Nokia, Apple and asymmetric competition in Regent Street
The Register reports the sad but unsurprising news that Nokia’s flagship store on Regent Street is going to close.
Nokia Store Regent St UK (from silicon.com)
It was actually the most recently opened store: there are others at London Heathrow and in places like Helsinki, New York, Chicago and São Paulo. You can check it (and the other stores) out online: http://www.flagship.nokia.com/
For those of you who don’t know the locale, it is directly opposite Apple’s UK flagship store.
Apple Store, Regent St UK (from the London Evening Standard)
I recently suggested to a client that they visit the two stores, for a sharp contrast in economics, illustrating what we call “asymmetric competition“:
- the Nokia store sells ‘phones – lots of different models
- the Apple store sells ‘phones – a couple of different models
- the Apple store also sells services, such as mobileMe at ~$100 a year
- the Apple store sells music and video and applications, through iTunes (as cards, in the store)
- the Apple store sells computers
As a result, at the moment Apple has fundamentally different economics from Nokia. Apple makes money in a variety of related ways, from mobile devices, and from personal computers (each of which generates several times the margin of even an iPhone), and from complementary cloud services and digital media and other devices.
Perhaps unsurprisingly, this Apple Store is London’s most profitable store, generating ~£60 million a year or £2,000/sq ft, three times the sales per square foot of Harrods.
Harrods
Each iPhone drives significant additional revenue and contribution beyond the device itself; as a result, Apple’s economics are fundamentally different from Nokia’s, or indeed from any other player without the same scope of activities.
There’s a related discussion about ‘phones vs platforms, and on the shape of product portfolios, which I will post on later this week.
Michael, I am eagerly awaiting your post on phones vs platforms! Google’s Android platform strategy and overall ecosystem positioning should make a very good case study, no?