With its smartphone margins falling (from 20% in previous years to just 11% in its earnings report earlier this month) and competition from Apple, Google, RIM and others raging, Nokia’s handset business is at a cross-roads, Business Week reported this week. Nokia is still the world’s No. 1 handset-maker, selling 108 million phones in the first quarter, up 16% from a year ago. But its market cap has fallen to $45 billion today.
As reported in the Business Week story:
On Apr. 27, Nokia introduced the N8, a touchscreen phone with a new version of its Symbian operating system. The model won’t be shipped until this fall, though. “While this is somewhat later than our original internal plan, it is really most important to get the quality and the user experience right,” CEO Olli-Pekka Kallasvuo said on the conference call. Smartphone chief Jo Harlow insists Nokia is doing just that with the N8 and other new models. The devices “will change the perception that people have.”
If Harlow is wrong and the new smartphones fail to wow customers, they “will do further damage to a brand that’s already weakened,” says Ben Wood, an analyst with research house CCS Insight in London. “Another N97…could have a catastrophic impact on Nokia’s ability to compete in the higher-value smartphone space.”
Connected Planet’s take,
Kevin Fitchard:
I imagine the big worry for Nokia and other old-line handset vendors out there is the danger of ceding the smartphone market to the new breed of computing companies-cum-handset-makers. Apple has proven that the innovation in software, services and design trumps old-school experience in phone manufacturing and distribution. Unless Nokia suddenly make a huge leap forward, the smartphone market could well become the domain of companies like Apple, the new HP-Palm and Google.
Research In Motion has been doing fine, but it was never an phone manufacturer per se. It started out making pager-like push e-mail devices and then moved straight to the smartphone. But its success has been built largely on the success of its BlackBerry enterprise solutions. If Apple or HP start pushing aggressively in that realm, RIM could find itself on the defensive just like Nokia. Samsung, Motorola and LG Electronics are pushing forward by partnering with the new wave of Internet and computing companies, a good strategy because Google and Microsoft will always need hardware partners to bring the software and services to market. As the barriers to entry in the smartphone market continue to fall, though, those established handset-makers could find themselves competing not just against one another, Apple and RIM, but a host of new manufacturers from across the consumer electronics spectrum — all of which will have access to the same operating systems and applications.
Nokia, however, is standing alone. It’s standing behind its operating system, Symbian, and its own development and service platforms. It would make a good strategy because of Nokia’s scale, but if Nokia can’t leverage that scale, it doesn’t have much to fall back on.
That’s our take on this. Let us know what you think in the comments section below:
There is no doubt in my mind that the apps on iphone are far superior to the apps on Android. The problem with Android’s apps are they are limited and don’t seem as user friendly, I know Google wants to improve or capitalize on Android’s apps database, but I think it will never compete with Apple. Just look at the amount of apps listed on iphone index sites like http://www.dozeniphone.com and you will see what I mean. The iPhone has an app for everything, Android has an app for some things. That’s the difference.