Microsoft makes branding push into retail market

Michael Momsen

It was almost impossible to imagine just eight years ago that the Finnish telecommunications giant Nokia would ever let go of its stranglehold on the handset market in the Philippines, where it enjoyed both a formidable market share and a positive brand image.

The advent of smartphones in 2007, however, forever changed the mobile phone landscape in that consumers realized that they wanted to have their hands on a device that would allow them to do more than just call and text to include surfing the Internet and customizing applications.

Nokia was painfully slow to fully embrace the smartphone concept and this, among others, led to a drastic decline in its market share and revenue figures over the past seven years to the point that one of Finland’s most well known companies had no other choice but to ultimately sell the flagship handset business, and it chose to sell to US-based Microsoft Corp.

Microsoft’s takeover of Nokia, on the other hand, was part of the American firm’s thrust to be a dominant player in what it envisions to be a “cloud first, mobile first” world, where people around the world will want services delivered through the Internet and accessed using their mobile phone.

Public perception of the 39-year-old Microsoft, however, is that it is a giant in the world of operating systems, software development and enterprise solutions, not so much in hardware and devices.

Not enough people, for example, associate the hugely popular Xbox gaming device with Microsoft.

The Redmond, Washington-based company founded by Bill Gates recognizes the challenge, thus it intends to put serious marketing dollars behind campaigns that aim to bring the concepts of Microsoft and mobile phones closer together.

As part of this marketing strategy, Microsoft regional vice president Neil Gordon said Microsoft would retain the Nokia brand for the entry-level mobile phones, which have remained big sellers in emerging markets such as South Asia, Latin America, Middle East and Africa.

The Microsoft brand, on the other hand, will be attached to what used to be known as Nokia Lumia phones, Nokia’s version of the smartphone that has been enjoying good reviews and a bump in sales despite the domination of the market by Apple’s iPhone and Samsung’s smartphone lines.

The rebranding will extend to the retail sector with the Nokia service and sales stores to be “transitioned” into Microsoft retail stores, which will carry the Lumia and Nokia phones as well as the Xbox, the Surface tablet and personal computers by third party vendors that use the Windows operating system.

Gordon told the Inquirer in an interview during the recent Microsoft Asia Pacific Executive Leadership Forum in Singapore that Microsoft had always enjoyed high awareness in the market because of its operating system, with Microsoft’s Windows becoming synonymous with the personal computer.

The hope is that the positive regard for Microsoft would extend to the mobile phones.

For Microsoft, the plan is for the mobile phones, particularly the Microsoft Lumia models, to be conduits for Microsoft services, such as cloud computing and productivity software.

Despite the presence of its rivals in the Philippines, Gordon was bullish about Microsoft’s prospects since there was still a large room for growth in the country of 100 million people.

“Today, there is less than 20 percent penetration of the smartphone although there is close to 100-percent penetration for mobile phones, so there is a growth opportunity in the Philippines that is hugely exciting,” Gordon said.

According to Microsoft Regional Director Michael Momsen, the Microsoft Lumia has been enjoying warm market reception because it is “the right device at the right price” and packed with productivity features plus enterprise-grade security, which means that the privacy and security features demanded by corporate clients are available for individual users.

At the same time, the Lumia phone can be seamlessly integrated with other devices such as tablets and even the desktop computers because they will run on the same Microsoft operating system.

This is particularly attractive to corporations whose employees work on multiple devices and often in multiple locations.

Momsen said the fact that a company can buy as many as seven Microsoft Lumia phones for the price of just one smartphone by a rival brand has won over the support of an increasing number of chief financial officers.

Microsoft aims to win over the same level of support from the burgeoning consumer market in the Philippines.