Nokia’s (NYSE:NOK) decision to retire its Ovi brand is a bold one. The company has invested heavily in developing the brand over the past four years, and choosing to rely instead on its own recognizable but unfashionable company name is an impressive show of confidence.
Nokia CEO Stephen Elop’s decisions show the company is adapting to a new era of its business, and it’s still the world’s leading mobile phone manufacturer (though its lead is diminishing quickly); Revenue was up 9% year-on-year in the first quarter of 2011, and the company made a profit of $499 million. Nokia’s shares have started to climb back from a late-March selloff.
On the other hand, the stock is down more than 26% since February, so Nokia needs to keep its positive momentum moving. Here are three strategies to make that happen:
Make the cheapest smartphone possible.
Nokia’s greatest success was making the cellphone an affordable item for almost every person with a steady income. Smartphones are becoming less and less expensive, even without older models of popular phones being heavily subsidized by telecoms, but there’s still an opportunity for Nokia to repeat that success. If Nokia can hit the market with a debut Windows phone that undercuts deals like AT&T’s (NYSE:T) $49 iPhone 3GS offer in markets around the world, it will win back both actual market share and mind share with consumers.
Keep Nokia services open.
While Google’s (NASDAQ:GOOG) Android app store isn’t matching Apple’s (NASDAQ:AAPL) for revenue quite yet, there’s a great deal of promise in the openness of the platform, particularly with regard to hosting external app stores like Amazon’s (NASDAQ:AMZN). Nokia would be wise to keep its store and service equally open to other businesses — even competitors — to encourage a higher quality of product through competition. It would force Nokia to keep its own product quality high, not to mention Microsoft (NASDAQ:MSFT) (which would obviously need to be complicit, at least for the duration of its partnership).
Don’t sell to Microsoft.
A current rumor is that Microsoft may purchase Nokia’s phone division outright rather than move forward with its smartphone partnership. Now is not the time to sell — Nokia may be down, but the company is far from out. When it comes to positioning in the mobile market, Microsoft needs Nokia much more than Nokia needs Microsoft. Given consumer indifference to the Windows Phone 7 platform, Nokia might find it beneficial to move forward with a different partner after two or three years if things don’t change.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
