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Forbes: Nokia’s Phone Volume Mystery

| July 3, 2013 | 55 Replies

Screen Shot 2013-07-03 at 19.58.06

An interesting article from Tero Kuittinen at Forbes. He postulates the Q2 numbers for Nokia’s feature phone segment, which has been in a vulnerable position since Androids continue to claw deeper segments where Nokia was once strong. This was the initial problem Nokia faced with Android during Symbian’s reign. For a while, it didn’t matter that the usability of Symbian was questionable or it didn’t seem as flashy. The iPhone was just too expensive for most and as were the rare and few Androids. The moment Android crept in to Symbian price range territory, that’s when we saw a lot of harm to Nokia’s numbers.

http://www.forbes.com/sites/terokuittinen/2013/07/03/nokias-phone-volume-mystery/

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Nokia’s rearmed their fight using Windows Phone and for Tero, the numbers here isn’t what’s concerning him at the moment. It’s the ‘feature phone’ segment. More so since the Asha 501 which aims to stem that decline has only been released in June with limited availability. He says that might mean a good Q3 2013 but not so much for Q2.

Another worry is the rumours that Apple will announce a cheaper budget iPhone. Apple has worked long and hard to be the ‘aspirational lifestyle brand’ that didn’t compromise on price but even they need to do something about the cheaper Android devices. Nokia’s entry level Lumias have been praised for being some of the best entry level smartphones available, getting recommendations to the tune of being precisely what entry level smartphones should be – low price, high end experience. With Qualcomm’s new processors, we might expect that to continue for Nokia as they push Lumia to lower and lower price points. How long until Lumia can fully take over the region of Asha series? Would that ever happen? It would certainly help in terms of the ecosystem bit. I think ‘disposable’ secondary handsets like the candybar 1xx/2xx series are safe for a little while though.

Cheers jiipee for the tip!

 

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Category: Nokia

About the Author ()

Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and  Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.com
  • Viipottaja

    Yup, Q2 is likely to be fairly good for Lumias, fairly bad for mobile phones. Might explain the apparent continued deterioration of the cash position.

    • pdexter

      Depends how you look it.
      Fairly bad for mobile phones could result a slight profit, while Lumias will more than likely still keep loosing money heavily, even with the projected sales of 7 million.

      It’s up to NSN and mobile phones to keep Nokia up, mobile phones are coming down fast.

      At this time its crucial for Nokia to increase its revenue, even if it looses money a bit. Nokia is still a huge machine compared to HTC for example and it needs transactions, sales to keep the system alive.

      • jiipee

        Nokia is huge compared to any of the second tier OEMs.

        After the next +27 percent sales increase the smartphone segment could be profitable. I’ll see, if I have to to look the financials tomorrow.

        Btw. there were plausible reasons mentioned, why Nokia got Siemens’ share so cheap:
        – most of the NSN IPR was still owned by Nokia
        – there will be heavy streamlining ahead in Germany and Siemens would not want to take a hit on their brand.

        If NSN is worth the 7-8 billion EUR, Nokia could cash it either by IPO or selling it as one entity. Also the sales of factories is still an option.

  • Pathetic

    When Apple launched its low-end phones we can say goodbye to Nokia, 2 ½ years to gain traction for Windows Phone phones on the market, but not even taken off, not even have started the engine. I can see you saying that Asha phones are better than them

    • Viipottaja

      I am fairly sure bet the “low-end” Apple phone is still $299 or more off contract.

      • Kasi Viswanath

        If that is the price point they are targeting, then no full access to the app store for sure. But contrary to what I think, if they allow full access to the store on those low-priced devices, it would be interesting to see how it would effect their other products/business/profits.

        • Random Random

          What would be the point of not allowing access to the App Store?

          • Kasi Viswanath

            First, this is all hypothesis until any such device is announced. But, just for the sake of a discussion:

            Selling a lower-priced device with full access to the store will more than likely sabotage the sales of their other high profit making device/s. Would they dare? First challenge.

            They have never been in this territory before. This is not an easy space to be unlike the high-priced phone space. With higher priced models, you are almost always selling products to people with similar mind-sets. This doesn’t hold true when you step into the mid-range segment. In this range, people expect a lot and want to pay less. How are they going to balance this out? They haven’t demonstrated any experience in this space before. Second challenge.

            People who buy their high-priced products, always also contribute a significant business towards their apps/media stores. With lower-priced range, this might not likely be true and in which case, they have to depend majorly on gains generated by selling this device alone. Would they be willing to do this? Third challenge.

            Few more can be listed but you get the gist now…

            In my personal opinion:
            <100 = Budget phones
            <200 = Entry level smart phones
            <300 = Mid-range
            <400 = Top-range
            500 range. If a second device is likely, and if that falls in the <300 range, then I stand by my points stated above.

            • Shaun

              If anyone is going to eat into Apple’s sales it’s better for Apple that Apple themselves do it and not Samsung.

