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The Honolulu Advertiser
Posted on: Saturday, July 8, 2006

Nokia expands reach with retail

By Mike Hughlett
Chicago Tribune

CHICAGO — Nokia is one of the best-known brands in the world, but the Finnish firm isn't satisfied that consumers are getting the message.

So, Nokia, the planet's biggest cell phone maker, opened its first U.S. retail outlet in Chicago last month, part of a campaign to plant "flagship stores" in premier shopping districts.

The store is Nokia's second flagship store; the first opened in Moscow in December. Another is slated to open in Hong Kong this month, and plans have been announced for outlets in New York, Mexico City and Helsinki, Finland.

Motorola recently opened a temporary store on the same street as the Nokia store, focusing on marketing its new "Q" smart phone. But Motorola has said it's not planning permanent stores in the United States.

Nokia is venturing into uncharted territory. In the United States, wireless networks — Verizon, Sprint, Cingular, etc. — are the primary sales channel for cell phones.

Those networks could feel threatened by a retail foray by a phone maker like Nokia, wireless industry analysts said. "The carriers want to own the customer," said Roger Entner, an analyst at tech researcher Ovum.

Not only are carriers big retailers, they also play an important role in testing phones before they hit the market and they have sway in determining phone features.

"If the carrier says, 'Jump,' the manufacturer says, 'How high?' " Entner said.

Cliff Crosbie, Nokia's Helsinki-based retail marketing director, said carriers have nothing to worry about. "We're going to sell their stuff, too," he said, referring to phone service plans available at the Nokia store.

Nokia phones can be purchased there with service plans through Sprint and T-Mobile. U.S. Cellular's service is expected to be available soon, and Nokia is in discussions with Verizon and Cingular, the two largest U.S. carriers, Nokia executives said.

Nokia's stores aren't intended to be a major sales channel, Crosbie said. "We already have great distribution."

Rather, the flagship stores are aimed at giving Nokia total control in brand presentation. With its flagship company-owned stores, Nokia makes "the ultimate presentation of our brand," Crosbie said. "This is the pinnacle."

Not that Nokia's brand is a slouch: It was sixth last year in the BusinessWeek/Interbrand annual ranking of global brands. Motorola, the world's second-biggest mobile phone maker, was 73rd.

But in the U.S., Motorola is king. It has a commanding lead in market share.

Nokia's new store is, of course, packed with Nokia phones — every model that's capable of running on U.S. phone networks. Many also are sold through U.S. carriers, but a few — like the company's premier music phone, the N91 — aren't.

The N91, which has been available online in the United States since early June, has a four-gigabyte hard drive that allows it to store up to 3,000 songs. It costs about $600.

The flagship store includes an "experience area" where Nokia employees demonstrate various phone features — like how to upload music into a device.

The Nokia store in many ways is like Apple Computer's busy store.

Apple's retail gambit started in 2001 as a way to showcase its products, but since has turned into a significant sales channel. The company has around 120 retail outlets in the United States, and eight more overseas.

Those stores are profitable, and they generated 17 percent of Apple's total sales last year. "They have been wildly successful," said George Whalin, a retail consultant in California.