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July 23, 2010

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Arief

symbian is hampered by low end hardware. why nokia didn't ship symbian phone with faster proc? a8 cortex maybe?

Mark Wilcox

I think this analysis would be a lot more interesting if you go for all phones costing more than $100 rather than all phones. People buying $25 phones aren't going to be migrating to a smartphone any time soon.

MeeGo figure seems daft as Nokia have clearly positioned it as a premium end product. There is zero probability they can migrate all customers to MeeGo (even if it does really well, the hardware cost for something capable of running it is just too high).

Nearly all the rest of the variance depends on what Samsung does. Even with bada this will probably continue to be a bit of everything.

Of course the underlying assumption that OEMs will not lose or gain share during the transition is rather dubious but you knew that when you wrote it!

Arief

@ mark wilcox
in my country, people buying $25 phones (non subsidized) not buying nokia/samsung/lg/motorola anymore, but shifted to chinese qwerty phone. i think any 3rd world country will find those chinese phone is have more feature than nokia's or samsung's (built in opera mini and yahoo messenger, micro sd upgradeable, 3.5mm universal earphone plug, usb charging).

i think meego or bada will only win in finland/korea, where most of asia and africa will fall to android. usa still iphone stronghold.

JB

Huh? A discontinued OS (windows mobile) has more potential than blackberry or iOS? Can you clarify what you're saying? I understand you think Symbian is awesome but how does the size of the manufactures give you any sense of the potential upside of the OS? I can think of other metrics that might be more revealing...

vvaz

I think you are overly optimistic about Nokia systems future. I think that can get solid 30-40% of combined marketshare, next 30-40% will go to Android, rest is BB, iOS and mobile Windows.

"Cheap China phones" are irrelevant because they will use one of open systems: Symbian, Android, MeeGo (so they fall into categories above). In that order due to hardware requirements. People complaining about underpowered Symbian phones are forgetting that on this hardware other smartphone systems would barely crawl.

HCE


There are so many problems with this article, I hardly know where to begin.

1. The assumption that every user will eventually switch over to smartphones is basically flawed. There will always be huge numbers of dumb phone users for one simple reason - smartphones cost a *lot* more and this cost isn't likely to come down over time. A smartphone is fundamentally useless without a data plan and the cheapest possible data plan will set you back close to $200 a year. Add to that the cost of the smartphone itself (which probably would average around $100 with contract) and you end up paying a minimum of $500 over two years.

2. This article seems to assume that if I own a dumb phone of brand X, I will buy a smartphone from the same vendor. Why on earth do you assume that people have any kind of brand loyalty to their dumb phone vendor? When buying a dumb phone, people look for a few features and then buy the cheapest phone that has these features. Often people don't even care about features - they just get whatever free phone their carrier offers them. Before buying my first iPhone, my wife and I had a series of dumb phones - from Motorola, Nokia, Siemens, Samsung and LG. There was never any question of brand loyalty. We looked for a specific form factor and size and picked the cheapest phone that matched our requirements.

3. The notion that it is even remotely likely that OEMs will put all their eggs in one basket and go with one smartphone OS is also ridiculous. There are only two smartphone vendors that will stick to a single OS - Apple and RIM. Nokia will probably stick to the two operating systems that it controls - Symbian and MeeGo. Pretty much every one else will have a mix of operating systems - some combination of Android, Windows Phone 7 and perhaps Symbian.

4. Finally, your definition of potential is incomprehensible. You take today's market share numbers for vendors and assume that things are going to stay constant while every one switches to smartphones. By your logic, Android's potential two years ago would have been 0!! Things change all the time, companies come out with compelling products and gain share (Apple and Android are the perfect examples), others stagnate and lose share (look at what has happened to Microsoft, Motorola and Palm over the past 5 or so years).

I am so very disappointed in this simplistic analysis. While I often disagree with your articles, they always contain good points worth pondering. Here, I can hardly find any.

