Apple has been slowly stealing Nokia’s market share since the release of the iPhone, but this past quarter it finally passed the Finnish handset manufacturer. By a mile. Well, half a billion dollars actually, but that’s not how the saying goes.
At first glance it might not seem like terrible news for Nokia. According to research firm Strategy Analytics the company still leads in overall handset share, shipping over 108 million handsets in the third quarter (compared to 7.4 million iPhones). But that actually makes the news worse. Nokia is selling more phones – nearly 15 times as many – but losing in profits by 50% of what the company earned? That’s insane, and it’s a trend that will likely continue. Apple has put the iPhone on multiple carriers overseas to great success, something we’ll likely see stateside in the near future.
The Strategy Analytics report points to several factors for Apple’s success, high subsidies and low manufacturing costs among them. There’s no reason those things should change for Apple anytime soon. Enough people want the iPhone that carriers would be crazy to boycott the phone based on the price. It’s a problem that points back to branding. If you asked a hundred people what an iPhone is I’d guess 85 or more could tell you, most in great detail. Ask about an N97 and you might get 10. 15 tops. How long before the same can be said for Nokia itself?
I think I’m starting to understand AT&T’s strategy for the next few years. As complaints continue to pile up, the company will just add more and more bandwidth-hungry devices until it inevitably crushes the network, at which point customers will be so fed up they will pay for anything, including tiered data plans. That’s a long introductory sentence for a netbook, I know. Now, the netbook.
Nokia confirmed its 3G capable netbook, the Booklet, to be released on subsidy with AT&T. The little lappy will run $299 with a two-year contract at data rates of $60/month. You will also be able to get the computer for $599 unsubsidized. The system runs Windows 7, which supposedly seamlessly handles 3G to wi-fi crossover, has a 120GB hard drive, and sports an A-GPS card for location services. Nokia has also crammed a 16-cell battery into the thin frame for an estimated 12-hour battery life. I’ll believe that when I see it, but for now it’s nearly double most other netbooks.
Through the holidays you’ll only be able to buy the Booklet at Best Buy stores. Execs from Best Buy, Microsoft, and Nokia were all in Manhattan for the announcement today and seemed optimistic about sales potential. If you’re looking for an ultra mobile device and don’t already have a laptop, will you really want one of these on a service contract? How bout when it’s sitting next to a 32GB iPhone?
Despite a poorly planned N97 and the continued explosion of the iPhone user base, the loss report is still a shock. A 66% earnings loss is more than just recession-grade economics, though the global economy certainly amplified things. Nokia also reported a sales decline of some 25% and a shipment decline of 15%. The company also recanted their goal to gain market share this year.
Nokia’s CEO, Olli-Pekka Kallasvuo, said his company “put in a solid performance in what was another tough quarter.” I’m not sure how tumbling earnings look “solid,” even in a bad market. And how long can they continue to make that same, solid performance? As mentioned above, some analysts are saying Apple, of all companies, will catch Nokia as early as 2011 with a 33% market share. By 2013 these same market research types believe Nokia’s share will have dropped to half their current, from 40% to a meager 20%.
I doubt things are quite that bad, but they’re getting close. Make no mistake, Nokia is bleeding – slowly for now – and if they don’t revise their product strategy and start delivering decent phones for every market (yes that includes the US) it’s just a matter of time. Meanwhile, nothing can sate Apple’s hunger, and when the iPhone finally breaks from AT&T exclusivity, the stateside smartphone market is going to be a mess.
What could help Nokia win back some much-needed market share? Do they need a touchscreen, or just a smarter-than-iPhone smartphone with a decent app catalog? Sound off in the comments.
This weekend sparked (get it…like sparklers) rumors that Nokia, the world’s top cellphone maker, was abandoning Symbian for a new project. The phone, code named “Rachael,” was said to be designed to run Android. Unfortunately, Nokia denies that claim.
It really is a shame, considering Nokia is one on a very short list of manufacturers capable of competing directly with the iPhone. What they need, though, is a consumer-friendly operating system like, you guessed it, Android.
Speaking of the rumor, a Nokia spokesman said, “”Absolutely no truth to this whatsoever.” He followed up with, “Everyone knows that Symbian is our preferred platform for advanced mobile devices.” Doesn’t get much clearer than that.
Nokia’s hoping some star power and a little Nostalgia will you get you itching for an N97. The ad is a remixed version of ‘Mama Said Knock You Out’ by LL Cool J. It’s full of snappy one-liners like, “don’t call it a comeback” and, “over the competition I’m towerin’.” If only your phone wasn’t $700, Nokia. If only. You can see the whole video below.
Apple has been slowly stealing Nokia’s market share since the release of the iPhone, but this past quarter it finally passed the Finnish handset manufacturer. By a mile. Well, half a billion dollars actually, but that’s not how the saying goes.
