Ah yes! This is THE news we've been waiting for. Nokia will return to smartphones. I can die happy.
UPDATE 26 Apr 2015 - two days after the story broke and as lots of sites started to report the story, Nokia has on 26 Apr - yes on a Sunday - officially denied this matter and Nokia.com has a clear statement "These reports are false, and include comments incorrectly attributed to a Nokia Networks executive.. Nokia reiterates it currently has no plans to manufacture or sell consumer handsets." Read the whole (short) statement here. Please note that 'currently has no plans' does not mean 'will never' and the end of 2016 is still far away... (and to quote BBC TV comedy series Yes Minister/Yes Prime Minister, 'never believe anything that is not first officially denied' haha..). But yeah. Lets calm down for now, Nokia clearly wants to move slowly (if at all) in this instance. The rest of this blog is as I wrote it on Friday 24 Apr when the news broke, and we may well want to return to this blog in coming months and about a year or so from now...
So yeah, its now reported in many Western media sources that MIke Wang the President of Nokia in China told Chinese press that Nokia will set up an R&D facility in Sichuan (South-Central China, regional capital city is Chengdu) which will support the upcoming Nokia smartphone production. And the press stories say Nokias new smartphones will ship in 2016. Thats almost day-after-tomorrow in handset years (vs human years, dog years, internet years). This is awesome news for us fans of mobile phones. And great for competition and for good consumer experiences and for innovation.
Well, what should we expect? The early Nokia re-entry will not be huge scale. Nokia has to grow its total handset operation from handset model line to factory production (initially probably outsourced but also probably soon produced in Nokia-owned factories if the project goes well). The ramp-up stage will be done 'sensibly' as opposed to 'the Elop way' haha, so OBVIOUSLY the first Nokia re-entry smartphone will be the new flagship, not how Elop tried on a mid-range phone with the underwhelming Lumia 800. The premium flagship will address a huge pent-up demand of fans of 'real' Nokia not the Lumia Windows Phone rubbish and those buyers will pony up a premium price. Nokia is very smart at marketing, they will know to price the first flagship on a profit-skimming strategy when the demand is big, but also to feed those customers with may 'ooh-aah' features and gorgeous design - just check out the Nokia N1 tablet or the last non-Elop designed smartphones, the MeeGo based N9 and N950.
Nokia knows fully well where the real market is - starting with China (duh!) not the USA - and the first Nokia re-entry flagship will be designed for Emerging World but affluent customers. Expect removable battery, miroSD card slot and all the goodies, of course stuffed full with high tech from NFC to 4G to wireless chargiing to yes, of course the Pureview camera tech. The first Nokia re-entry smartphone flagship is by far the favorite to win the 'phone of year' awards, they've now waited so long to do it 'right'.
Expect the first flagship to be an iPhone-clone in slab form factor, but with Nokia-distinctive design. I would expect it to totally differentiate from Lumia ie not the cheerful neon plastic colors. Something 'serious' and 'expensive' in materials and look and feel. Obviously it will run Android which is total death to the last remnants of the Lumia Windows Phone business at Microsoft. And Sony, Samsung, LG and Lenovo-Motorola better hurry in 2015 to try to build loyalty at the top of the Android pyramid, next year they all will be easily toppled. Nokia's 2016 sales will be limited by capacity to produce and ship not by demand.
Soon after the initial flagship we'll see two sister products. A premium mid-price 'little sister' phone, slightly lesser specs and lower price but still in the premium smartphone segment. And then the follow-up to the iconic Communicator line. Again, something Nokia staff begged Elop to allow but the idiot CEO overrode his staff. Now we'll finally get the flagship-spec QWERTY executive phone, which will be the most advanced phone of its year, like the E90 Communicator, the E7 and the N950. And with a price to match. That phone is likely even to be branded 'Communicator' and it will be a technology showcase of 'everything including the kitchen sink' principle but ignoring the silly race for supermodel-slim phones. This will be the thickest, fattest smartphone we've seen in several years. But we will drool to want it, and will fork over the cash to buy it too. It will be the phone all telecoms bosses will proudly exhibit as the 'better than iPhone' model that all carrier CEO execs want. Who cares what it costs. Nokia prices it obscenely, ships only limited numbers of it, and makes a nice profit on it.