- HCE

John Swan

Again, these analysts are obviously not programmers nor engineers. Symbian is a full-on, real-time embedded operating system designed specifically for mobile and embedded devices, not a cut-down desktop OS like Apple or Android that needs near-desktop class CPU & RAM just to run at a decent pace. So comparing CPU & RAM specs for these different devices is a laugh. A smartphone with a 600MHz ARM CPU w/ 256MB RAM running SymbianOS is like running a cut-down desktop OS requiring 800-1000MHz & 512MB RAM. Don't compare iApples to iOranges. These aren't commodity PC components running a common OS & software.

cycnus

@HCE,

Unlike the believe in USA, Smartphone is usable without data plan (wifi ring a bell?), and you're not need to be 100% online with smartphone.

@Arif

I'm also from Indonesia, you were too exagerating the QWERTY model from china. I knows a couple of friend who own china phone CDMA-GSM-GSM (triple card), and CDMA-GSM that looks like mini iphone, and then QWERTY GSM-GSM, QWERTY GSM-GSM with TV.

And I can say that I would rather buy a US$30 Nokia 1616 instead of the US$40-US$50 QWERTY china phone. Why? About the same phone. No Java, lousy screen, uneven keypad back-lit, unknown battery (will it explode?). If you were SMS a lot, you can see that Nokia 1616 is better at SMS than the china phone.

As for the China phone with Java, it cost around US$70-US$120. I could be able to afford the US$55 Nokia 2220 with a brighter screen, or perhaps US$80 Samsung B3310 that have better QWERTY with better screen or US$ 120 Samsung B5310.

I'm not against china phone, but today i went to Roxy Mas just because i'm really curious about these phone, and i just want to point out that people who bought china phone is people who don't really know what to buy (see the Tomi blog about this), They just bought it because the Sales Girl said it's good, and the china phone put the operator logo in their product and saying it's approved by the operator because it's good. If the user really know how to compare phone and see price over performance, i don't think china QWERTY phone will be that successful. And.... if those china brand didn't improve their quality, they will be gone just like the biggest china brand that ever be number #1 in china... The BIRD... (china bird).

So, YMMV.

HCE

@cycnus

> Unlike the believe in USA, Smartphone is usable without data plan (wifi ring a
> bell?),

Well, you can buy smartphones anywhere (including the USA) unsubsidized and not have a data plan - nothing stops you. Of course, then the price of your smartphone goes from $100 to $350-400. You save maybe $100-150 over two years by not having a data plan. The smartphone (even without the data plan) costs a lot more than a regular cell phone - and that cost is not something everyone will be willing to pay.

- HCE

Tomi T Ahonen

Hi Arief, Mark, JB, vvaz, HCE and John

Thank you for the comments. I will respond to each individually

Arief - thats typical battle we have also on PCs, the operating system grows and gets bloated, and the CPU struggles with it.. Then we get faster CPUs that kind of fix the problem, but the next OS version is then again bigger..

MArk - hey, this is 'assuming all shift to' smartphones. I am not saying that will happen, but there are MANY experts who think they will, some think very quickly. I do think that Moore's Law makes tomorrows phones superbly powerful and today's OS's even MeeGo will be a breeze to handle by the most basic phones five years from now. And Moore's Law tells us the current smartphones are as cheap to make as the 25 dollar phones also, in about 5 years.. But yes, its certain the OEMs won't be able to retain exactly their current market shares, that is obvious. For a given family of OS suppliers, the errors should more-or-less cancel each other out, if LG gains and SonyEricsson loses, its near Zero effect. The bigger the family, the more the risk is spread..

JB - sorry I was not more clear. I included WinMo only to give a comparison, so we can see both how its doing now, and how much worse Microsoft's Phone 7 seems to be prepared to do.. Sorry I was not clear why it was included.

vvaz - another of my mistakes. I am NOT for one moment assuming that Nokia can get both the Symbian AND the MeeGo market share. But I am assuming Symbian will eventually migrate totally to MeeGo. So you can see the starting point for Nokia in Symbian today and the end-state of MeeGo towards the end of the decade.