              They’ve also been in this situation before with the iPod. Back when they had just hard disk models like the classic and the mini, the competition were putting out smaller cheaper flash based mp3 players. Apple killed the mini replacing it with the nano and then the shuffle.

              The iPad mini is also Apple’s answer for people looking for a cheaper iPad just as much as someone wanting a smaller one.

              The original Mac mini was also a cheap computer at one point. It may be £499 today but at one point it was £299.

              What I’m getting at is that Apple aren’t afraid to cannibalise their own sales faced with the competition starting to eat theirs.

              • Kasi Viswanath

                Either, they couldn’t make a decent profit selling the mini at 299 continuously or they didn’t know how to make a 299 mini anymore.

                My point being, they have never been tested enough on the mid-range price point.

              • von

                YEES! Apple is not afraid to compete with its own self! Unlike for ex. SONY! They have not removed the overcompression of photos in their mobile phones at firmware level bec they know that their sensors are great but they don’t want to compete to their own line of point and shoot.

            • jiipee

              That was good analysis, thanks!

            • Brian

              $400-$500 is not high range anymore

            • Otto

              This. I loved this.

          • Janne

            I think iPad mini is proof enough Apple isn’t afraid to cannibalize. Unless the new cheap iPhone is some iPod shuffle/nanoesque limited feature phone, App Store is pretty much guaranteed for it. And I doubt they’d do such a thing anyway, iPhone and their app economy lock-in is too important, a cheaper iPhone is no side-project like iPods now are…

        • Brian

          wth, even ipod touch has full access to app store

      • Pathetic

        of course, that must be the price to make a profit, or you believe that Apple are stupids like Nokia?. How much profit do you think a Nokia lumia 520 generates?

    • Random Random

      The problem is that MeeGo wouldn’t have been able to get more sales any faster.

      After all, MeeGo was not better than Android or iPhone OS.

      Are you calling the current iPhone 4 a low end phone? Or what low end phone did they launch? It’s hardly a mid range phone.

      • MdN

        Of course MeeGo was better. Phones without an always-on AMOLED clock are crippled. Also, it looked way better than this American blandness.

        • dss

          Why are we still talking about Nokia’s old strategy.. it doesn’t matter now, done deal :)

          Its slowly becoming obvious that the current strategy wasn’t the smartest choice, and Nokia will suffer the consequences.

          • John

            Because random_random, LordUS, whatever his name is…
            Always wants make it about the old strategy that never happened, because he sees it as some kind of unknowable threat.

            • jiipee

              He has been working on symbian and is still living his nightmare, where FOSS guys would have taken the credit.

              Or Nokia’s HR was lousy and didnt recognize his talent.

              • Random Random

                You really like to guess, don’t you?

                Fine.

                I’ll give you one tip but that information has nothing to do with what I’m doing.

                When Nokia ended the Meltemi operations at Ulm, they didn’t fire everyone. Some of the best talents were moved to another project in Germany. I’m sure we will hear about that at a later time.

                Downsizing and focusing can really pay off if done properly.

                I’m also quite sure you will like the outcome.

                • Jeff

                  Sure thing, you don’t now anything other than, where to find the next dingle-berry in your bum hair.

                  • Random Random

                    Oh yes.

                    You were the guy with all the knowledge in the world about MeeGo.

                    When that fails, you start complaining about how people don’t share your opinions about the world.

                    • Jeff

                      I was the guy countering the pure FUD you were spewing, because of how utterly impartial you usually are.
                      No pure FUD… No talky from me…

                    • Random Random

                      Actually my message was backed up by facts and all you gave was the idea of MeeGo being so nice and ready that people would have been ready to buy the devices in tens of million from the start.

                      Yes.

                      You lied.

                    • Janne

                      You guys misunderstand Random, though. Unintentionally or intentionally.

                      Not that I blame you. He can sound a bit of douche sometimes. Don’t we all. It is hard to read past it.

                      But on this one (MeeGo unit sales) he is right. There is this prevailing myth that by staying with the eroding Symbian, a high-end play with MeeGo could have somehow maintained Nokia’s sales volumes – whereas WP didn’t.

                      I don’t think for a minute MeeGo could have sustained. No new platform in the history has. Symbian would have kept on loosing and MeeGo would have had to start from scratch, just like WP did. There was no mobile Qt ecosystem either. Symbian^4 was another new platform, incompatible with 99% of existing Symbian apps.

                      Could MeeGo have fared better than WP? Sure, it might have. Or it might not have. Either way, by 2011, nothing could have sustained Nokia’s market share or even device volumes. Nokia had three new platforms in the pipeline (MeeGo, Meltemi and S^4), none compatible with existing Nokia apps and a loose promise of a future Qt mobile ecosystem to come.

                      Three new platforms launching from zero to tens of millions of sales? I doubt it. Not even iPhone managed that, not even Android. Not even Symbian.

