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April 22, 2010

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Mark

Great analysis, and quick as well. Thanks.

kevin

Some quick comments:
I know you adjusted RIM's numbers since their last set of data is for Dec-Feb, but is your adjustment accurate?

Palm won't be reporting again until June. They are on a different fiscal schedule.

Verizon reported today - only 423K new postpaid wireless subscribers (less than AT&T); postpaid churn now as high as AT&T at 1.07% (first time ever that AT&T has equalled Verizon).

Iain

The market is disappointed with Nokia's results - their stock is down 13% at the moment. Market cap is a meagre 48.53B.

They are being squeezed at both the high and low end. Their "smartphones" are not keeping pace. They are facing their own bloodbath.

Jody

@Iain. Did you read this posting at all?

The market might well be disappointed with Nokia, but the market is wrong. Nokia's market price is driven by the US and it seems extremely obvious that the US markets:

1. Have no idea about mobile.
2. Have an extreme case of Not Invented Here.

You can see the exactly the same thing with the market treatment of RIM. The US markets have an obvious extreme bias in favor of Apple and it makes no financial sense.

Dardano

Nokia delayed Symbian 3 to 3Q and for sure late 3Q!!! They probably saw the leaked iPhone 4G and said "shooot.. guys back to the drawing board we've got it all wrong again let's start from scratch" LOL

By the time we'll see a Symbian 4 device which is supposed to be a real competitor to the iPhone OS there will already be an iPhone 5G, iPhone 5G Qwerty and prolly an iPhone 5G mini lol

Nokia is playing catch up here, they are only riding this train so good because they have scale and reach consumers who are not well informed and prolly dont have the cash or access yet to buy an iPhone. Sooner or later they either need to innovate something which I highly doubt just by seeing what kind of crappy software they always come out with.. from n-gage to S60 v5 to email client to messenger client to ovi store.. man they're smoking some weird shi** up there in Espoo, pardon my french but they have really no clue or they will become a gigantic irrelevant dumb phone manufacturer at an average "smartphone" selling point at 60bucks a pop. Their best "smartphone" they have the N97 is to me really a dumbphone, have you ever used it? Man nothing more than a pain in the as$! The biggest €500 waste I have ever spent! It's not even worth a hundred euros! Heck the headaches it gave me I should really get paid from using it and putting me through this horrible experience!!!

Nokia needs Palm as much as Palm needs Nokia! What Nokia lacks is a vision and real software engineers and what Palm lacks is good Hw manufacturing and scale! I agree with you Tomi that Nokia has no use for Palm because they are too deeply tied with Symbian and Meeeego but the heck with meeegooo and symbian, I highly doubt either is as slick as webOS. webOS is on par with iPhone OS and why can't Nokia just invest into improving webOS? They are going nowhere with the path they are in now, swallow the pill and change now before it's too late. Nokia's average selling price on their phones is keep going down because their best products are really just crappy and nobody wants to pay that much for it.

What good is it to have 41% market share and you're barely making money on 430 Million phones you sell annually? That's why their shares are down because despite the volume they sell they hardly make any money on that junk they sell.. how much they make like 4 bucks per device? Nokia is like General Motors, they sell a ton but dont make any money on it because they dont offer a good value to the customer and a horrible experience.

Tomi T Ahonen

Hi Mark, kevin, Iain, Jody and Dardano

Thanks for the comments. I will respond to each individually.

Mark - thanks! Happy to be of service :-)

kevin - thanks for the numbers. My RIM numbers this time are their real reported quarterly numbers so its the 3 month period ending November, and 3 month period ending February, just like HTC, same cycle. I do have my own estimate of RIM's and HTC's adjusted market share but don't think thats reasobable to use here, so I will wait for the Jan-Mar quarterly data when we get Gartner or IDC etc to report it and use their 'adjustment' haha.. But in sequential growth it does not matter which period we use, as long as the period length is the same, if we go across several periods.. I will switch again to Oct-Dec and Jan-Mar quarter numbers when I have an 'independent' source (IDC/Garner etc) reporting it..

Iain - thanks. Yes, the market is brutally punishing Nokia right now. I think it is ironic. There are 3 big smartphone makers. RIM grew unit sales and market share over the past 3 quarters and are one of the most profitable companies in all of mobile. They were punished by Wall Street. Nokia grew unit sales and market share over the past 3 quarters and are one of the most profitable companies in mobile. They were punished by Wall Street. Meanwhile Apple sales are flat, and their market share has been flat for 3 quarters. And Wall Street showers them with love and affection. It does not always make sense haha. And yes, while Nokia overall did see a decline sequentially in profits from the previous quarter, Nokia is totally in a different league from most of its main rivals like SonyEricsson (barely broke even), Motorola (how many years of consecutive losses), LG (razor-thin profits) etc.. But Nokia profits tower over all others - except RIM and Apple who are somewhat - but not drastically - better in profits. So Nokia and RIM are lumped with Moto and SonyE and Palm haha as 'losers'.. Yeah, Wall Street seems to be a bit confused..

