Nokia's US Enterprise Headache

Nokia Corp. (NYSE: NOK) may be the world's top handset maker, but there is one area where the Finnish giant has failed to make headway -- the U.S. enterprise market. (See Nokia's Mixed Call, Nokia's Profits Up 16%, and Nokia Realigns Sales.)

Nokia has seen enterprise net sales in the first quarter of this year leap in almost every region except the U.S. The firm also reported North American device shipments down by 42.5 percent at 4.8 million in the first quarter of the year compared to the same period in 2006.

Nokia's position in the U.S. hasn't been helped by its ongoing legal battle with Qualcomm Inc. (Nasdaq: QCOM), Todd Kort at Gartner Inc. notes: "Nokia no longer makes their own CDMA phones, and thus they are essentially walking away from a substantial part of the North American market."

There is also a perception in the business that Nokia is a consumer-orientated vendor, says Info-Tech Research Group Michelle Warren. "They have to shift the perception of their products -- away from consumer and into corporate -- in order to grow market share and revenue points," she tells Unstrung.

The issue, however, is how exactly Nokia makes that change.

Part of the reasoning behind recent rumors about Nokia buying either Palm Inc. or Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM) is that either company would improve Nokia's enterprise story in the U.S. Since neither seems likely, however, Nokia will need to consider other ways to win the hearts and minds of mobile business people.

Rob Enderle at the Enderle Group says that vendor partnerships could help open company accounts up for Nokia. Nokia needs to open up enterprise but to do that they need to partner and aren't good at partnering," he says. "HTC is growing like a rocket largely as a result of their Microsoft partnership and RIM leveraged partnerships with HP and Dell to enter the segment."

Upgrading its Symbian operating system could also help, according to Gartner's Kort. "The Symbian platform is fine for the large consumer smartphone market, but as a platform for business applications it has been lagging well behind Windows Mobile and RIM, particularly in North America."

Nokia's corporate E-Series phones have only limited availability in the U.S. and it seems that Nokia's carrier partner's aren't pushing the handsets that are available as hard as they might.

"I don't see much in the way of advertising or promotion of phones by Nokia or by their carrier partners, certainly not in proportion to Nokia's size in the global market, so awareness and interest in the Nokia E-Series in North America is pretty low," notes Gartner's Kort. "Cingular/AT&T has focused on promoting BlackBerries to their business customers and the Samsung Blackjack to prosumers and this seems to be working pretty well for them."

Nokia has even hinted that it may try some new ways of selling its E-Series phones; something that the vendor is likely to have more news on soon. Analysts, however, all agree that it would be "risky" if the vendor was to try and go around the traditional carrier channels.

Nonetheless, Nokia is faced with a problem of getting more of its corporate devices into the hands of users in the U.S and it appears to be a difficult issue to crack.

"RIM was able to get its product into the hands of its users -- to get them to use and appreciate the product," says Info-Tech's Warren. "If Nokia can get their products into the hands of corporate users, perhaps they can help to break through some of the stereotypes that exist with respect to their strong consumer presence."

— Dan Jones, Site Editor, Unstrung