Market seem to think that the Microsoft’s Nokia Device Business acquisition made sense. Nokia’s shares are up over 50% as of mid September. I don’t want waste your time on speculating whether this is a doom or boon of the new handset-less Nokia. Instead I want to drill down on the real loser the Nokia Brand.
FROM SUPERBRAND TO NOBODY
2011 Superbrand ranked Nokia as #1 brand in China, and Nokia sold a whopping 417M handsets globally. 2012 Interbrand ranked Nokia as the 19th most valuable global brand. Nokia’s brand value was $21B, and it was was ranked above Amazon (#20), Pepsi (#22), Nike (#26) and Ikea (#28).
2013 Nokia’s heart and soul, the handset business, was sold to Microsoft with $7B. The deal also included a license to use the Nokia’s brand for 10 years. How is it possible that $20B of brand value eroded in just two years?
HOW TO LOSE $20B BRAND VALUE IN TWO YEARS
1) Pick an untested Operating System
Jumping to untested Windows Phone 7 OS was very risky move. Even riskier move was to announce death of Symbian months before the first WP7 devices where about to ship.
2) Lose the critical smartphone segment
Nokia’s 2008-2011 shipment numbers look great, but in reality the high-end market and mindshare had already been long lost to iPhone and Android devices.
3) Don’t hire product/brand people to top positions
Nokia’s key decision makers have had limited background on building consumer brands. CEO Olli-Pekka Kallasvuo spent most of his long successful Nokia career in finance and sales related roles. CEO Stephen Elop’s experience prior to Nokia was purely B2B. Chairman Risto Siilasmaa founded one of the most successful Finnish companies F-Secure, but his experience of consumer products is limited.
Disclosure: As a Finn I have deep ties to Nokia and I have spent over 5 years of my life working for the company. On this post I’m only reflecting publicly available information.