But this blog is not about financial performance. This is not a financial analyst blog or stock-price advice blog. This is not a smartphones blog. This is a social networking blog (Communities Dominate) with digital convergence and mobile telecoms. On mobile my main focus is in mobile SERVICES not handsets.. I made very clear that we are looking at smartphone market share - because the reach of the smartphone platform is of great interest to readers of this blog - companies who make services and apps for mobile phones. They don't care who is the big hit on Wall Street. But they are very concerned who will be viable as a smartphone platform in a few years. Palm is obviously toast. And if now Apple iPhone is hitting a plateau, and starts to decline in market share, that is very alarming news. Just 3 years ago Motorola had 21% market share in mobile phones (not smartphones) and they crashed so hard, today their market share is 3%. That is how volatile mobile is as an industry. My readers want to know market share. I really don't personally care what Wall Street thinks of any given company haha... but I do want them to be profitable of course, so that the companies are viable in the long run (again, witness Palm, Motorola...)

Jody - thanks! cheers!

Dardano - good points and I even agree with part of it. Yes, in the apps space, Ovi Store, etc, Nokia is now playing catch-up with Apple. Same with the user friendliness of Symbian vs iPhone OS/X. I agree with that. But don't be so smug about it. Apple just announced they are going to make multitasking possible and folders. First, the multitasking is again typical Apple style - limited. And these will not be made even possible on the early iPhones like 2G. How is Symbian? Its had multitasking and folders for 8 years already. It is equally true that in other ways Apple is still playing catch-up with Nokia and/or Symbian.

But I do agree with you, that Apple is by far the best phone by its user interface, has been from its launch and will continue to be ahead of all rivals including Android - into perpetuity. That is Apple's core competence. That is why the Mac is so loyally loved still today 26 years after its launch. Same for the iPod (and all those who lovingly remember the Newton)

Your writing style is well, colorful haha and your examples perhaps a big exaggerated but your point is valid. Apple is far more like BMW at the luxury end with best user experience and luxury premium for that loyalty, with high profit per unit sold. Nokia is far more like GM (or Ford perhaps better example as Nokia is very healty in profits haha, where GM was broke..) which sells a vast range of products from the very expensive to the very cheap, and by far the majority of its products are at the low end of the market. Very good analogy and I totally agree with it.

On Palm you know my view already and you also know it is totally a pipe-dream to imagine Nokia buying them. Won't happen. But lets hope Palm lands in a good home and we'll see it re-emerge.

Thank you all for comments, please come back again.

Tomi Ahonen :-)

Pablo Roca

Hi Tomi,

Don't take offense, but it's funny to see how much are you biassed to Nokia. His 41% in smartphone marketshare is almost a joke, cause almost every mid-ranged Nokia phone is considered as a smartphone (including platform S60). Market it's punishing Nokia cause numbers were below analysts expectations, nor less than that.

% of Marketshare can be of interest mainly to Nokia, but not to the users, developers and people in general. What interests people is seeing more apps done for the device, buzz regarding phones and apps, to the developers sales from apps, for the phone operators they are interested in internet traffic volumes. I fell that Nokia predominates only in hardware, no more things. This things are leaded by Apple & Google with the Android stuff. See # apps, volume of app sales, volume of internet traffic and this will give you the real story: "Nokia nowadays is nobody in the smartphone app bussines, just only in the hardware"

Who cares? Sure that Nokia.

An also sure that I don't care cause I'm a developer.

Regards,

Pablo Roca

Steve Ives

In my market model (used here at Taptu), we track the device market growth by consumer form factor, i.e.

1 "Normal" phones
2 Qwerty phones
3 Touch phones

(yes I know in Silicon Valley an iPhone is a normal phone, so we get some confusion when we use these terms over there ;-)

Each of these 3 categories can include both smartphones and featurephones.

Why look at the market in this way?

First, because the mass-market consumer doesn't appreciate the difference (and won't necessarily pay for the difference) between a candy-bar smartphone and a candybar featurephone, so long as the phone runs Facebook.

