A sleek new cellular phone may not be the average person's idea of a must-have accessory, but Nokia found a way to mix style and substance with great results.


The revival of the provocative musical Cabaret onBroadway in May 1999 took place at the reopened Studio 54, the notorious nightclub where the rich and famous once gathered to party and consume copious amounts of drugs. Amid the repackaged decadence, the handpicked launch party audience salivated at its current equivalent, a brand-new Nokia cell phone.

The chrome Nokia 8860, which retails for around $800, had been seen in the clutches of stars like Sean Connery andVanity Fair fashion director Elizabeth Saltzman. In the futuristic film, The Matrix, the flashy phone was FedExed to star Keanu Reeves.

Though the Cabaret event was held in early summer, Nokia's pr firm, Ketchum/Crescent, Atlanta, had been flying to New York months earlier to preview the device to fashion magazine editors. By July, the 8860 had been featured in Marie Claire and The Robb Report, among other upscale publications.

Is this the future of cell-phone marketing? It seems to be working for Nokia.

Once written off in the U.S. as an also-ran to Motorola, Nokia is now the category leader. Statistics in wireless space are notoriously unreliable, but Nokia claims it shipped a healthy 70 million handsets last year, about 29% of the estimated 245 million distributed worldwide. Dataquest, the San Jose, Calif., researcher, put Nokia's share at 27%, compared to Motorola's 17%.

Matt Wisk, 40, the former vp of customer marketing for Nokia, deserves much of the credit for this feat. Wisk joined Nokia in 1994, when it was assumed that giant Motorola would easily control the market. By giving Nokia a cool edge his competitors lacked, Wisk managed to defy conventional wisdom. (Wisk ended his stint in June, when he was promoted to oversee worldwide advertising at Nokia Networks, its European business-to-business arm.)

How did Nokia get its cool edge? Looking back,Nokia's success stemmed from making some strategic choices that were not emulated by competitors Motorola and Ericsson, not to mention Samsung Telecom or Sony. The technology-as-fashion statement positioning, influenced by Palm and Apple, was just the beginning. The others range from a keen focus on industrial design, to smart linkages with wireless service providers. It also didn't hurt that many people think the Finnish-based Nokia is actually a Japanese brand.

"You don't equate Finland with cool telecom devices," said Iain Gillott, an analyst with International Data Corp. in Austin, Texas. "People think Nokia is Japanese and they've done nothing to lead people to believe they're Finnish."

Nokia's understated Finnish lineage, in fact, was a key component of its own revival. The 135-year-old company, named after Finland's Nokia River, was originally a lumber mill. After merging with Finnish Cable Works in 1967, Nokia was put at the forefront of an effort by Scandinavian countries to develop a radio network. Sweden's Ericsson, now a key competitor, also emerged from this endeavor. In 1981, the project netted a cellular phone service. And while it was not the best in the world from a technology standpoint, it soon became the most heavily trafficked. (Finland remains at the forefront of wireless usage. Some 70% of Finns have cell phones, about double the U.S. rate.)

Nokia was originally the Finnish equivalent of a Korean chaebol, a conglomerate that manufactured all sorts of things, from paper to rubber to chemicals to TV sets. In 1992, led by CEO Jorma Ollila, Nokia decided to streamline its diverse operations and sold off its other businesses to concentrate on wireless telephony.

At the same time, Nokia put a lot of energy into building its brand. The "Nokia Way" emerged as a philosophy patterned on Hewlett-Packard's "HP Way" that prescribes four core brand values: creative, inspiring, human and accessible. According to those virtues, Nokia's imprimatur stood for enhancing communication, not making phones.

New Nokia employees are briefed on this brand mandate and even view a slide presentation called "The Brand is Everything," which outlines the brand-centric philosophy. Another training piece details Nokia's pro-environmental stance. "An environmentally responsible company has better opportunities to attract and retain employees," Nokia executives told shareholders in a statement earlier this year. The branding philosophy filters down to everyday language as well. Nokia sales representatives don't talk about their products being the fastest or the lightest on the market, but they do talk about the great technology that lets customers communicate.

Marty Brandt, president of ProBrand, a consultancy in Menlo Park, Calif., said the emphasis on branding has made Nokia a solid player. "When the whole company culture supports brand-building, it kind of sneaks up on people," he said. "All of the sudden people realize they like the way the service works and how the designs are integrated and, lo and behold, they realize they're doing a darn good job and it's not through the weight of advertising."

