proudly possessed a Nokia Communicator for a while (in fact I still do, but it's not in operation). Opening up the cover you got the full Star Trek impression (at least the b/w screen evoked the old b/w transmissions)
Seriously, however, the Communicator trade name was much more evocative than N95 (which I do possess and still find great)