Second, because the form factor defines the content experience, as follows:

Normal phones: old-style WAP/XHTML pages, old-style apps

Qwerty phones: great texting/social network app experience (because of the keyboard), plus old-style apps, old-style WAP/XHTML pages

Touch phones: new-style touch HTML/HTML5 pages, webapps and new-style touch-oriented native apps

Now that phones are not (primarily) voice devices, the consumer is much more interested in the content experience, the interface interaction model, and whether they can run their favorite social network app.

They are less interested/aware of whether the phone is a smartphone or a featurephone (this precise classification is in any case quite difficult - a lot of Korean "featurephones" are running BREW under the hood, which from a technical standpoint looks a lot like a "real" phone OS)

When you look at the phone market bloodbath against this backdrop, the competitive dynamics are a bit different. Nokia is dominating in "normal" phones, with Samsung a strong number 2. RIM pioneered the Querty phones, but now have plenty of competition from all the big guys and now Microsoft. In touch phones, Apple are dominating, with other manufacturers jumping onto the Android platform to try and catch up.

We only track overall market volumes and forecasts across these three categories, but it would be fascinating to take this one step further and do a market share analysis. (Tomi - I don't have the access to all the numbers to do this, but happy to help you do it if you have the numbers)

Reda

Hi Tomi,
as previous comment, no offence but you come across as heavily biased during this post (and in others as well actually). It's a good analysis but the bias undermines the conclusions unfortunately.
I hope in future you can be more impartial.
Cheers,
Reda

Dardano

The reason why investors are punishing Nokia is because their profit margin has gotten thinner and Nokia fails to generate a user loyalty. I hear all the time how Nokia wants to incorporate everyone's lives into this Ovi experience but the problem is they don't have the capabilities of making anyone's life easier, they actually are only getting the users upset with half baked mumbo jumbo software. I took a look and downloaded this new Nokia Messaging app the other day... OMG it's the worst piece of software I have ever seen, how that past QA over there is just mind blowing to me.

Sure they can improve upon that but believe me users will punish them sooner or later because once you get too many users mad they will never buy an other product from you again. Nokia is making the same mistakes General Motors made and the problem is that once customers get that mindset that Nokia sucks at sophisticated platforms then they will have a hard time selling anything at a high profit margin.

That is why they need to change something, Symbian might be a good OS I dont know I'm not an OS expert but that wont matter if the end user ends up hating it because it's a headache working with it. People love the look and feel of webOS from Palm, the only problem with it is the hardware it's not well done so that's why Palm has a hard time selling it to people and the fact that they made the mistake and went exclusive with Sprint.

The platform is great and Nokia should swallow its pride and realize that the game has changed and it's not anymore about hardware it's about software and Nokia is not good at making any sophisticated software without dropping the ball one too many times. They could use webOS in staid of meego/symbian for any of their high end X- N- E- phones. They can still use symbian for the low end dumbphones and make them a lil smarter lol

Even if that rout would still not get them any closer to the American market since US carriers dont like Nokia and vice versa, who cares, they'd end up with a sophisticated platform everywhere else and they could also ask a premium on those phones because users will want to use them and they'd be back in the competition with Apple and it's high profit margin.

Tom Ross

"Google Android smartphones doubled sales in the same period!"

Do you have a source for that? Eric Schmidt alluded to this, but what he actually said was "we are now shipping 60.000 devices per day, twice as many as last quarter". This is neither just smartphones (rather all kinds of devices), nor is it a proper quarterly summation, just some one-day perfomance highlighted for promotional effect.

No doubt Android is growing (from a very low level), but I'd rather Google told us the real figures and not leave that up for Gartner et al. to guesstimate.

Tom Ross

"First, the multitasking is again typical Apple style - limited. And these will not be made even possible on the early iPhones like 2G. How is Symbian? Its had multitasking and folders for 8 years already."

Do you have the technical expertize to judge that? To my knowledge, all smartphone platforms are using some kind of managed multitasking (where apps are always killed when they're closed, but allowed to sign in some background threads). Every one: iPhone, Android, Symbian, Web OS... except for the deceased Windows Mobile.

You keep referring to Apple being late to Copy&Paste or Multitasking, yet avoid discussing their claim that "we admit we're late, but we needed the time to create the best implementation". From my experience, Apple's Copy & Paste is easier to use and more comprehensive than the competition. It's pointless to discuss Apple if you don't want to discuss product quality.

sami

Reda, Tomi, I hope I don't offend anyone jumping in discussion, but from what I see you and Tomi have different points of view. Tomi's approach is based mostly on figures and facts, your argument is based mostly on feelings.

