Trends in smartphone adoption in the west suggest that Finnish phone maker will have a hard fight to make an impact with its Windows Phone devices
You'll have seen Nokia's terrible second-quarter results. The number of both mobile phones and smartphones that it sold fell back to levels last seen in 2006; its mobile phone revenues fell back to levels last seen in 2005. In smartphones, which is where everyone expects future sales for all phone makers to lie, it did worse with its entire range of smartphones than Apple did with its two, namely the iPhone 3GS (vintage summer 2009) and iPhone 4 (vintage summer 2010). Nokia sold 16.7m - a 30% drop year-on-year, with average selling prices for those phones almost unchanged at €142 compared to €143 a year ago.
That's not the worst of it though. The bad stuff is yet to come, because although Nokia is working very hard on producing a Windows Phone device, and is expected to have at least one for sale from some time in October, or a bit afterwards, that's just one device. It's not going to be a game-changer like the iPhone. (And even that didn't sell in vast numbers in its first quarter.)
Nokia's problem, as the analysts I've spoken to see it, is that it isn't going to have a range of smartphones that people want to buy ready for sale before some time around March or June of 2012. That is, in three or four quarters' time.
But by then the smartphone window will be all but shut. According to the data from ComTech that we published earlier this month, smartphone adoption in the UK is growing by about 1% per month, and in the US at a slightly slower pace, but still fast enough that in the UK (one of the largest phone markets in Europe) and the US you'll either be past, or close to, 50% smartphone ownership by June 2010.
That ignores the possibility, by the way, that there's a Christmas bump of smartphone purchases this year after Apple releases its one (maybe two? we're hearing whispers) phone/s in September, and Samsung and HTC continue to pour their brightest and best into the market. Samsung, which will report its second-quarter results on Friday, and is expected to have sold even more smartphones than Apple, and more mobile phones in total than Nokia's 88.5m total. The Galaxy IIS is wowing plenty of people, while HTC's Android models are proving popular.
Given that those three companies alone - let alone RIM - will be going hell for leather after the customers at Christmas, it may be that those adoption rates will speed up. (It's noticeable though that it didn't speed up last Christmas, so the straight-line model may be good enough.)
Meanwhile Windows Phone sales numbers are so impressive that Microsoft didn't even mention them in its latest quarterly earnings. The whole Windows Phone effort is skated over in a single paragraph. And the analysts don't ask about it in the Q&A.
Now, Francisco Jeronimo, smartphone analyst for IDC, thinks the timing issue presents a problem for Nokia. "On the smartphone in the just-passed quarter they couldn't even compete on price," he says. "They cut prices to keep the volume high in the mid-tier, but as Android smartphones go lower in price, the actual price isn't a strategic selling point. Consumers can buy a better experience [than Nokia's] for the same or lower price."
So how about when Windows Phone comes along? "That will reverse [the decline], but the question is how bad it can get [for Nokia] before it's too bad to regain leadership. They can't compete with Samsung and Apple."
And as the window of opportunity closes - and there are fewer consumers and enterprises left to try to persuade to switch for the first time from their feature phone - Nokia will be facing two diametrically opposed forces that are equally antagonistic to its success:
• some of those remaining feature phone users will be refuseniks who don't want a smartphone and aren't going to change unless they're somehow forced to, or the price of changing is zero;
• the feature phone users who do change will face temptations on offer from all the Android manufacturers, and Apple, and RIM. Android handsets may be so cheap you'll near enough get them with packets of cornflakes.
That means the window of opportunity for Nokia, before all those feature phone switchers get tied up with two-year contracts, is closing really quite fast. The switchers who come after June 2012 probably aren't going to be as generous with their money (else they would have bought a smartphone already). They're less valuable. And Nokia will have to scrap for every new contract as the early adopters come out of contract; the most likely course is that people who have bought into an ecosystem tend to stay with it. Thus iPhone users tend to stick with iPhones, and Android users with Android phones (even if they switch between brands).
Yes, you can argue that the US isn't switching quite as quickly as the UK (and the rest of Europe), so the windows of opportunity should remain open for longer there. That's true - except that Nokia faces a monumental uphill struggle in the US, where its share and brand awareness are next to zero. Winning the US, or even placing third, will take a monumental marketing effort - and those aren't cheap.
There's only one bright note for Nokia, which is that carriers are quite keen that it should succeed, or at least provide some sort of competition that will stop Apple riding roughshod over them and Android leaving them with no margin. Sources I've spoken to at carriers raise their eyebrows and shrug their shoulders a little hopefully. But they know that time is not on Nokia's side here. It needs to do quite a lot, quite quickly.
Just to rub it in, Richard Windsor, equities analyst at Nomura Securities, thinks that 2011 is going to see the fastest growth in sales of smartphones (it's forecast to be about 50% up on 2010, which saw a total of 285m smartphones sold, and that 2012 will see slower growth. That's the tough, competitive market that Nokia will be launching its Windows Phone models into. It's already discovered that price doesn't persuade people to buy its smartphones. Now the question is: what will?
--
Source: http://www.guardian.co.uk/technology/2011/jul/25/nokia-windows-phone-opportunity-limited
~
Manage subscription | Powered by rssforward.com
0 comments:
Post a Comment