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Dumb salesmen are hurting us – Nokia CEO
Incentivising the McJobs
Analysis Stephen Elop got a pretty indulgent reception from analysts, and most of the press yesterday, after delivering some shocking results. Nokia turned a profit of €2bn into a loss of €1bn in the new boss's first full year; volumes are down by 29 per cent; sales of the new Windows phone are unremarkable (to put it generously); and Elop has scrapped guidance for the rest of the year. [Summary] News like this would normally have analysts reaching for the panic button - but not today. Why would this be?
Well, obviously, much can be explained by the appreciation that Nokia is in rapid transition – it isn't even a full year since the Elopcalypse. Elop got the bad news out of the way in his (still) remarkable Burning Platforms memo. But it's also because he was quite unexpectedly frank and forthcoming about why Nokia isn't making more headway with its shiny new platform - the one that isn't burning. Elop explained that Nokia has a very stiff learning curve ahead of it in consumer retail. He also said that sales staff in the channel weren't helping. He even detailed this country-by-country. I'm surprised more Nokia-watchers haven't remarked on this - or why Elop dwelled on retail in such detail.
Nokia staff should be glad he did, because of a forlorn sight I saw last November. Just as the Christmas shopping season was getting underway on London's Oxford Street, I saw a quite ominous sight. The flagship West End Carphone Warehouse store, next to John Lewis, had large posters in the window announcing the arrival of the Lumia 800. There were two live Lumia 800s available for curious punters to play with – of around half a dozen such working retail models from rivals. Except they weren't live. They were completely dead. And although Nokia had secured the prime corner spot for its devices, it may as well have hidden them on some remote industrial wasteland. The shop was very busy, but nobody came and asked if they could see the Lumia working.
If Nokia is to claw its way back into contention, this won't do. Getting one million Lumias stocked really isn't a terrific achievement considering that the six largest European markets had the 800, and some pretty significant Asian markets had the 710. The needle hasn't moved.
"There are areas where we are learning and areas where we must adjust. First, we are learning more about the variations in our store-by-store retail execution related to Lumia," said Elop yesterday.
He then re-emphasised how important it was to show people the Windows UI, and suggested that quality of the sales droids was very variable:
"We need to increase the engagement of the retail sales associates in the stores, because it is the retail associate who speaks with our consumers and puts the Lumia device in their hands," he added, correctly. And he singled out some of the domestic channel here, suggesting he hadn't been impressed by what he saw:
"For example, in the United Kingdom, where competitive ecosystems are firmly entrenched, we have seen mixed retail execution around Lumia devices with a range of results among different locations, different chains, different stores and so on."
I know several first-time smartphone buyers and Windows Phone wasn't even on the radar. People don't know it exists. In the UK, Android gained an early and enthusiastic foothold, which two years on translates into a mature and knowledgeable market. The Samsung Galaxy SII was the best-selling phone in the UK at Christmas, by some distance. For the average punter a buying decision begins with a binary choice between Apple and BlackBerry, and if it's a touchscreen then it's between the iPhone and "one of the other lot". The other lot is Android. Sales staff in stores like Carphone aren't uniquely thick - they're like all savvy retail staff - they want their commission, and they know there's a huge appetite for Android out there.
It's a sign of how things have changed. Nokia can no longer play hardball with its channel partners – today, it really needs their help. Windows has made no impression on the market and gaining people's attention – which includes aligning the incentives of the channel – is going to be much more expensive than analysts realise.
I'm onto my second Lumia, and I like the UI very much indeed. But I still haven't seen a civilian – someone who isn't an analyst, journalist or Nokia industry partner – carrying a Lumia in the wild. Have you? ®