I'm not trying to imply one of these approaches is better than the other, in fact I think both are relevant. However, in context of biases, I think the approach based on feelings is more likely to be tainted by a bias, one way or another. To make argument about how people feel, we'd need to study opinions of a lot of people, taking opinion of just one person will probably result biased argument...

Pablo Roca

Sami,

The clear fact is that Nokia is losing his ground since iPhone & Android come to play.

Welcome competition

Carlos


@Tom Ross, I've been programming mobile phones for several years. I can tell you from fist hand experience that Symbian and Blackberry have full multitasking as Windows Mobile. I have no practical experience with Android, but for what I have read you can write services that work in the background. The iPhone is the one with the most limited access to multitasking. I have no idea of WebOS, in internet it looks like it also have full multitasking.

I have no read the new specs for the iPhone OS4, so I can not comment about them.


ounkeo

---"The clear fact is that Nokia is losing his ground since iPhone & Android come to play."---

As far as we all know here, the facts are, Nokia is now gaining ground, year over year even as the market grows. Are they as technically and UI proficient as Apple, Google and HTC? No they aren't. However, you don't need to be. You just need to produce the right kind of devices targetted at the right kinds of people; something Nokia does very well. They are willing to target almost every segment of the globe's population with devices that will appeal. Otherwise, how do you explain that they can sell hundreds of millions of devices a year?

Cost is only one factor. The other factor is that the device must appeal in design and in function to any market and Nokia, so far, has done the best to provide for those markets. That is why, even with heavy pressure from rivals, Nokia is still growing.

Did it's profit per device drop? Sure it did, can we expect any company to not suffer some kind of drawback to their business when competition is as fierce as it is? Just look at Apple. They are doing well, but hardly conquering the world. Unless you think 50 million is the world; or even a signifigant part of the world. And even with the growth they are getting, their marketshare remains flat. There is always a cost when competition is involved.

What matter most here is how many people have what types of devices in their hands. And since it's from a global perspective, expect that Nokia is going to be mentioned A LOT since they currently pretty much dominate the world with their phones. And frankly it's a lot more refreshing than reading North America media and blogs that obssess over the smallest, most inconsequential detail about Apple (like a new screw being used under the backplate!), as if the rest of the world and players did not matter???

This is one of the few blogs I have read where there is at least an attempt at balancing the information. Go anywhere else and the only thing you will get from them is "Don't invest in RIM, it's a dead company. Apple wins." ; "iPhone accounts for 80% of total global web use. No other company is relevent." You know the information is blatantly wrong and there is not even an ounce of editorial control on them; but it's exactly what 50 million people want to hear! Never mind balance! At least Tomi gives you information to back up his claims.

This is a post about the global market for mobile phones and their users. It isn't an investment blog. In an investment blog, you can expect to get a lot more partial articles towards Apple. In a blog like this, expect to hear Nokia more often and in a more positive light.

kevin

Tomi himself has noted repeatedly that it's unfair to compare single quarters for Apple since iPhones are only released once a year. So let's stop doing that. Let's look at data (not feelings) on full-year market share growth using Nokia's own estimates of the global smartphone market:

Between Apr08-Mar09: 165M converged devices (aka smartphones; Nokia's term) sold, Nokia sold 59.6M or 36.1%, Apple sold 15.8M iPhones or 9.6%.

Between Apr09-Mar10: 193M converged devices sold, Nokia sold 75.6M or 39.2%, Apple sold 30.1M iPhones or 15.6%.

So on a fair annual basis comparison, Apple has increased its market share from 9.6% to 15.6%. Nokia has increased from 36.1% to 39.2%.

But note: To get that growth, Apple's iPhone ASP has dropped from $640 (at end of Mar09) to $622 (at end of Mar10) or 2.8%. (Apple added one cheaper model.) Nokia's smartphone ASP has dropped from 190 to 155 euro or a whopping 22.6%.

Those numbers, plus Nokia's delay in getting to market a top-end "N-series" caliber model running Symbian^3, and Apple's huge margin that can enable future much lower iPhone prices, explains the different directions taken by NOK and AAPL on the stock markets.

But Tomi wrote above "I made very clear that we are looking at smartphone market share - because the reach of the smartphone platform is of great interest to readers of this blog - companies who make services and apps for mobile phones."

The stock market wants to know the same thing but not just for last quarter or today, but for next year or two or three. Which platform can be projected to be more viable and have greater reach in the future?

Based on that data, which do you think?

kevin

Oops, I screwed up my math - Nokia ASP only dropped 18.4%, not 22.6%.