                    • Janne

                      (Just to be clear, I think Nokia could have sustained Symbian^3 a little better by handling the strategy change and PR differently, though.)

                • Otto

                  I say we need to bookmark this for the future. If this guy is having legit info here, I have been deaf and blind last 12 months.

                  • Jeff

                    please do, I want to see a mea-culpa from this douche for once in his life.

                    • Otto

                      Done.

                    • Random Random

                      Nice.

                      In a way you just admitted that you were unable to shoot down my facts in the past.

                      On the other hand.

                      How could you have done that while they were that. Facts.

                      Yes.

                      MeeGo had no chance to maintain the unit sales Nokia had. It was just not going to happen.

                      How should I say it like someone else would?

                      Nice playing with you?

                  • Random Random

                    Well.

                    Do you have information not available to the general public?

                    • Otto

                      I’m sure you’ll explain how Nokia has spread all those key talents to multiple companies around Germany just to disguise their secret project?
                      AFAIK people from Ulm were merrily spread to other companies with none staying in Nokia. So if there was moving of “key talents”, it totally escaped my eyes and ears. Hence my comment.

                    • Random Random

                      No, I don’t claim that everyone had to leave Nokia.

                      I have already said almost enough.

        • Viipottaja

          You engineers… :P

        • Random Random

          Are you suggesting that people would have bought tens of millions MeeGo devices in the first year just because of the display, Swipe UI and the promise about the possible Android compatibility?

          Compatibility that was just a promise and without the access to Google Play.

          Right.

          • Janne

            +1

            My post earlier in this thread explains why.

  • Monkeyz

    THE OLD ASHAS, AND NOKIA PHONES… like nokia c3-00 etc..

  • twig

    Bloomberg is reporting that businesses are dropping BlackBerry and deciding to go with Microsoft because of the best cooperation in designing their corporate customers needs through mobile tech and the all important ecosystem. Bloomberg says its too late for BlackBerry.

    • dss

      It was always going to be really hard going against MS/Nokia for that 3rd place..

      Its a shame, but the US software cartel will control 100% of the market sooner or later.

      • jiipee

        BB is in bad situation since MS is in strong position in the business segment. Ios and android get the MS sw, but not BB anymore.

        Its a pity since it looks like BB has made a lot better work in designing BB10 for professionals.

  • Shaun

    Pure speculation. You have no way of knowing what would have happened if Nokia had chosen to stick with MeeGo.

    Its only your opinion that it wasn’t better than Android or iOS. Many other people considered it better and it received good reviews.

    I don’t want to speak for ‘Pathetic’ but I’m presuming ‘launched’ is a typo and they meant ‘launches’. A cheaper iPhone will force Nokia further down the the price scale. We’ve been here before except instead of it being the Lumia 520 it was the Nokia 5230. Lots of those were sold but by people who bought them because they were cheap and not because they were smartphones. Nokia made no money on them, app sales were dismal.

    • Shaun

      Oops, that was in reply to Random Random’s post…

      “The problem is that MeeGo wouldn’t have been able to get more sales any faster.

      After all, MeeGo was not better than Android or iPhone OS.

      Are you calling the current iPhone 4 a low end phone? Or what low end phone did they launch? It’s hardly a mid range phone”

    • Random Random

      It’s not just speculation.

      The truth is that every new platform needs a ramp up time in order to get some serious unitsales.

      There is no proof that MeeGo would have been different.

      You probably want to believe that wouldn’t apply to MeeGo just because breaking this rule would have been the only way for Nokia to maintain the unit sales they had.

      Unfortunately MeeGo was a new product just like WP and Nokia needed time for building the sales.

      There just wasn’t any way around it.

  • Pingback: Forbes: Nokia’s Phone Volume Mystery | B_Phone2

  • dss

    The cheap iphones will be a huge hit in the US, especially amongst the teens.. I see that they are bringing new colors as well.

    If they offer that thing free on 2/year contract on Verizon/ATT/TMO/Sprint..

    oh my.. :)

    Google will suffer quite a bit as well.

    • Sam

      not only teens, waiting for iphone mini to gift it to my mom :P

  • ms.nokia

    i’m preparing myself for a price drop post 18th July, hopefully i’ll buy more nok.

    • Otto

      I always look at that avatar of yours and read your posts as if they were written by 12-year old. Until there’s something like “buying more $NOK”.
      God I love Internet.

      (In reality I’m 16yo Japanese schoolgirl that only pretends to be 35+ European male.) :D

      • Janne

        No wonder Viipottaja has been eyeing you…

        • Janne

          He’ll be disappointed now.

          He’s been known to like 35+ European males.

  • BellGo

    Nokia feature phones will probably continue to crash in sales, which is bad for them, but I am more interested in seeing if Lumia’s will continue to be mediocre. If yes, Nokia is in a bad spot, because as soon as the feature phone sales are pretty much gone Nokia will be bleeding money, won’t they?

    • Otto

      That’s why they bought NSN.

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