Wisk, a Michigan native, logged about 10 years in the telecom marketing field, at MetroCel (now AT&T Wireless), NEC America and GTE, before joining Nokia in 1994. Since then, he has functioned as the gatekeeper of the Nokia brand essence.Colleagues say he's got a very fixed idea of what Nokia should stand for—and perhaps more importantly, what it shouldn't.

"He really does embody Nokia," said Rhonda O'Connor, director of partner marketing for Nokia's broadband systems. "He was intuitive, he brought his brand values to a company that accepted it."

"He was always the first person in the room to say, 'That's Nokia and that isn't,'" said Peter Lempert, account director at The Richards Group, Dallas, which handles Nokia's business. "He really understands what the brand is all about."

At the same time Nokia was rebuilding its core franchise, it decided to pay attention to how people actually used the devices. "Our products went from being bolted into cars to carried in hands," said Wisk. "Once that happened, it was inevitable that fashion would play an increasing role in our industry. Our logic was when you carry something with you wherever you go, like a watch, pen or pair of glasses, it starts to go beyond functionality into design and fashion."

To keep on top of fashion, Nokia established design centers around the world and kept track of which colors were increasingly popular. It may sound rudimentary, but such mundane things had been often overlooked in the tech industry. "Motorola had a bunch of engineers deciding that black and grey was cool," said Gillott. "So you have to put it in perspective."

Nokia's first big hit was the 2100, which was considered the lightest and smallest handset in the world at its debut in 1994. The 2100 was also the first phone to feature a changeable faceplate, a curvy design and a large screen, attributes that would soon become Nokia hallmarks. Nokia planned to sell 400,000 of the devices. Eventually it sold 20 million.

Wisk said the 2100's screen, rather than the lightest and smallest billing, was the key to its success. "No one else had a screen anywhere near that size and quality," he said. The screen wound up being a key differentiator. "Prior to that, I think many phones were perceived by consumers as being identical," he said.

The move, and Nokia's decision to target consumers, rather than business types put Nokia years ahead of Ericsson, which didn't target consumers until 1996."

In time, Nokia bolstered its distinctive industrial design with equally innovative marketing and advertising. Under Wisk's watch, Nokia began targeting the fashion industry, partnering with major designers, like Kenzo, to increase visibility. "No one effort really did it," Wisk acknowledged. "It was a long-term commitment to this strategy of working with talent, press and events all from the fashion industry."

Wisk recalls staging a fashion show at the Fashion Cafe in New York a few years ago with spokesmodel Niki Taylor. "People in the consumer electronics industry really wondered what we were doing there," he said.

A fashion positioning, of course, was not unprecedented in computers and consumer electronics. Apple has always had a chic appeal and Palm has benefitted from presenting its product as a must-have accessory. But Wisk was more influenced by such style-conscious marks as BMW and Nike. "Both are brands where the design/fashion message didn't detract from performance or credibility issues," he said.

Nokia's advertising, via The Richards Group, rarely highlights phone features, instead focusing on colors (a technique Apple has also perfected) and the coolness factor. In 1999's "Pets," a woman is shown painting her nails red and reaching for her Nokia 5100, which sports the same shade. The premise continues with a woman clad in yellow with a canary reaching for her yellow phone. "We at Nokia have noticed that our phones somehow seem to remember their owners," a narrator intones.

Another spot borrowed a tack from car ads, where a seemingly cowed suburban Dad makes eye contact with a black leather-clad biker. Next, Dad pulls out the silver 8860 and wins an approving glance. The Dad, newly confident at his coolness, polishes the phone.

"We want the phone to be perceived as a trusted personal device that gives you a sense of individualism," said Lempert. "It's not something you buy that looks like someone else's."

Motorola and Ericsson were slow to emulate Nokia's lifestyle positioning, instead emphasizing product features. But that too is changing.

"In the past, our ads have been very rational, explaining the technology of the products themselves, but research shows that the end user thinks we're not a part of their life," Fred Medina, Ericsson's director of marketing, told Brandweek in April 1999. "To remedy that, we have to represent their lifestyle in advertising."

More troubling for Nokia is a looming attack from Japanese rivals like Sony and Panasonic. Sony pulled out of the market last year, but IDG's Gillott said a restaging is in the works. Panasonic, meanwhile, has stated its intention to get into the market, though it gave no firm dates. The trendy Palm and Handspring Visor are also encroaching from a second front, adding wireless capabilities to their now-ubiquitous handheld devices.

How will Nokia fend off these latest threats?

"We will stay focused on what the end user wants and through speed in execution," said Wisk. "These are not companies to be taken lightly," he added, "but our hope is that if we can continue to keep our focus on mobile information devices, then the strengths that they bring to the table can be kept in check." J