Tomi T Ahonen

Hi Pablo, Steve, Reda, Dardano, Tom, sami, Pablo again, Carlos, ounkeo, an kevin twice.

Good discussion. Will respond to each individually

Pablo - First, on the 41%. I don't make the rules. The definition of a smartphones is a cellular mobile phone which has an operating system where users can install apps. Please note, the original iPhone 2G did not even fit this definition (but was mostly counted in the stats nonetheless). I cannot go interview every 4.6 Billion people on the planet asking what kind of phone they have and neither can you nor anyone else. If we want to have a reasonable discussion, we have to have some accepted definition and measurement. So, for example in cars. You may think that the India made Tata is not a 'proper' car, but it still fits the global definition and their production is counted in the car total global market.

For mobile phones there are only two measures of phones. There are those that are any kind of phone and then out of that, the ones that are smartphones. If we want, we can remove the smartphones from all phoens and get the number of 'dumbphones'. But beyond that, it would be opinion. Why should phone X be accepted and Y not. I won't play that game. I talk about what we can measure. The Symbian phones are legitimately smartphones.

Its like saying only Cadillacs should be considered cars. That sounds very subjective to me, and not conducive to intelligent discussion and debate. What is I said that only those cameraphones that have an inbuilt flash should be counted? All Nokia smartphones have a flash, none of the iPhones have one. So if you really are into photography and the camera part of the phone is important to you, we'd eliminate the iPhone from conversation.. No, we talk about what we can measure here.

Steve - very good comments thanks and agree with you obviously. That is a very modern way to look at the device landscape (random readers might not know, but you guys at Taptu know this well, the world manufactures at any point in time more than 1,000 different new phone models by over 40 manufacturers headquartered in over a dozen countries - so its a very broad market out there. American readers are exposed to a very tiny corner of it, mostly because the US carriers form such a stranglehold on the US domestic industry and limit the choice).

I like the split and it clearly the devices would lend themselves very strongly to also distinctive behavior patterns, and consumption patterns by the consumers. Should be also of interest to the carriers/operators. It could be a basis for some segmentation thinking too. I only wish we had strong data on it. For exmaple just in the Nokia Quarterly results, they lumped their QWERTY and touch screen phones into one lump at 18 million. But maybe we'll get some of the big analyst houses to start to track this info and report on it. I'd love to do some deeper analysis also then on the market shares etc, but more interested obviously in the consumers and their behavior patterns based on that classification..

Reda - thanks. I do not mean to sound biased, but its clear that I am an ex Nokia guy and from Finland, there is bound to be an emphasis of Nokia in all of my writing simply because I know that brand so well. I would hope you read some more of my writing here, I have been very critical of Nokia too, I have been praising Apple like no other company in this industry - I call the iPhone the only transformational phone ever, that we actually measure time 'before iPhone and after iPhone' which obviously I don't do for any Nokia phone etc.

Maybe it 'annoys' you that what you read on this blog does not conform with what you read elsewhere? So perhaps it 'seems' Nokia-biased when I discuss Nokia facts, when in reality the Nokia fact is 'significant' and should be discussed by also others who discuss the smartphone space? Would you be willing to agree that Apple gets far more than its fair share of attention in smartphones, almost drowning out the far bigger RIM and Blackberry for example?

Dardano - fine, lets say we agree, Nokia should change something, to avoid becoming the GM of phones. Agreed? Well, then, Nokia becamne the world's biggset phone maker in 1998 (from Motorola). The iPhone and its app store is not the first global challenge that Nokia faced. This is the most dynamic global industry ever with far more disruption than even the PC and internet industries. Consider the past 12 years since Nokia took over. The phones went from being voice devices to texting devices (majority of world now considers their primary use of a mobile phone to be for SMS texting, not voice calls, that pattern arrive even in America in 2009 as reported by the CTIA).

Then the phone became a media device. Then the phone became a payment device. Then the phone became a user-generated content device (starting with the cameraphone). Then the phone became a primary device for social networking. Its since become a fashion gadget. The phone became an internet access device. It is now our pocket computer (with apps). It is now an augmented reality access device and a remote control device. In every one of these changes, there is a relevant industry - like say banking - which is 'opposed' to this change.

Every one of those changes could have - and in many cases did - cause immense disruption to the phone industry. No other industry ever has been under so much change as this, not cars, not airplanes, not TVs, etc. Airplanes got jet engines in the 1950s, their next big change was wide-body jets in the 1970s - they get 1 big change every 20 years. TVs, went from black-and-white to color in the 1970s, then to digital in the 1990s, again one change in 20 years - and I haven't even talked about the technical changes to mobile phones like 3G, WiFi etc or the business model changes like Skype and Blackberry messenger and MVNOs etc.

