Analysis: LG and Nokia regroup as HTC accelerates

Analysis: LG and Nokia regroup as HTC accelerates

LG and Nokia have seen turmoil at the top with a series of high profile management changes over the last few weeks.

Nokia has drafted in former Microsoft chief Stephen Elop to take the helm, while LG Electronics has promoted head of trading firm LG International CEO Koo Bon-joon to CEO.

Both companies face similar difficulties: a lack of innovation and weak portfolios.

But the changes might be too little too late, with the UK market providing a snap shot of the troubles the manufacturers have encountered over the
past year.

The UK market, where consumers are both savvy and spoilt for choice, is one of the most competitive and crucial markets. Punters want the latest technology and expect manufacturers to keep up with the elite.

Both LG and Nokia have struggled to grab the attention of their customers in recent times. They may have maintained market share, but that has been through low-end and low margin sales. Meanwhile, other manufacturers such as HTC and Samsung are moving away from the high volume, low margin model.

The repercussions of a lack of portfolio and strategy have been keenly felt in the UK, with LG’s mobile management team undergoing rapid change
over the last year.

Meanwhile, in Q2 this year LG’s handset division reported a loss of £64m. It was the first time in four years the division had made a loss.

And the situation seems to be the same at Nokia. Just days before Nokia’s annual conference, CEO Olli Pekka Kallusvuo and head of mobile solutions Anssi Vanjoki announced their departure.

Questions about the UK were soon raised, and shortly after it emerged that UK MD Mark Loughran was leaving the company.

Like LG, Nokia has had to face up to some harsh facts. Some sources have suggested that both Nokia and LG have too many layers of bureaucracy, which means that crucial messages from the lower echelons of the organisation get lost.

One source explains: ‘The UK is an example of how a company can lose its focus and the impact it has on the market. LG and Nokia have been suffering here for a while, but the message seems to have been lost in translation.’

And although Nokia was one of the first, now all the manufacturers are looking to content and services as a way of bringing customers closer. At Nokia World, Nokia VP of markets Niklas Savander had to point this out, saying: ‘Nokia, not Google, is the leader in mobile navigation.’

But Savander’s speech was bullish, giving the impression that Nokia is in the mood to ramp up the competition. All eyes are now on the Nokia N8, the manufacturer’s flagship handset for Q4.

Meanwhile, LG is looking stagnant. It might have a range of touch-screen handsets, but that isn’t enough any more. It is also launching some new Optimus and Chic devices – and possibly a tablet – which could be its saviour if launched in time.

HTC heads up innovation

As LG and Nokia confront ongoing challenges of turning around huge organisations, they face a growing challenge from rivals such as HTC.

HTC’s bright and fearless strategy was personified by the launch of the HTC Desire HD and Desire Z. The manufacturer chose to announce the handsets on the second day of Nokia World, even organising coaches to ferry the press away from Nokia’s event.

The move was cheeky and inspired and prompted Nokia to carry out its own guerrilla marketing campaign on the day. Nokia marketers were stationed outside HTC’s event holding red balloons that read: ‘I know where I am going with Nokia Ovi maps.’

But HTC managed to generate excitement at its event, where it unveiled two new devices as well as a new cloud service.

HTC executive UK director Jon French explained the manufacturer’s clear three-pronged vision. First, improved features; second, an improved navigation experience; and third, HTC’s user interface, Sense, becoming connected.

The announcement of the new handsets and instantly created a buzz. CCS Insight analyst Ben Wood says:

‘This strengthens an already strong portfolio and takes the fight to Samsung and Apple.

‘The step into cloud services with is extremely ambitious and creates a whole new dimension to interact on. They have managed to deliver a differentiator on the homogenous Android platform and it re-enforces their position as a leading Android manufacturer.’

And not only is HTC differentiating itself, but it is now building up for its biggest ever marketing campaign and flexing its muscles in the market by aiming for new segments – mainly the business market – where HTC believes it is well positioned.

HTC’s vision was summed up by French: ‘It is about having credibility in this market. Brand awareness has increased dramatically and we are on a real upsurge in terms of what we can bring to the party for Window Phone 7.’

This is a revealing insight, as HTC thinks it is joining a party while Nokia believes it is involved in a fight. In truth, HTC has gatecrashed the party and the incumbents are being forced to fight back. The big companies have to change tactics quickly, while smaller companies like HTC are able to respond rapidly to the demands of the market.

Written by Mobile Today
Mobile Today


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