The Future Scenario for Nokia Is an Image of Toyota Brand / Posted by Ari 03.05.2009 06:00

Nokia was one of the sexiest brands in the world at the end of 1990s. Investors loved the company so much that they quadrupled its share price in two years. Mobile phone shoppers adored the products so much that they made Nokia the biggest mobile phone manufacturer in the world. Nokia's management and employees loved the company that made millionaires from those individuals who had received stock options.

In the early 2000s, the dot-com crash returned Nokia back to earth and maybe even a few feet under. Despite the new CEO Olli-Pekka Kallasvuo, who returned Nokia to growth path in market share and sales, Nokia's brand image has been showing signs of being out of fashion. It's not the world's trendiest electronics brand anymore, apart from in emerging markets, such as India or China.

Brandz Top 100 Most Valuable Global Brands 2009 report ranked Nokia the 13th valuable brand in the world. The ranking was based on monetary values calculated from earnings and expected future earnings for the brand. While it is a remarkable achievement to end up in 13th position, Nokia's brand value decreased 20 percent from the year before.

When Nokia's future is assessed through four scenarios, the outcome of the Brandz report isn't surprising at all.

The first future scenario for Nokia is that it would scale down from a low-cost, mass-market electronics maker into a high-value design brand like Apple. We can think of BMW as Apple's cousin in the auto industry. This scenario, however, is unlikely for Nokia because it really would have to become another type of company. It would have to sacrifice its efficient manufacturing machinery to design products that would be outsourced in smaller quantities from China or India.

The second scenario is a natural path for many corporations - expanding to new business sectors, like HP and Microsoft have done. They have become warehouses for all things in technology business. Ford is a similar company in the auto industry, manufacturing everything from small city cars to large trucks. Nokia has been so successful with its sharp business focus on telecommunications and especially, on mobile phones that this scenario is unlikely.

The third scenario for Nokia is to take cues from Google. Nokia would have to boldly start up new businesses and product lines that don't have any promise for short-term or mid-term returns. This type of continuous innovation and risk-taking where Google excels, doesn’t suit Nokia's strategy for performance and cost-efficiency that requires the company to be profitable every single quarter. Google conducts business somewhat differently from other companies. It is difficult to find similar businesses from the auto industry, but electric cars hold similar future promise as Google.


The fourth future scenario is the most likely for Nokia. It may become Toyota of the electronics industry. As it happens, Toyota is number 14 in the Brandz ranking for global brands – right after Nokia. Both are somewhat dull and grey brands that don't necessarily excite people to become lifelong fans. Rather, Nokia and Toyota come to mind when we simply want a quality product from a trustworthy company and don't want to spend too much time on choosing the product.

It's good to be a Toyota or a Nokia in the global business. An average person is likely to buy an averagely priced product that's not too colorful, not too eye-catching and not too different. They are likely to purchase the product from a company like Toyota or Nokia. And there are billions of these people.