Did Nokia adjust? They anticipate the internet to come to phones - it was actually Nokia who wrote the world's first white paper of how to do the internet in mobile (I co-wrote that white paper when employed there) - and this was literally a decade before Apple's iPhone. Nokia was the first phone in the world to do media - accept paid downloaded ringing tones. Nokia was the first phone maker to do a fashion/luxury phone with its Vertu brand. Etc etc etc. Motorola had 21% market share only 3 years ago, now they have 3%. The top 5 phone makers just ten years ago included Panasonic and Siemens. Panasonic is out of the Top 10 and Siemens out of phones permanently. Ericsson since merged with Sony and today have 3% of the market struggling to hold to a Top 5 slot. But the past decade Nokia took all those challenges and met them head on and today has 33% of the global phone market, more than they had in 2000. That is solid management in a turbulent industry.

So what is on their plate now? Some say that the future of the mobile phone will bypass the carrier and we will have WiFi etc free networks with Skype etc. Nokia did not invent the WiFi phone (neither did Apple). It was NTT DoCoMo in Japan, but Nokia released the first WiFi phone outside of Japan way back in 2004. And Nokia has aggressively brought WiFi down to its mid-cost phones to make sure it does not miss this wave.

Some say the future of mobile is 3G. Nokia did not invent 3G (first 3G network was deployed by NTT DoCoMo of Japan) but Nokia brought 3G phones to its lineup in 2004 and has been aggressively moving 3G into mainstream Nokia phones, today sells 3G phones for under 100 dollars.

Some say future of mobile is touch screen. Nokia did its first touch screen long before the iPhone and today 18 million of Nokia's phones sold in the past quarter were either touch screen or QWERTY or both - more than Apple obviously.

Some say the future of mobile is apps. Again an innovation from Japan's NTT DoCoMo but Nokia was early into apps, launching its app store in 2003 for the N-Gage. It didn't succeed in the market but Nokia saw this trend coming and was prepared for it. Now its rapid ramp-up of Ovi store (is already the second best-selling app downloads after iPhone App Store with half a billion downloads per year and growing far faster than Apple's) shows Nokia is capable of playing in that game.

Some say the future of mobile is in services. Nokia launched a mobile services unit in 2000 (I remember, I was recruited to join it but got a better rival offer inside Nokia at the time haha). Nokia saw that coming and currently reports 804 million Euro (over 1 Billion dollars) of services revenues in just one QUARTER. Apple's total iPhone app store global revenues last year were 740 million dollars (according to Morgan Stanley) and Apple gets 30% out of that. So who is leading whom in services.

Some say the future of mobile is advertising. Apple just bought its own ad agency and launches iAd. Nokia did that three years earlier.

Some say the future of mobile is in low cost handsets for those who are not wealthy, like say the 1 billion people of Africa (vs 300 million wealthy Americans). Have a guess who sells most phones in Africa..

I hear you that you feel the 'radical' change - that Nokia 'has' to respond to is the new sexy and desirable iPhone with its touch screen and internet and app store and developers. Sure. But that is ONLY one of the major changes that the phone industry has faced the past decade, and far bigger changes have already hit Nokia and its not that it is still standing - out of all of its big rivals, only Nokia has consistently reported quarterly profits for its handsets unit for over 40 straight quarters. Its grown in size, adjusted to every change thrown at it - where rivals vanished - Nokia regularly posted profits. I think its a pretty well run machine. So its a bit slow to take on Apple. Some say Nokia was too slow to take on Motorola Razr the world's most popular phone of 2004. Where is Moto now?

So we agree, Nokia needs to change. But its a big ship, it moves slowly, and is very well managed to consider ALL the changes, not just Apple. Like China's 3G. Did you know the world's largest mobile handset market has its unique 3G standard. And the Chinese government forced the private company China Mobile - the world's biggest mobile operator/carrier - bigger than all US carriers combined - to use the unique Chinese standard. So any normal Motorola or Nokia or Samsung or Apple 3G phones are incompatible with the 3G used by China Mobile. Did Apple release a 3G model for the TD-SCDMA standard, of course not. But did Nokia? This is the world's largest mobile operator? Of course Nokia did. There is more to the mobile industry than Apple...

Tom - the Android figure. I don't have any better number than reported by Google so far. When we get IDC or Gartner, you can be sure I will be reporting it. Mind you - Google said 60K per month in January. Since then many major Android phones launched by the big phone makers like LG, Samsung, SonyEricsson etc - so expect the number for full Q1 to be bigger not smaller.

