Notes on Nokia's phone comeback

There’s a Nokia 8 phone vibrating on the desk. Soon I’ll write a review of my experience with the phone. For now, the first impressions are favourable.

Nokia’s new phones use Android. It makes sense. The phone operating system is popular. Android runs on about four out of five phones.

Android’s popularity brings two things to Nokia. First, it means familiarity, at least for most customers. There’s still a little work to do, but not much. It’s not like, say, the jarring switch from iOS or Android to the Blackberry 10 operating system.

Or the less jarring but still non-trivial move from Android to iOS or vice versa.

It’s about the apps

More important, Android means Nokia phone buyers get access to a huge phone app library. Almost every important phone app is available on Android.

So from day one you can Facebook, Tweet or Instagram to your heart’s content. You can also do important or useful things.

Nokia last phone series used Microsoft’s Windows Phone operating system. The first rebooted Microsoft phone operating system was Windows Phone 7.

As phone operating systems go, Windows Phone 7 was brilliant. We can argue whether it was better or worse than Android and iOS. At the time it was at least on a par with the two more popular OSs for operating a handheld device.

Windows Phone 8 wasn’t quite as good. But then nor was desktop Windows 8 as good as Windows 7. By that time Microsoft lost the plot and added unnecessary complexity and flexibility. This may have appealed to geeks. For the rest of us it made an otherwise simple, elegant user interface harder to understand and use.

Momentum

The fatal flaw with Windows Phone wasn’t technical. It was that it never gathered enough momentum for take off. There were reasons for this. Not least Microsoft charging phone makers for the software. Google’s Android was free.

This lack of market momentum meant fewer app developers got behind Windows Phone. And when they did, they didn’t prioritise updating, refreshing or even fixing apps.

The lack of apps lead to a vicious cycle. It was a reason not to choose a Windows Phone, which made the pool of app customers smaller again. And so on.

Nokia’s parent company sold the phone business to Microsoft. That did little to change things.

Microsoft failed to capitalise on the excellent integration between Windows Phone and desktop Windows. This integration is something that continues to sustain the iPhone even though Macs are far less popular than Windows PCs.

Microsoft failed Windows Phone in many other ways. It failed to invest in development and seed third-party developers — something it did to great effect with desktop Windows.

The rest is history.

At the time Microsoft was still selling phones in reasonable numbers some argued a switch to Android could save the phone business.

That was never going to happen at Microsoft. For a variety of reasons, some good, some bad.

Putting aside politics and pride, there’s one overwhelming reason why Android was a bad idea.

Money

No-one at the time was making money from selling Android phones. Every Android maker other than Samsung was losing vast sums. Samsung was making a tiny margin and didn’t manage that every year.

That’s changed. Samsung now makes better margins on Android phones, although they are still small compared to Apple iPhone margins. Sony trimmed its Android business to the point where it is profitable again. At least two other Android phone makers, Huawei and Oppo appear to be making money selling phone hardware.

How about Nokia’s new owner, can it make a profit selling Android handsets?

It’s too soon to say for certain. As suggested at the top of this post, the phones are more than good enough. They cost somewhere between the middle and premium part of the Android phone market. They should sell.

Nokia passes the product quality test, but that’s not enough. Its Lumia phones were great quality yet didn’t sell in big enough numbers.

Whether they sell in profitable volumes is another question. The Android phone market is beyond saturated. They are still too many brands chasing customers. Samsung, Sony, Huawei, Oppo and a handful of Chinese brands and non-brands fight for every dollar.

Almost every 2017 midrange or premium phone is good. I can’t think of a single bad one. So Nokia’s prospects come down to things like its brand cachet, its distribution channels and its marketing. All these have to hum for the comeback to work.