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« (Corrected: Not Blackberry, actually HTC falls out) BREAKING NEWS: Blackberry falls out of Top 10 biggest smartphone makers globally, for Q1 2013, as Coolpad of China enters Top 10 | Main | Now Android Also Biggest Tablet OS - iPad share eroding gradually, with Samsung looming »

April 26, 2013

Comments

Tester

@Hansu:

Good for the farmer, maybe, but definitely not good for Nokia.

Nokia's self admitted goal here is to tie users to the Nokia brand. But since this phone caters to the least affluent group of customers one can be 100% sure that it won't have ANY impact whatsoever on helping high end devices sell.
And we all know that the profits with ultra-cheap phones are minimal at best.

And it definitely cheapens the Nokia brand's value overall if it stands for lowest end of the market.

Hansu

@ Cheapens the brand how? and that's not the point of the 105 is to be someones first phone and then assume that the farmer strikes oil on his field and decides to upgrade to high end Lumia that's not the point. The person who is going to splash out 400-700USD on smartphone usually dont care what other products the company make they want a phone, Samsung makes cheap phones but that doesn't stop people buying the high end devices Apple that's a different story they could do that and people would still line up for their products. Remind me again how Nokia made it in the first place? well they made a product cheaper and better than the competition Nokia has allways made cheap phones did that stop people from Buying High end Nokia's in their heyday no and why should it and besides a cheap Nokia will allways beat an Iphone or Samsung as phone and that's the stuff Nokia is famous for making phones that survive armageddon and nuclear winter and still have 2 bars left on battery indicator. Many who buy a 20usd phone wont be able afford a smartphone/ the country lacks the infrastructure to support it but why blame Nokia for earning 100million US since nobody else dont want it

Pawan

I too think that Nokia will soon beat at least the Samsung. Samsung has been launching lots of identical Galaxy smartphones and now people are bore of the traditional design. As Samsung is not into thinking about new design, so it will be affected by the Nokia soon as Nokia is working very impressively these days. Its Lumia smartphones are really awesome inspite of not running on neither android nor the iOS.

Tester

@Hansu:

>> and then assume that the farmer strikes oil on his field and decides to upgrade to high end Lumia

... but according to some statements in the article I linked that seems to be precisely the intent!

>> Many who buy a 20usd phone wont be able afford a smartphone/ the country lacks the infrastructure to support it but why blame Nokia for earning 100million US since nobody else dont want it .

Again: The cost of the hardware is the least a new mobile owner has to worry about. The costs for the service will far outweigh it. At some point the price for the phone is no longer relevant - or at least not as relevant as some people may think.

And think a little why nobody wants to make it. The answer should be obvious: There's not much money to be made in this segment. I don't know how much it costs to produce such a low end phone but whatever it is, the profit margins are extremely slim, so they will never EVER make $100m profit on them.

@Pawan:

That's utter bullshit. Nobody would buy a phone with an inferior operating system just because the design may be a little better. Those who spend this amount of money look for inner values. All this design FUD comes from questionable US sources who are pimping Apple like crazy and try to find anything negative to say about Samsung.

At least Samsung gets the 2 most important things right, unlike HTC, Nokia and Apple: They got a replaceable battery and an SD card slot. And nobody would think that this may be, perhaps, a reason why Samsung sells so much more?
For me this is a killer criteria to pass on all the other brands.

Hansu

@Tester The cost of using it most of developing world use prepaid so the costs of using the phone depend on how much you talk and text and if the phone is cheap people can afford to use it more. When it comes to the profits the 105 predecessor 1100 sold 250 million units and Nokia if anyone is the master at squeezing the buck from a 20 buck phone and if the farmer finds oil in his field good for him but if he had Nokia as his first phone the odds for him choocing another Nokia is alot higher than if he didn't have any kind of phone to begin with then again he could go for a cheap Android or if he finds oil he will just go for a iphone with 64gb memory and gold protective cover and everything else associated with a third world country becoming instatly rich. But the main point of the 105 is to put Nokia back to the top in mobile phones in shipments and as Stalin put it: A quantity has a quality all of its own

Spawn

@Hansu

> virgin market

Sorry, but thats so wrong on so many levels that I need to reply and correct that. First those markets have tons of overs kn that price category. $20 is even high(er) class already. You get tge usual featurephone for below $10 and you get Android's fof ar below $100. What they not tell is that the second habd market is HUGE. And in that second hand market you pay at best half of the original price for any device.

Those market is lost terrain for the big manufactors since they can made an additional dime of from that. Especially Nokia phones are still leading that segment with cheap below $10 complete packages. That's there competition when going so far down the price.

What most articles are missing is that this amazing large second hand market is more and more flooded with Android. $70 and you have a recent one. Usually the quality isn't that good (shorter lifetime, faster scratches on screen, battery lifetime shrinks) what makes them lesser acctractive for second hand but its still competition.