About multitasking - I am no longer qualified to judge by my own experience (have not programmed for more than a decade haha) but I am reporting what other say openly at the developer forums. It is definitely no secret Symbian had multitasking long before the first iPhone launched, no?

On Apple reasons why they do things late - that is fine, but note - Apple admit they are late. Its good they do things well. But that does not invalidate my arguement in any way. I did not talk about whose was best, but who was late. Apple admit they were late.

sami - good point yes, I focus on the numbers and whenever I find it, I like to share also what consumers feel about given things, but obviously this is not a 'smartphone reviewer' blog where we compare phones haha, I am more interested in the usage of mobile services, who uses SMS, who listens to music, who accesses news websites on their phones - and obviously our main theme here on this blog - social networking use on a phone, Twittering, Facebook, CNN iReport and that kind of use..

Pablo (second comment) yes - totally true, Nokia and Symbian have lost some market share since Apple came along and since Android launched. Meanwhile the world's second largest smartphone maker a decade ago, Palm is now being sold. And the world's second largest smartphone OS only three years ago Microsoft Windows Mobile/Phone 7 has fallen to 5th place. Meanwhile Nokia is still as big as its nearest 2 rivals, Symbian as big as its nearest 3 rivals added together. So yes, they lost market share somewhat, but the real losers were Palm and Microsoft, wouldn't you agree?

Carlos - thanks

ounkeo - thank you very much for detailed rebuttal. Obviously we agree :-)

kevin - haha, that was quite a nice trick there. So you want to get around looking at quarterly performance by picking a rolling 12 month period, but you selectively pick the arbitrary starting point to be that quarter where Apple drops its worst quarter and substitutes its best quarter ever. I don't think thats very kind to the math haha. But yeah, you can torture the data to confess to anything. I think we best use the conventional annual cycle with the calendar year, not pick rolling 12 months haha.

But you ask for my opionin on which platform is more viable. Fine. I think scale here rules. Nokia is clearly moving pre-emptively where the mass market of smartphones is going to be. SonyEricsson didn't do that. Motorola didn't do that. Samsung is late but doing it now. RIM started to do that, Apple is not.

The app platform game is in its infancy now. In a few years it will be far more mature, where most platforms will be similar, the differences minor. Then scale comes to play. Apple will release more than one iPhone that is inevitable, but they dont' seem to be in a hurry. Lets say the do so with 2 phones in 2011 and 4 in 2012 (Blackberry already does 8 models today).

In 4-5 years Apple will be alive and relevant, with a fanatically loyal user base of premium luxury clients, very strongly clustered in the wealthiest nations of the world (not a bad market segment to be in). But their market share of smartphones will be under 10%. Larger than Apple will definitely be Nokia/Symbian/MeeGo and likely Google Android second with also RIM Blackberry and Samsung Bada ahead of Apple. Where will Microsoft be, they have enormously deep pockets and can afford to play the 'I'll fight you in the next generation' game haha.. But Apple is too design-centric to 'ever' be a mass market player over any extended period of time. iPod was about the maximum they could hope to do that. iPhone they made their play and we can already see the writing on the wall, their reign is over. Andoid and Bada will rush past them this year and next, and Nokia and RIM were on the right (global mass market) strategy far too long for Apple to catch up.

Thats my gut feeling today in April 2010. It may change if the facts change enough to convince me to re-consider. But currently Apple is riding a hype wave, and it will crash.. There will be bodies when that happens.

Thank you all for writing, please come back and we'll discuss some more

Tomi Ahonen :-)

kevin

Tomi,
You accuse me of a trick of picking the best rolling annual period for Apple. I did no such thing; far from it, I chose the most recent period in order to use the most recent data, which actually is the best rolling annual period for Nokia.

Below is the summary of every possible rolling period since 2007. I added RIM data. Nokia didn’t report smartphone ASP data until 1Q09. Industry estimates are from Nokia, all other data from respective quarterly reports/filings.

