MarketLine Blog

Nokia on Heaven’s door? Microsoft ditches the Nokia brand in favour of Lumia

Following the $7bn acquisition of Nokia’s device business in September 2013, Microsoft has officially begun to phase out the once ubiquitous phone brand.

Microsoft has begun the withdrawal in France, where the Nokia Lumia social media accounts have announced they will become Microsoft Lumia in due course. This is not a sudden arrest in the brand however; Microsoft has been gradually phasing out the Nokia brand on devices and apps, and redirecting traffic from websites to Microsoft Mobile. The Nokia brand was still being used on products which launched only in September 2014, such as the Nokia Lumia 730 and 830.

This could be symptomatic of a need for Microsoft to streamline their mobiles branding, and will attempt to centralise the divisions’ products under one brand. The Lumia is Microsoft’s most successful Windows Phone OS product range.  It also dispels any confusion, as Nokia still exists as a company: it now provides location network services, network infrastructure, and technology development. Nokia’s business still employs over 57,000 people and EUR 8.9bn ($11.9bn) sales in year to date 2014.

Nokia still retained some strong brand loyalty in developing countries, with India accounting for more revenue than the US, and possessing a strong market presence in the Asha range. It still possesses strong distribution channels across the country, but it remains to be seen whether the country will warm to the new Lumia brand; it was dethroned as the country’s top phone seller in 2012 by Samsung and faces challenges from other domestic competitors providing cheap Google Android phones, such as Micromax and Karbonn.  Microsoft may be hoping that the loyalty will remain and these consumers will switch to Lumia phones and its Windows Phone OS, but Microsoft’s efforts to usurp Android and iOS at the higher end of market have ultimately been futile.

Nokia was once the envy of the telecoms industry, being one of the most desirable brands and earning more than 50% of all the profits in the mobile-phone industry in 2007 at its apex. Within six years it was a fraction of its former glory. Whilst still one of the largest mobile phone companies in terms of handset sales, it has fallen behind in the smartphone era, with Android and Apple iOS taking nearly 90% of the operating system share combined in 2012, systems on which Nokia phones do not operate. The operating systems have both attracted large amounts of customers and developers in a self-perpetuating cycle.

Microsoft has suffered similar problems to Nokia; it once held monopolist control over the PC market, and its operating systems are still ubiquitous. However, Microsoft has made a series of blunders in its attempts to take advantage of the growing mobile devices market. Despite strong revenues from its Windows operating system, Office suite of business software and Xbox game console, the company’s mobile phone unit and tablets have struggled. Sensing the market trends are now moving beyond traditional computing, Microsoft is hoping to realign itself as a devices and services provider. By acquiring Nokia, it had a direct smartphone manufacturer and associated expertise.

For related content take a look at our Nokia Microsoft case study, and our Nokia and Microsoft Company Profiles.

Posted in Technology, Telecom.

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