The dynamics are qmqzing. People are switching phones every week and a damn lot of people buy a phone, useit a week and sell it on to the second hand market where its living on for years and owners to come. All that is competition and much morr for a $20 phone then for a $500 phone for people who turn around each penny twice.

I am not saying they not sell. They will like they did before. But talking of a "virgin market" is just plain wrong. There is no market more like Madonna, means lesser virgin, like the featurephone market.

> if he had Nokia as his first phone the odds for him choocing another Nokia is alot higher

Just not high enough for Lumia as we where and are still able to see with Nokia bleeding market share and all the loyal ex-Nokia customers switchhed to competition. And hey, Nokia HAD (past) the most loyal customer-base, strongest brand and best relations to customers, partners, carriers ... till Elop.

Tester

@Spawn:

Why do you even bother arguing with these hopeless Nokia fanboys? They still seem to thing that there's some magic out there that might cure the company.

It's clear that the featurephone business is a dying market which gets constantly pushed down to lower and lower prices with increasingly slimmer margins. At some point it just won't be profitable for anyone anymore. Even if the phones cost just $20, that price includes margins for dealers, shipping costs, manufacturing and who knows what else. One doesn't have to be a genius to see where this will lead.

Yes, short term it may be slightly profitable (if you factor out the research and development costs) but since the prices for smartphones are rapidly declining there will eventually be the point when the added cost of a smartphone won't matter anymore. We are already at $70 right now and this isn't the end. My guess is that by the end of this year all those people can easily get a used smartphone for $30 - and at that price point a $20 (ultra-)dumbphone won't hold any attraction anymore. Nokia will have to lower the price but tell me what you want, if you add up the fixed costs to produce and ship one handset to its user, it will eventually present a barrier that cannot be crossed anymore because they'd have to sell at a loss.

And let's not forget: Even the less affluent customers would love to own a real smartphone. So anybody who might buy such a low-low-end phone is by necessity either someone without any money to spare or someone who really doesn't need anything better. In both cases it's a customer who would never buy a smartphone! So for customer retention it's a worthless product.

The long term prospects of this lowest end market are dire. A healthy company wouldn't have to cater to a no-profit market if it wasn't solely for inflating the number of devices sold. To me it looks like an act of desperation to get at least some positive buzz.

John Phamlore

Isn't the Seeking Alpha article stating that NSN is the valuable part of Nokia, comparing it to Ericsson?

As I have been saying, the successes seem to have in common getting bigger, whether they are Apple, Samsung, Huawei, or Qualcomm. More vertical integration, more than just handsets, simply more.

Spawn

@Tester

I think the point he raised, comparing the featurephone-market with the smartphone-market and even believing the featurephone-market is "virgin", is a widespread missunderstanding. Not related to Nokia but to ignorance understanding that markets. So, my point wasn't at all about Nokia but more about competition in the featurephone-segment. There is huge competition, much much more then in smartphone-land whike the differences are smaller. In featurephone-land devices did not evolve so much like smartphone did, all those tons of featurephone devices sold past years are still present and up-to-date. They are strong, they are cheap, they are in competition. Nokia did not drive there featurephones forward enough. Where are there latest $20 offerings better then the same they had some years ago and which are priced now half that at $10?

The only new thing, that gives more value, was Asha and that's another segment with being x4 times as expensive and being in competition with Android smartphones. There are 2 trends here. The one is the move to smartphones. But the second is missing innovation at featurephones. Those bricks are still the same like years ago. No investment, no innovation. This is a 100% Nokia failure. They did, they did Asha but barely enough to stay in, keep biv numbers of sold devices and stay profitable long-term. Why Nokia failed so hard to drive Asha feature and bring it low-end is beyond me. Its like Elop looked at that and decided its time to replace there low-end offerings with WP, aborted all investment and now they are about to lose the huge featurephone sale figures from past.

With latest $20 Nokia featurephones giving no value to what they had past years the price-tag argument is bogus since much cheaper are there own offerings from past years they compete against now while giving zero advantages, more value in there latest featurephone-batch. They lost the advantages they had in that segment. Customers switching from featurephones to smartphones cause low-end Android becomes available is just one part of the story. The other, and much more important factor, is that Nokia's $20 featurephones are miles, no light-years behind. Where is that decent browser customers asked for since years? Why no HERE? Java ME, are you serious? What happened on the e osystem and app-front last 5 years? Nothing? Aha.

S40, Asha can be as nice but with all those disadvantages and years of halt its not going anywhere. S60 was where investment happened and that got aborted. Doh, a mistake far below smartphones? Yes!

@John Phamlore

> More vertical integration, more than just handsets, simply more.

