The Never-Ending Story

Nokia’s Handset Return Isn’t a Boomerang Tale

According to brand consultancy Interbrand, in 2010 the Nokia name was worth $30 billion. This means that the company’s logo then was worth more than its market capitalisation now. Nokia’s brand value was ranked eighth in the world in 2010 according to Interbrand, above the likes of Apple, Disney and Nike. The Nokia name really had that sort of clout in those days.

In Interbrand’s most recent ranking, Nokia’s brand value has fallen to number 98 with a value of $4.1 billion. But it’s still a top-100 global brand and highly regarded in some important markets.

When Nokia’s CEO Rajeev Suri said earlier this week that the Finnish company would return to the smartphone business in 2016, it’s tempting to think back to Nokia’s glory days. But its re-entry will not be a matter of storming the gates to re-take the city; rather, it’s subtly exploiting its goodwill and intellectual property through a series of partnerships once the exclusivity period with Microsoft expires.

Mr Suri said that the new smartphones would be Nokia designed and labelled, yet manufactured, marketed and sold by partners to be named later. The Nokia N1 tablet, unveiled in November 2014, followed this strategy, with development and design work by Nokia and manufacturing and distribution by Foxconn.

Market-share logic suggests Nokia will develop Android-based devices skinned with Finnish design finesse and bearing the famous blue logo. They could also include some innovations currently hidden away in Nokia lab vaults across the globe.

This supplier approach is a twist on being an original design manufacturer. The phones aren’t white-labelled goods but rather blue-labelled devices. A company interested in springboarding into the smartphone industry with an established brand could suddenly become a Nokia.

CCS Insight has written several times about the crisis that has hit European mobile firms. Many of them helped develop the modern mobile world and their products burned up the sales charts. Now these companies licence their logos. Phones ostensibly from Alcatel and Philips do well in some markets, but are really Chinese through and through. One of Europe’s top contributions to the handset industry has become logotypes — see Philips’ Brand New Phone (Made by Sang Fei) for another example.

Nokia’s “pre-labelled reference design” is a fresh approach to brand licensing and is a clever way to leverage the company’s intellectual property and keep the brand relevant — and potentially in Interbrand’s top-100 ranking. There is however a temporary feel to this strategy and the company can adjust its value-chain roles and product portfolio depending on market success.

Nokia’s handset story never really seems to want to end. The company could be the industry’s first smartphone franchiser.