Nokia heading for its “Kodak-moment”

Nokia’s recent earnings release has been dismal. The worldwide recession is hurting the industry in general and Nokia in particular. It’s market share has gone down from 40% a year ago to 37% in Q1 2009. This trend is continuing for past several quarters and it is my belief that Nokia is headed for its “Kodak moment”.

Remember way back in 2006, the digital camera revolution was in its infancy and a ton of competitors from Sony to Fuji to HP were producing digital cameras. However, Kodak was the king of cameras, selling the most cameras in US and winning awards for its products. “Really!”, you say. “Wait, I don’t remember that!”, you say. It is sad but true. Kodak was still considered a film company despite having invented the 1st Megapixel camera, won awards for its product design and had the biggest market share. But, it was struggling to become a leader in digital camera. Its business model was failing.

Now, fast forward to today. Nokia is the market leader worldwide, its products win awards too and it basically ruled the market (though did not invent the mobile phone) for a long time and there are a bunch of upstarts that are eating away at its market share. All the while, Nokia is struggling to keep its place. It has not recognize the challenge RIM & Apple pose, it has been slow to innovate and has failed to recognize the shifting consumer tastes. 

As Bruce Nussbaum suggested in this 2006 blog post, Nokia, like Kodak, needs a business model innovation. Its device strategy is not working and needs overhaul, RIM & Apple are eating its lunch with smartphones, the next baseline phones. Nokia smartphones have not outshined the competition, even HTC, LG & Samsung have better, more popular offerings that are doing better than Nokia.

How does Nokia change its strategy? First, it needs mid-market smartphones to compete with HTC, LG & Samsung. Second, it needs to overhaul its flagship N series and the E series to be at the leading edge to compete with Apple & RIM. It should take a leaf out of Palm playbook and design a new device that not only improves upon the rival’s offering, but has that extra special feature that the world wants. Third, it is time to dump Symbian from its smartphone lineup. Symbian has its place in the mid-to-low market phones, but it is not upto snuff on the top-line smartphones. The user experience is just not there. Good news is that Nokia has several options on this front: – Design a new user interface from ground-up to sit on top of Symbian much like LG S-class. Or get on the Palm’s WebOS or Android bandwagon or do incremental improvement on Symbian. This last option just maintains the status quo and does nothing dramatic. Finally, it needs to take the battle to the competitor on their home-turf, ie. US. Nokia has not been successful in the past. However, it needs to try again or go down fighting.

This is probably the last chance Nokia has to avoid its Kodak “moment”. So, will Nokia change the game plan or will the game change Nokia?

Nokia’s flirtation with Android raises questions about Symbian investment, again.

Here we go again. Recently, Nokia and Google announced that they were going to collaborate on Android to develop new Intel-chipset based mobile devices. This has led to many in the industry to question Nokia’s commitment to its Symbian operating system. Adding fuel to fire is the news by the Guardian newspaper indicating that Nokia is going to announce an Android based, touchscreen mobile phone at its Nokia World Conference in September 2009. 

I truly doubt that Nokia has given up on Symbian just yet. It was only a little over a year ago that Nokia spent millions of dollars to buy out its partners in the OS and made it open source. Secondly, Nokia has been saying since February that they were going to develop Android based devices. I have to agree with Om Malik of GigaOm:

It is quite possible that the company is using Android as a basis for a 3G- or 4G-enabled netbook-type device that’s powered by Intel’s chips.

Finally, while it may be true that Nokia might be losing share of the smartphone market, you have to remember that Nokia is still the largest maker of mobile phones and almost all its phones are based on the Symbian OS.

Get ready for browser wars, again.

That’s right browser wars are coming. Only this time, they are coming to a mobile phone near you. So far we have Microsoft Mobile IE,  Apple’s Safari, Opera, Google’s Chrome and the Blackberry’s proprietary browser. Add to that mix the recently announced and currently undergoing alpha testing, Fennec, the mobile browser from Mozilla, the maker of Firefox open source browser.

Given all these browsers, there is bound to be a shakeup. However, on the flip side of it is the fact that there are so many mobile platforms, Windows Mobile, Apple iPhone OS, Google’s Android, Symbian and Blackberry OS. So, one could argue that each of these are walled gardens and therefore the browsers work in these walled gardens. However, two of the above-named browsers, Opera and Fennec are not tied to any specific platform, though they may not work on all platforms yet. Not to mention, all the big players, except maybe RIM, have the resources to quickly make their browsers platform independent. So, while I don’t expect the browser wars to start right away, I fully expect them in maybe late 2009, early 2010.

Apple, RIM win smartphone marketshare from Nokia

According to a report published by Canalys, a market research company, Apple and RIM are winning market share in the smartphone category from Nokia. By Q3 2008, 40 million smartphones were sold worldwide. This represents a 28% growth YoY compared to 3% growth for the larger mobile phone market.

Nokia lost significant ground YoY in Q3 down from 51.4% in 2007 to 38.9% in 2008. Nokia uses the Symbian platform which as a result also lost significant ground. Here are the top 4 smartphone platforms and their market share:

• Symbian 46.6% down from 68.1% in Q3 2007
• Apple 17.3%
• RIM 15.2%
• Microsoft 13.6%

Since the bottom three vendors are so close, there is going to be continued fight for the second spot. It is likely that RIM might overtake Apple in Q4 with its upcoming release of Blackberry Storm and also the recent release of Blackberry Bold.