But why are 'cheap China phones' irrelevant? The Chinese are the world's biggest users of the mobile internet already and very heavy users of mobile data and now that their 3G networks went live last year, are gobbling up smartphones.

HCE - I appreciate the detailed response. Lets address each of your points. 1 - the price. Currently there are 3G touch screen smartphones that cost less than 100 dollars without subsidy or contract. Vodafone released one of those, Nokia has one, ZTE has at least one. 2 - I am not saying this will happen. I am sure that there will be big turmoil in market shares in the transition - but there is brand loyalty in phones obviously, not just at the high end of prices. There will be some correlation with a given brand's dumbphones and their eventual market share in smartphones. Not 1 to 1 obviously, Nokia is far better in smartphnoes than dumbphones, Motorola is the opposite.. But this is a scenario IF nothing changes, then this would be the market. Have you seen anytyhing like this anywhere? Are you HCE saying there is NO value in considering this when doing an analysis of the platforms. OI course we all know it won't look like this in 10 years, obviously. But this is better than nothing or no? You really mean to say there was no utility or value at all in this? Please HCE, you are here often. Do you mean this was pointless or do you mean this is so common knowledge you can see this on every blog? 3 - valid point and there its likely that the errors will partially cancel each other out. If LG gives more preference to one platform and SonyEricsson to another, those deviations will mostly (but not completely) cancel each other out. This analysis is better than nothing, it shows which platforms have bigger potential than others. Or no? aNd point 4 - no, Android's potential was about 40% also 2 years ago, when they announced their handset partners.

John - I am truly not a programmer (anymore). And totally have not taken one second to think about the CPU. Now you seem like an intelligent, well-read expert. So you know of Moore's Law. It is relentless. And the smartphone in your pocket today is more powerful than the first Cray supercomputer. So its only a matter of time when phones have so powerful processors that any of these OS's will be a joke for them to run, like DOS would be to the personal computers of today. This is not suggesting today's phones. I said clearly that if we will get to the point in time when all phones are smartphones - and that is years, probably at the end of the decade - are you suggesting that at the end of the decade your argument of CPU speed is any kind of bottleneck?

cygnus - thank you for your comments to the others here. Cheers!

HCE (second comment) - the price point for low-cost smartphones went under 100 dollars this year. Your point was true a couple of years ago, no longer.

Thank you all for writing, please return with more comments and please enjoy the blog

Tomi T Ahonen :-)

HCE

Tomi,

Yes, you probably can point to one or two ultra-cheap smartphones but still, you need to pay at least $200 for a smartphone (unlocked, no contract) and often $300-400. BTW - I'd be interested in knowing which Nokia touchscreen 3G phone comes in under $100. Going to the Nokia website, the cheapest touchscreen 3G phone is the 5230 which costs approx $200. I'm still quite confident in saying that we'll always have dumbphones with us - the fantastic scenario of yours of everyone switching to smartphones is simply not going to happen.

Saying the Android's potential was 40 percent the day they announced their partners is ridiculous. What about the day before? Any evaluation of potential should be based on how good your product is vis-a-vis the competition and the likelihood of your success in a competitive environment - not the number of partners you can line up on launch day. With or without Windows Phone 7, Microsoft has pretty much the same list of partners - yet WinMo 6.x has very poor potential but the potential for Microsoft with WP7 is decent - to say the least.

Finally, regarding brand loyalty. Here's one thing I've found. I notice that among my friends and co-workers (pretty much all of whom are in high-tech) a few don't even remember the **brand** of dumbphone they have (they actually have to pull out their phone and look at it). Almost none can tell you the model name/number. So much for brand loyalty. I'm not saying that there is absolutely none but it is very very minimal.

