Handset maker Nokia Corporation (ADR) (NYSE:NOK) is out with a hilarious ad attacking both Apple Inc. (NASDAQ:AAPL) and Samsung fans. But, while Nokia is clearly borrowing a page from Samsung in poking fun at its competitors, its advertising campaign is likely to have little traction.
Samsung’s attacks on Apple
Samsung’s advertising campaign against Apple Inc. (NASDAQ:AAPL) might go down as one of the best campaigns ever. The ads, which were directed by comedy legend Bobby Farrelly, characterized Apple fans as hipster sheep, mindlessly buying the Cupertino tech giant’s latest phones despite their lack of features.
“I heard you have to have an adapter to use the dock on the new one,” says one man waiting in line for the next iPhone. “Yeah, yeah. But they make the coolest adapters,” responds his friend.
In many ways, the Galaxy S3 was a watershed moment for the smartphone market. For once, there was finally a phone that was at least as good, if not better, than Apple Inc. (NASDAQ:AAPL)’s flagship device. While Samsung’s advertising certainly helped, the phone proved to be a quality product — widely praised by most tech reviewers.
Can Nokia follow in Samsung’s footsteps?
But unlike Samsung’s Galaxy handsets, Lumia sales have been lackluster. To be fair, sales of Lumia devices have beaten analyst expectations in recent quarters, but continue to sell poorly in the US. Last quarter, Nokia shipped 400,000 Lumias to North America — a 33% decline year-over-year.
Shares of Nokia Corporation (ADR) (NYSE:NOK) are up roughly 30% in the last six months, but are still down nearly 10% over the last year. Over the last five years, shares have dropped a staggering 88%.
Lumias compose nearly all of Nokia’s smartphones. If the company is looking to make a comeback, it will be on the strength of its Lumia devices.
Married to Microsoft
Nokia Corporation (ADR) (NYSE:NOK) remains effectively married to Microsoft Corporation (NASDAQ:MSFT) for its smartphones. All of the Lumia handsets run Microsoft’s Windows Phone, the tech giant’s answer to iOS and Android.
Unfortunately, Windows Phone has its own issues. Although it ties well into the larger Microsoft PC ecosystem, the mobile OS struggles from a lack of apps. What’s more, as engadget notes in its review, Windows Phone 8 doesn’t work well with Google Inc (NASDAQ:GOOG)’s services like gmail and Google docs — services that are near and dear to the majority of Samsung Galaxy users. While Microsoft offers its own services as an alternative, Nokia’s task of getting Galaxy owners to switch is made that much more difficult.
Nokia Corporation (ADR) (NYSE:NOK) also faces potential competition from Microsoft Corporation (NASDAQ:MSFT) itself. Many have feared that, after acquiring Motorola, Google Inc (NASDAQ:GOOG) would turn its back on its Android partners (like Samsung) and produce its own superior devices. Likewise, there are rumors Microsoft is plotting to enter the smartphone market.
Traditionally, Microsoft has stayed away from hardware production. That changed last fall when the company shipped the Surface tablet. That decision drew criticism from Acer’s CEO, who publicly bashed Microsoft.
It isn’t hard to see why Acer was upset. The company already has to compete with other hardware makers like Dell Inc. (NASDAQ:DELL), Lenovo and Hewlett-Packard Company (NYSE:HPQ). Microsoft is just another competitor. Similarly, if Microsoft were to release its own Surface phone, it would hurt Lumia sales even more.
Samsung’s strategy was more than advertising
Samsung’s strategy with its Galaxy devices has been more than just advertising. In addition to offering a quality product, most of the Galaxy handsets are available on nearly all of the major carriers.
Conversely, Nokia Corporation (ADR) (NYSE:NOK)’s flagship Lumia 920 is only available on AT&T Inc. (NYSE:T). The company plans to release the 928 on Verizon Communications Inc. (NYSE:VZ) soon (a slightly modified 920), but at this point, the device has fallen behind hardware wise compared to some of the newer phones, like Samsung’s Galaxy S4. Further, Nokia has no presence at all on Sprint Nextel Corporation (NYSE:S).
In addition, Samsung’s success coincides with advances in Android. The Galaxy S3 was upgraded to Android 4.0 (Jelly Bean) roughly two months after its US debut. Jelly Bean included a number of major upgrades to Android, such as Project Butter, which made Android faster and more responsive (smooth as butter).
Don’t expect Samsung results
While Nokia Corporation (ADR) (NYSE:NOK)’s new ad campaign is similar to Samsung’s, investors shouldn’t anticipate similar results. In addition to its ads, Samsung benefited from advances to the Android operating system, while offering its devices across all major carriers.
Nokia, meanwhile, is hamstrung by the limitations of Microsoft’s Windows Phone 8 and has limited carrier support. In addition, the possibility that Microsoft could enter the market with its own competing device continues to loom large.
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The article Nokia’s Hilarious Ad Attacks Apple and Samsung, But Won’t Sell Many Lumias originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
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