Annual Periods ending in Mar (Feb for RIM)
Apr06-Mar07: 84.0M converged mobile devices estimated sold (Nokia definition: smartphones and mobile computers), Nokia sold 42.3M for a 50.4% share, Apple sold 0M/ 0% share, RIM sold 5.2M/ 6.2% share
Apr07-Mar08: 132.1M, Nokia 63.3M/ 47.9%, Apple 5.4M/ 4.1%, RIM 13.7M/ 10.4%
Apr08-Mar09: 165.3M, Nokia 59.6M/ 36.1%, Apple 15.8M/ 9.6%, RIM 26.0M/ 15.7%
Apr09-Mar10: 193.0M, Nokia 75.6M/ 39.2% (ASP decline 18% yoy), Apple 30.1M/ 15.6%, RIM 36.7M/19.0% (ASP decline 16% yoy)
Nokia: 50.4% to 47.9% to 36.1% to 39.2%
Apple: 0% to 4.1% to 9.6% to 15.6%
RIM: 6.2% to 10.4% to 15.7% to 19.0%

Annual Periods ending in Dec (Nov for RIM)
Jan06-Dec06: 77.5M, Nokia 39.0M/ 50.3%, Apple 0M/ 0%, RIM sold 3.1M/ 4.0%
Jan07-Dec07: 122.3M, Nokia 60.5M/ 49.5%, Apple 3.7M/ 3.0%, RIM 11.4M/ 9.3%
Jan08-Dec08: 162.6M, Nokia 60.5M/ 37.2%, Apple 13.7M/ 8.4%, RIM 22.6M/ 13.9%
Jan09-Dec09: 176.4M, Nokia 67.8M/ 38.4%, Apple 30.1M/ 14.2%, RIM 34.0M/ 19.3%
Nokia: 50.3% to 49.5% to 37.2% to 38.4%
Apple: 0% to 3.0% to 8.4% to 14.2%
RIM: 4.0% to 9.3% to 13.9% to 19.3%

Annual Periods ending in Sep (Aug for RIM)
Oct06-Sep07: 104.3M, Nokia 52.8M/ 50.6%, Apple 1.4M/ 1.3%, RIM 9.2M/ 8.8%
Oct07-Sep08: 154.7M, Nokia 64.2M/ 41.5%, Apple 11.6M/ 7.5%, RIM 19.8M/ 12.8%
Oct08-Sep09: 172.0M, Nokia 62.1M/ 36.1%, Apple 20.8M/ 12.1%, RIM 30.6M/ 17.8%
Nokia: 50.6% to 41.5% to 36.1%
Apple: 1.3% to 7.5% to 12.1%
RIM: 8.8% to 12.8% to 17.8%

Annual Periods ending in Jun (Aug for RIM)
Jul06-Jun07: 92.1M, Nokia 47.2M/ 51.2%, Apple 0.3M/ 0.3%, RIM 7.6M/ 8.3%
Jul07-Jun08: 142.2M, Nokia 64.7M/ 45.5%, Apple 5.8M/ 4.1%, RIM 16.7M/ 11.7%
Jul08-Jun09: 169.2M, Nokia 61.2M/ 36.2%, Apple 20.3M/ 12.0%, RIM 28.4M/ 16.8%
Nokia: 51.2% to 45.5% to 36.2%
Apple: 0.3% to 4.1% to 12.0%
RIM: 8.3% to 11.7% to 16.8%

The data has not been tortured; it only uses annual numbers due to once a year release of iPhone. On an annual basis beginning with any quarter, Apple has been averaging market share gains of 5.5% and RIM gains of 4.5% over the last 9 rolling annual periods. Nokia has stopped its 2-year decline from 51% to 36% share and has averaged share gains of 1.7% over the last two quarters.

I think the data speaks for itself.

Mark

@Kevin

Your figures for 2009 - January to December - are incorrect. Apple sold about 21.5 million iPhones, not 30.1 million. Remember that Apple offset their earnings by a quarter.

kevin

Mark, you're correct that my unit number was incorrect for that period. I copied and pasted from the period above (Apr-Mar), and I adjusted the percentage to 14.2% but forgot to change the units.

Good catch, but the correct units should be 25.1M, not the 21.5 you have in your comment.

Intosh

@Dardano

"What good is it to have 41% market share and you're barely making money on 430 Million phones you sell annually?"

Err, what? Please get some clues about the financials of Nokia's Devices & Services segment.

Buy Palm/WebOS? Abandon the hundreds of million of Symbian users for a couple million (at best) of WebOS users?

No offense but I have a hard time taking you seriously. You're probably a disgruntled ex-Nokia phone user who's letting his emotions do the talking.

Mark

@Kevin

Woops! Transposition error!

I think the main point for me is that Apple and RIM's growth doesn't appear to have eaten into Nokia that much.

kevin

@Mark: Nokia fell from about 50-51% share of the annual smartphone market down to 36%, and then in these last few quarters, it climbed back up to 39% (annual).

Overall, while Apple/RIM took about 30% over the 3 years, Nokia lost about 11-12%, with the rest losing the other 18-19%. I guess some might interpret losing 11-12% of the highest profit margin submarket as not that much.

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