- HCE

Piot

Tomi's smartphone market = (currently 125% of smartphones)
" numbers are your friends "

vvaz

@Tomi

In this post you are comparing OSs - not producers. "Cheap China phones" producers will use one of free mobile systems which were included in your comparison and therefore fell into percentage slots - they don't need separate category. That is why I think they are irrelevant. If you compare producers marketshare - China phones would be relevant. But not in this context.

Note: this is remark more for you critics who are saying - "There will come China road roller and equalize everything" without thinking what will be an engine in these rollers.

em

@HCE

Nokia is not the cheapest seller. It would damage their resellers and that is stupid. 5230 is cheaper elsewhere. And that phone + unlimited data costs around $10 per month with contract (in some countries where GDP per capita is higher than in the USA, price includes taxes). The costs are around $240 for the device AND unlimited data over 2 years. India and China will be far below that when their 3G networks are ready.

Phones will be sold with simple and more complicated software and user interfaces, but the hardware will be very much the same. It is "just" the matter of ramping up the "smartphone" chip production and pushing the prices down. Volumes in mobile are huge, it takes years to achieve this.

The partner volumes tell the maximum a platform can get. There is no simple and straightforward way to compare products beforehand, especially in the mobile market where the real product performance is a very complex combination of network, hardware and software. Also operators and salespeople (as you say the brand loyalty is weak) can pretty much decide the mobiles we buy, it is not the ideal market described in the economics textbooks.

@Piot The original text says that total share will exceed 100%. Which is good when comparing maximum potentials of the platforms.

cycnus

Hi,

I think if the cheap china phone + those who have not produce smart phone goes to smart phone, the smartest moves is to use a symbianOS at this moment.

Why symbian, not android? Symbian is much more at mature state than android. Symbian @369MHz ARM11 doing very well, and symbian@600MHz really fly. but Android @600MHz is only as fast as symbian @369MHz. Not to mention the RAM requirement, and the open status of symbian vs. android.

So, in the long run, i do think that the cheap china product and anyone else will go to symbian ecosystem.

and note... i'm using nokia smartphone, and my next phone will be symbian too.

HCE

@em

I checked the price of the 5230 in various parts of the world on the Nokia website. It consistently comes to around $200 - sometimes a little less sometimes a little more. This seems to be the price of the phone alone and not with any data plan.

- HCE

Mark

@HCE

Not sure what sites you're looking at. Carphone Warehouse, Amazon and Play have the 5230 at £80 on PAYG.

Of ocurse you don't get a data plan but you can buy one for £7.50 a month.

HCE


@Mark

I was looking at Nokia's website - not retailers. The one retailer I checked was Amazon in the US which has the 5230 for $182.

- HCE

Alb.

just some numbers from a minor euro country.
one of the largest retailer in italy (actually a german chain) sells a nokia 5230 at 129 euros (on line), including taxes. street price on certain shops can be cheaper (slightly above 100 euros). and italy is not the cheapest country for this gear; we also have 20% VAT.
i have an unlimited data plan at 9 euros per month.

Tomi T Ahonen

About the low cost phones

Nokia's cheapest 3G phones are not designed for nor intended for the Western market, obviously. Currently the cheapest 3G smartphone that Nokia makes (as far as I know) is the 2730 Classic, which launched in February 2010 in India for 4490 Rupees which is about 95 dollars.

Lets keep this discussion on the point, shall we. Its obvious Moore's Law rules and the prices keep coming down.

Tomi Ahonen :-)

Matthew Artero

Hi Tomi,

Thanks for doing this blog of yours. For me it is like a special gift of data and analysis that I have not found another source of. (Did you say you would email us a free analysis of yours?)

I also want to thank the others who write comments and respond to the comments of others. It adds to the richness of the experience that Tomi’s rebuttal is not the only rebuttal.

Tomi I’m glad you brought up the point of Moore’s Law. It seems when I read the comments of others on some of your other posts, they nit pick a specific point and forget that that point or the topic of your post is only a cog in the wheel.

Tomi you’ve written a lot about the iPhone in some of your other posts, talking about its features, market share, marketing, and its affect on OPK. You mentioned it had 15 improvements touted as major improvements with all but one available years earlier on other phones.