Correct. Anybody knows that. Software plus services, ecosystems, bla, bla. Its only Nokia who webt the opposite direction and is left in dust now.

Winter

At the low end, Firefox OS is promising features at a very low price. That already attacks Asha. A $20 dumbphone is nice, but would fast become too expensive.

http://ostatic.com/blog/mozilla-wants-low-hanging-fruit-with-first-firefox-os-phones#buzz

Spawn

@Winter

FirefoxOS has huge potential. They are indeed bringing advantages to low-end, a complete user- and dev-story, a believable future.

Asha, as synonym for Nokia's low-/lower-end strategy, could have gone such a way too. Its not like it wasn't possible and its not like nobody saw it coming. It was even one corner-stone of Nokia-strategy. The famous next-billion with Smarterphone, Meltimi, Qt at S40, WebKit at S40 ("connecting next-billion" sub-strategy which had the exact same plan FirefoxOS brings to low-end now), billions of investment, etc.

It was all aborted, burned, halted. Elop's plan was and still is to bring WP to low-end, effectively stop Asha, S40 like they stopped S60 Symbian. Investment shifted away to Lumia. And what's happening now? Its expected Nokia is able to ship low-end WP *earliest* next year. Maybe even only in 2015. The bleed low-end market share, FirefoxOS will (so I think) take over larger remaining customer-segments and Nokia is about to lose on e more because of there WP-strategy.

Double head-shot, the General strikes back.

Tester

Firefox OS will be exactly what I predicted: The next-gen Featurephone system with limited smartphone capabilities.

If Firefox competes directly with Asha, Nokia will be toast. In a direct competition there's no question which of these two systems is better. So the more expensive Ashas will be wiped out by Android, and the lower cost ones by Firefox.

Yeah, yet another market segment where Nokia completely blew it.

As for 'low end Lumia', that's a joke, right? How will they ever be able to go really 'low end' with a system that has been designed to compete with Apple? It's never going to work. By the time they got that working, low end Androids will be available for half the price and Firefox for even less.

Winter

And the $50 Android phones are coming:

http://www.androidcentral.com/andreessen-android-looks-explode-emerging-markets

Joe

You ought to explain why you're a worthless, bitter twat who is still sulking over the fact that Nokia fired your ass for incompetency.

AtTheBottomOfTheHilton

Nokia maps was renamed to "here" and they made the interface look like Windows 8. This really suggests that they wanted to remove the Nokia badge so that it appears to come from Microsoft instead so the dismantling of Nokia had already begun.

What's funny is that Stephen Elop is doing this in Finland and under the nose of everybody and nobody reacts.

I have to agree with Tomi that Nokia will be sold, in parts.

RottenApple

This got nothing to do with Mobile and Nokia - but doesn't this story sound awfully familiar regarding Microsoft?

http://www.bloomberg.com/news/2013-05-08/yahoo-ceo-mayer-said-to-seek-ways-to-end-microsoft-search-deal.html?cmpid=yhoo

If Nokia maneuvered themselves in a similar position it'd be really bad news.

Doctor Daehlback, I presume

I think the WS /Wallenberg bankers already made a deal with the Chinese at the time when Ericsson left the Symbian alliance.
The Swedish paper and pulp giant Stora Enso is investing heavily in the paper industry in China. The bankers running that business need lisences and other stuff for it to operate.
The deal most probably includes the sales of Nokia mobile phone division to Chinese Lenovo. In that way the needed licensees and other permissions are granted by China.

That's a win- win for all parties. (Microsoft, WS/Wallenberg bankers, Lenovo, Stora Enso, Ericsson, Siemens)
Ericsson will most likely get the NSN in the end.
That's the way how those bankers normally operate. Thinking big.

daz

http://business.financialpost.com/2013/05/07/nokia-shareholders-grill-ceo-elop-at-agm/

Nokia shareholders grill CEO Elop at AGM

...

Many shareholders at the annual general meeting in Helsinki said Elop should reconsider his 2011 decision to switch to the phone operating software made by his former employer Microsoft, which has left the company scrambling to get back in the race from a standing start with its new Lumia range of smartphones.

“You’re a nice guy … and the leadership team is doing its best, but clearly, it’s not enough,” one shareholder, Hannu Virtanen, told Elop. “Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road,” he said.

...

Winter

@RottenApple
From the link:
Adam Sohn, a spokesman for Redmond, Washington-based Microsoft, said.
“There’s real momentum in our ad platform and the product quality share.”

My question here is why MS did not add in which direction the momentum was? I suspect the momentum is in the wrong direction.

RottenApple

There's momentum in their ad platform as much as there is in their mobile phone platform, i.e. clearly not enough.

I still find it interesting how similar the story sounds to the Nokia disaster.

The comments to this entry are closed.

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