Ill-Lumina

Launching a late-comer product into a maturing market is like pushing a salmon up Niagara Falls.

Some folks (with perhaps a bit too much time on their hands) have estimated that about $450 has been spent marketing each Nokia Lumina sold … which currently retails for $49 (with the ubiquitous two-year contract). You don’t need an MBA to see that this is not an entirely profitable go-to-market plan. The Lumina was the first serious attempt to lift Microsoft’s mobile market share, and managed push fewer than two million of them into users hands (though it is uncertain if this includes the number of devices Nokia gave to AT&T employees in an attempt to evangelize in-store sales staff).

There are about as many Android activations each day as Luminas now in use.

The marketing puzzle that Microsoft failed to solve was getting consumers to believe that WinPhones were better gizmos than iPhones or Androids. Like their server operating systems, WinPhones were presented via old school press releases, analyst product demos and lifeless online videos. Consumers, busy sharing notes about Android and iPhone apps, were not distracted by Microsoft’s “marketing” because they never heard it (or if they had rebooted their laptop 20 times that morning might have thought that a Microsoft phone would be equally frustrating).

The smartphone market is maturing in industrialized countries, with Android and iPhones thumping all competitors (have you seen anyone carrying a new Blackberry or Symbian phone lately). The smartphone market has become a two party system, and like in politics, cracking it is a challenge. For consumers to not instinctually gravitate toward one of the two major options, they have to:

Know: People need to know there is a viable alternative. The Libertarian party brags about being the most popular third party in America. Yet they have no widespread brand recognition even among the politically aware. WinPhones, even if the technology is great, have no mindshare in the market.

Believe: Knowing there is an alternative is insufficient. Buyers must believe that an upstart offering will be good enough if not great. WinPhone has not made anyone leap out of their office chair to proclaim its grandeur. Without belief there can be no evangelists.

Bet: Every action involves a risk/reward analysis. Even when I ponder the reward of eating a candy bar, I evaluate the risk of an expanded waistline. Adopting a mobile operating system for two years requires believing the experience is relatively risk free. When iPhone and Android users are constantly showing off their devices and apps, betting on WinPhone seems as risky as eating two candy bars.

The failure herein is not Nokia’s or AT&T’s. Perhaps they made poor strategic decisions, but Microsoft committed poor marketing. Entering late, offering nothing significantly different or better, and saddled with their reputation for BombWare, Microsoft could not generate anything remotely resembling buzz. This forced Nokia to cut the price of Luminas in half in hopes of moving as many units this year as Android moves this afternoon.

The marketing lesson herein is that customers now drive all markets, and traditional marketing approaches – though still important – pale when compared to creating differentiation, awareness and belief among buzzy buyers.


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