I know what I think with my limited understanding of the industry so I would much rather read what you have to say if we lump all those comments of yours about the iPhone into one post as an analysis of what the iPhone’s future market share is likely to be.

I would like to read what exactly those 15 improvements are, who had them first and when. I think that would really put things into perspective for us on what the iPhone is and what it has to do in order to maintain market share.

The fact that better features are available on other phones makes me think of the iPhone more as a fashion accessory rather than a great utility device. It also makes me wonder what deal is Nokia refusing to give USA operators to get them to carry Nokia’s phone.

You also talked about marketing of the iPhone and how some users have to have the device that is chic, it, the head turner, or the one that gets talked about, so the owner will get noticed and talked about. To that end I have my own theory about the decline of iPhone market share and an idea that I think would make a great marketing campaign.

You see, the problem with having the phone that gets talked about is that it is the phone that gets talked about. So when a flaw or suboptimal feature is pointed out, the owner becomes the butt of jokes rather than the recipient of praise for owning the cool phone.

Here is an example for an advertising campaign to counteract the iPhone. Pick any feature you like but this example will use the camera as an example.

Someone is walking toward the Ifil Tower in Paris, dressed very fashionable. The person is walking and talking with the stereotype of someone who thinks they are cool, trendy and better than others (a snob). The person says “I’m so cool, everything about me is cool, I even have the latest very cool iPhone”. He hands someone his iPhone and says “Here, use my cool iPhone to take a cool photo of me with the Ifil Tower in background”.

The other person has to back up in order to fit the Ifil Tower in the frame and the cool person becomes unrecognizable. When they are viewing the photo another passer by says “Is that the new iPhone?” Looks at the photo, looks at the cool person, looks at the photo and says “I can’t even tell if that’s you.”

“Here use my La De Dah phone it has “x” mega pixels. They take a photo and it looks great and they say “You look cool in this photo.” Then he says “Let me take out my memory card and transfer the photo to your phone”. He takes out his card but is unable to put it in the iPhone which has no slot for it. The end caption says “the iPhone IS cool, the La De Dah phone makes YOU cool.”

This is my theory about the iPhone’s decline in market share. If someone buys it for the name, but then someone else shows off a better feature on another phone, it can leave a bad taste in the owner’s mouth. What happens when the person who owns an iPhone notices that pictures that their friends send them from their phones look better than the pictures they take on their iPhone.

So Tomi I am very curious to see how you might lump it all into one story. The features, the subsidies, Moore’s Law, etcetera. What does it all mean for the future of the iPhone’s market share? How long can marketing trump features and utility?

For example I am about to buy a new Handy Cam and everything says it should be a Sony. But with a new baby I noticed that it is important to have great low light performance. Adding light can distract or wake the baby; ruining the shot. So I’m going with the comparable Panasonic. I won’t have the cool camcorder but I’ll have better images.

I often need to take detailed photos of different projects and email them to clients and or keep them on record. I never wanted a camera in a phone before but photos have become part of the pace of business and communication. So I’m part of these users that are migrating upwards. I wasn’t happy with my first camera phone. I should have spent more and will next time. I gotta have more megapixels and focus quickly and process quickly. None of this baloney about most people not needing more megapixels.

You ever look at your old photos taken with film. The ones taken with more expensive faster film are always the ones you are happier with. So is the iPhone user happy looking at his photos or happier when looking at photos taken by another phone?

If Nokia is the powerhouse we keep saying it is, shouldn't it always be able to get the best subsidy deals? If not, why not?

HCE

@Tomi

The 2730, as per Nokia's website, is not a touch screen phone. The cheapest touch screen 3G phone that I have seen from Nokia is the 5230 which has an MSRP of around $200.

Yes there are plenty of non-touch 3G phones for around $100 and I'm sure some touch screen 3G phones get heavily discounted down but the absolute minimum MSRP for a touch screen 3G phone is around $200 - and most are north of $300.

