Anita Kong's Blog

Nokia, one of the world’s largest mobile phone makers, has been suffering in market shares and is currently in a situation where it may be unable to pay dividends.  As it proved incapable of keeping up when smartphones became the new must have, the company faced a crisis.  Nokia has resorted to massive job cuts, closure of production and research facilities, and the sale of patents in an effort to earn back profit.

The company’s lifeline to re-establish their brand value is by the release of the Lumia smartphone.  Nokia’s main point of difference to distinguish the Lumia from other smartphones is that the phone will be powered by Microsoft Windows 8.  What is shocking is the Lumia will be priced higher than the Samsung Galaxy S III but still lower than the iPhone 5.  This move is risky because Nokia’s goal to position its brand in its own category will require the company to attract a strong customer base.  As customers are still unfamiliar with a Windows smartphone, they will be compelled to purchase a smartphone where they know what their money is worth.  In order to appeal, Nokia will have to consider customers’ perceptions when faced with competitors.

References:

http://business.financialpost.com/2012/09/27/nokia-dividend-elimination-looms-as-it-bleeds-from-iphone-battle/

http://www.torontosun.com/2012/09/27/nokia-risks-backlash-with-lumia-pricing