[Via Reuters]

Motorola to hitch its fortune to Android

In a major change in strategy, Wall Street Journal is reporting that Motorola’s new CEO Shanjay Jha has decided that going forward it will streamline on three OSs for its phones. He will announce these changes as early as today during the earnings call. Motorola will use Google’s Android platform for its consumer targeted smartphones, ditching Symbian OS. It will uses its own P2K OS for feature phones and for the business focused phones, it will use Microsoft Windows Mobile platform.  Also, Motorola is looking to outsource some of its Window Mobile based phone production to third parties. Motorola is expected to release its first Android-based, social networking focused smartphone in Q2, 2009.

Let’s hope the struggling Motorola can find its mojo with these changes. However, I am not optimistic about their chances. As I recently wrote, the mobile industry is starting to face some headwinds which are expected to get stronger in 2009. Just today, BusinessWeek reported that according to a survey by mobile application portal GetJar, 76% of users globally are actively looking to reduce their wireless bills and 78% are delaying their new phone purchase.

[Via UnwiredView]

Gartner: Worldwide sales of smartphones grew 15.7%

Gartner, today followed up with a press release reporting that the smartphones sales grew 15.7% in Q2 2008 over Q2, 2007. This amounts to 32.2m units sold in Q2. This is pretty much in line with what other research companies have recently reported and also what Nokia said in its forecast for Q3. Here is the breakup of sales according to Gartner:

Company	2Q08 Sales	2Q08 Market Share (%)	2Q07 Sales	2Q07 Market Share (%)	2Q08- 2Q07 Growth (%)
Nokia	15,297,900	47.5	14,151,689	50.8	8.1
Research In Motion	5,594,159	17.4	2,471,200	8.9	126.4
HTC	1,330,825	4.1	605,900	2.2	119.6
Sharp	1,328,090	4.1	2,275,401	8.2	-41.6
Fujitsu	1,071,490	3.3	877,955	3.2	22.0
Others	7,598,711	23.6	7,472,441	26.8	1.7
Total	32,221,175	100.0	27,854,586	100.0	15.7

What is interesting is that Samsung and LG do not make it on this list considering that they are 2nd and 3rd mobile phone makers worldwide.

Symbian meets iPhone challenge head on

Symbian yesterday released its 1st half 2008 and 2nd quarter 2008 performance. It had robust growth in 2008 with 10% increase in units shipped year over year from 34.6m to 38.1m units and 5% increase in Q2 from 18.7m to 19.6m units. It also increased the number of handset models in the 1st half of 2008 by 30% to 159 models. At the end of Q2, seven Symbian licensees had 92 phone models in development, an increase of 48% on Q2 2007 (62 models) – the highest ever achieved. All the growth in 2nd quarter resulted in Symbian keeping its leading status with 6.4% of 304m handsets sold in Q2 that Gartner reported. 

So, lets see how it did against Apple. In Q2 2008, Apple shipped 717,000 iPhones compared to 270,000 in Q2 of 2007, a 166% increase. However, in terms of market share, this amounts to only 0.2% of the 304m handsets sold. Another important area of revenue for both companies is applications marketplace. While Apple has upward of 2500 applications in its App Store, Symbian without a similar marketplace, has nearly 10,000 applications.

As you can see Symbian is holding its own against the iPhone challenge and is in fact growing. With Nokia’s decision to buy out its other partners in Symbian and to open source the OS, I see a very healthy and strong future for Symbian, not to mention a formidible competitor.

Is GPhone a pipe dream?

Update (8/5): HTC’s CFO confirmed that HTC Dream, an Android based device will be out in Q4 2008. The Dream is similar in size and shape to the HTC Tilt, a candy-bar, slider. 

Given the recent developer discontentwith Android SDK from Google, it is clear that Google is learning what it takes to bring a quality Mobile OS to market. However, according to this report, analyst Jack Gold thinks, Google should tie up with the Symbian foundation and forget about Android. Now, that would make a lot of sense. Google could contribute its OS to the Symbian foundation, be a major player on the foundation and devote its resource to its core strength of developing multi-platform applications.

Google still contend that an Android-based device, aka the GPhone, will be out in the second half of 2008. Certainly, the pressure is mounting with iPhone 3G out in the wild, and RIM, Nokia, Sony Ericsson, Samsung and LG announcing a stellar lineup for the rest of year (see this post for RIM, this post for Nokia, this post for Sony Ericsson, post one and two for Samsung, and this one for LG). Not to mention, yesterday’s Microsoft employee memo by Steve Ballmer hinting at a Zune phone on the horizon. So is GPhone a pipe dream? I think not, and blogosphere certainly does not think so. However, when will it launch is debatable. I believe that Google will most probably announce the GPhone in 2009 at their major developer shin-dig.

Symbian Foundation gathers steam

Nokia today announced that the Symbian Foundation (SF), that it purchased from other backers last month, has received backing from other companiesincluding operators 3, TIM and America Movil. This is an ongoing effort on SF’s and Nokia’s part to keep the spotlight on itself as it tries to consolidate various operating systems under a single open source system. As I stated earlier, Nokia and Symbian have earnestly committed themselves to the Platform Wars. They want to ensure they continue to be the dominant platform for smartphones.