- HCE

Henrikki

Didn't have time to reader all the comments. Sorry, no need to answer if my comments are not relevant anymore.

I think u can forget any other major handset maker backing symbian. SE loves android, the android devices were, if understood correctly, the ones which made SE's profit. Samsung's effort have been half-hearted so far to day the least. Bada isn't going to help that.

Symbian And Nokia stands alone like the cheese. Ok, they stand together..:).

christexaport

@ HCE,
you replied,"The 2730, as per Nokia's website, is not a touch screen phone. The cheapest touch screen 3G phone that I have seen from Nokia is the 5230 which has an MSRP of around $200.

Yes there are plenty of non-touch 3G phones for around $100 and I'm sure some touch screen 3G phones get heavily discounted down but the absolute minimum MSRP for a touch screen 3G phone is around $200 - and most are north of $300."

At what point did smartphone = touchscreen? Was the MotoQ not a smartphone? Blackberry? E71? How about the Qualcomm prototype?

The reason people choose a smartphone is the added features and extensibility, not a touchscreen. And Nokia and others provide options in smartphones costing around $100. They may not be good enough for you, but you don't have to buy their devices, they do. You continue to act as if Tomi lied, when its never the case intentionally, and certainly not the case now.

@ Henrikki, you seem to ignore the large amount of support from major players in the Symbian foundation. Remember, Samsung, Nokia, and SE make up the three largest manufacturers of devices to date. This ignores the carriers and ODMs like Foxconn (they make the iPhone and other devices) that can go around the manufacturers in the future should they desire.

Just because you don't see Samsung and SE Symbian hardware today doesn't mean they aren't on board. They are likely waiting on Symbian^4. No use investing R&D in the old UI toolkits, which is where most of the differentiation will come between devices. Let's talk more NEXT summer, when the Qt ecosystem is fully online and supported by Nokia. Its still early.

Samsung seems to have no problem using any OS available. SE will need an OS for low end markets. They will battle Android, and we KNOW which OS does the cheap devices well. They won't transition all of that featurephone share by making consumers jump from $40-80 devices to $250-500 devices. It will have to be closer to $100, preferably even lower, and Android just isn't efficient enough to undertake such a task.

christexaport

@ HCE,
"Well, you can buy smartphones anywhere (including the USA) unsubsidized and not have a data plan - nothing stops you. Of course, then the price of your smartphone goes from $100 to $350-400. You save maybe $100-150 over two years by not having a data plan. The smartphone (even without the data plan) costs a lot more than a regular cell phone - and that cost is not something everyone will be willing to pay. "

AAAAAAAAAAAGH!! Another mind skewed by the anomoly of the US market...

The price of devices NEVER changes, especially not in the US. When you sign a contract, you never pay less, and usually pay more because of high contract requirements with no buyout option. So that mythical "$100" smartphone doesn't go to $350-500+. It was always that price! The carrier just covers part of that cost, knowing it will recoup at least that over the life of the contract, and still make a profit.

You usually save at least $480 by not having a data plan for two years, assuming a typical US data plan of $20 a month x 24 months. But most will have a data plan. The real benefit is freedom. You avoid a contract, which means no ETF, which are usually $300-400+. With no contract, you can switch to any carrier IN THE WORLD at no cost to you, perfect for someone looking to be as mobile as possible, which is the intent of the mobile phone, right??

What benefit is a mobile if its tethered to a geographical location, with penalties if you leave it of having to keep paying a bill for service you don't or can't use on the low end, and a massive ETF if you decide to break the contract? The current US system makes it easier for users to buy high end devices by making a homogenous pricing scheme, where all high end devices are an affordable $199 on contract.

This is why the US is swarming with Android and iPhone users, since they run the high end at the moment. Nokia is barred largely from selling high end devices in the US for no good reason, but that may change soon. If it does, I hope they keep that same love they gave Apple's iPhone to Nokia, so we can prove just how big an effect it has on the market.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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