In the first 12 months, Nokia probably only gets to a run-rate of about 25 million smartphones per year, by the fourth quarter since launch (about 6.25 million level at that time or a bit over 1% market share that quarter). But this will continue to grow and be about double that in the second year and reach a run-rate of around 80 million by the third year (2018 and beyond) which is at 4% market share by the 12th quarter of sales. The growth will continue rather easily and Nokia's main issue is to manage profitability and expansion of capacity and by the turn of the decade Nokia will be around 10% market share still growing. But Nokia's 'native' market share without the Windows Phone baggage today is something in the 15% range or Apple iPhone size haha. Now Nokia can't sell 225 million Nokia branded smartphones costing 600 dollars or more (unsubsidised price) but at that kind of levels Nokia's ASP would be somewhere around 150 dollars, but this would be a very profitable fast-growing business, if Nokia wanted it. Nokia selling 225 million smartphones at 150 dollars average sales price means 34 Billion dollars of annual revenues! That is what is for Nokia to take without breaking a sweat.
If Nokia wants to move more slowly, and skim more of the profit, it can. If Nokia wanted to go beyond this, and really drive for number 1 again, passing not just Apple but Samsung - then yes, that is also within reac, once Nokia is back, its distribution is back, its manufacturing, sourcing etc is back. And here - remember, Nokia KNEW this but Elop ignored it and actually worked to harm it - Nokia's huge strength just four years ago was its world-best carrier relationships. Rajeev Suri the new Nokia CEO can easily tell any carrier CEO that Elop the cancer is gone, Windows Phone is gone, and Nokia returns to serving CARRIER NEEDS first. Something Samsung (and now even Google) have failed to do. Note the acquisition of Alcatel-Lucent is perfectly in line with Nokia serving... carrier needs! The market is waiting to be grabbed by Nokia.
The end-user customers never deserted Nokia. In the four most populous continents, Asia, Africa, Latin America and Europe, Nokia was the bestselling smartphone in 2010 and still in 2014, Nokia was the bestselling or second-bestselling PHONE. Because of Windows Phone, the distribution channel pushed premium customers to Samsung, Huawei, LG etc. But the customers want Nokia. They keep buying Nokia (even as its now owned by Microsoft). When the 'real' Nokia returns - on Android - the retail channel will love it and the full power of Nokia loyalty will be felt. As long as Nokia then delivers high quality phones, that are essentially bullet-proof (you know the story where the dog ate the Nokia phone and later pooped it out, and that phone still worked...)
The growth path for Nokia smartphone recovery and return is 'easy' and the rate and level for several years will be up to Nokia and Nokia only. Every quarter for at least two years we will hear that the channel wanted more phones than Nokia could deliver. What Nokia always delivered were phones that end-users loved and carriers loved to sell. Nokia's big problems in 2009 and 2010 were DELIVERY issues and slipping schedules (and some software issues, but now Google handles the OS). But most Nokia generations of phones were award-winners year out and year in.
And yeah. Am willing to call it right now before we know ANYTHING official about what or how, Nokia will give us more than one smartphone model, it will grow fast. in the first year Nokia passes Blackberry. In the second year it passes Lumia (if that still exists). By the third year Nokia RETURNS TO THE TOP 10. And every quarter of those first 12 quarters, 36 months, Nokia smartphone business will report a healthy profit.4% markets share is where LG and ZTE are today, or where Lenovo would be without its Motorola acquisition and obviously that is well bigger than Sony Xpera today. This is the minimum level I promise you Nokia will do 'with its hands tied behind its back' and blindfolded haha.
So WELCOME BACK NOKIA. We have missed you and we will cherish you and support you. Now please make sure we fall in love with your first re-entry smartphones in ways like we loved the N93 and N95 and E90 Communicator and N8 and E7 and N9 and 808 Pureview etc.