Nokia's Present & Future

[Mintmaster]

At the same time Sony has grown bigger than Nokia (on smarthphones) using Android...

Sony is boosted by it's home market, a 130M person country where it beats Apple and Samsung according to Laurent06's link, and it was also on Android well before Elop came on board (it had the #2-3 position in 2011).

Sony's mobile division lost a lot of money last year, and a little good news doesn't really help the growing competition (and downwards pricing pressure) they're facing from Chinese Android phone makers. That's what Elop was getting at, and according to him the Samsung dominated market is exactly what Nokia execs predicted.

If you actually look at Sony's released sales, growth isn't very impressive:
http://www.xperiablog.net/2013/05/1...013-blames-success-of-xperia-z-for-shortfall/

Lumia just hit 7.4M sales after being at 2.9M just three quarters ago. Yes, I'm cherry picking, but things looked bleak then, and even you look at Q2 2012's 4M units, that's pretty good YoY growth. I think Lumia will pass Experia in a couple quarters.

It's interesting that despite all that, they still are ahead of HTC despite HTC making some of the best Android phones available.

That's the brutal reality of being a non-Samsung Android handset maker.

I don't think Nokia wants to be stuck in that sort of situation. Android would have been a safer choice, but WP8 lets Nokia be the big fish in a small pond, and work with the MS behemoth to make that pond grow.

 

[tuna]

Sony's mobile division lost a lot of money last year, and a little good news doesn't really help the growing competition (and downwards pricing pressure) they're facing from Chinese Android phone makers. That's what Elop was getting at, and according to him the Samsung dominated market is exactly what Nokia execs predicted.

I do not get it, who is the competion here? Samsung or the Chinese phone makers?

 

[tuna]

Also, Sony's actual sales almost doubled from F12 to F13. So they seem to be selling more expensive phones....

 

[Jubei]

Also, Sony's actual sales almost doubled from F12 to F13. So they seem to be selling more expensive phones....

38% of UK Samsung Galaxy owners bought an Xperia Z over Galaxy S4

http://www.slashgear.com/samsungs-a...e-as-sony-grabs-apathetic-upgraders-01288565/

Also the AdDuplex report showed that the majority of Nokias sales are in the low/midrange. Lumia 920 was only 13% of the total Lumias out there in AdDuplex stats. Nokia has found success in selling cheap phones mainly in countries that prefer cash sales over contracts. But thats not really sustainable in the long run for Nokia, especially now that there is real competition coming for that market. Motorola X is rumored to be 199 no contract, and Motorolas brandname is far stronger in North America where Nokia is already failing to gain traction

iPhone Lite is rumored to be 299-399. We saw with the iPad Mini vs Nexus 7 that a lot of people are willing to pay more for the Apple brand alone

 

[Mintmaster]

I do not get it, who is the competion here? Samsung or the Chinese phone makers?

They both are, obviously, but Samsung is unassailable. It has established itself as the flag-bearer, able to charge a bit more while also having lower costs, resulting in decent margins. Nobody is going to topple them unless they get complacent/greedy.

Everyone else is competing for second place without any real brand strength, and in the same boat as the Chinese makers (who often sell their products under phone carrier brands). They're basically the "other" category behind Samsung and Apple, not a real third alternative on par with the other two. That's why Samsung gets 95% of the profits among Android manufacturers.

This is not to say Nokia is a strong third yet, or that they are guaranteed to get there. But WP8 is their best shot at doing so. If Kallasvuo moved Nokia to Android a year or two before Elop replaced him, that may have been another route to challenge Samsung's present dominance, but he didn't.

 

[Mintmaster]

Also, Sony's actual sales almost doubled from F12 to F13. So they seem to be selling more expensive phones....

What does F12 & F13 stand for? February? First quarter? And what data source are you using?

 

[BRiT]

Typically it's FY[Year] for Fiscal Year such as FY12 or FY13, Q1/Q2/Q3/Q4 for first, second, third, fourth quarters, and MonYear for Month-Year such as Feb12 for February 2012, Mar11 for March 2011.

So I'm thinking 'F' is for Fiscal Year; Fiscal Year 2012 and Fiscal Year 2013.

 

[Mintmaster]

I considered that possibility, but FY2013 just started, so how can tuna have results on it? Sony's FY2012 ended on March 31, 2013, and results were released a month later.

 

[Florin]

Nokia going with WP instead of Android hasn't done anything to make Samsung less of a competitor. It mainly means that Nokia started at a disadvantage, with an unproven ecosystem built by a partner with a legacy of repeated mobile failures.

That choice was all the more reckless if you consider that Microsoft did not even have a serious mobile OS ready at the time. Instead of marking the beginning of a strong Nokia ecosystem, the WP7 fiasco was entirely avoidable detour that cost the company dearly in inventory write downs.

I'm not sure why anyone would take what Elop has to say about a predicted scenario playing out (Samsung becoming king) at face value. It would've been more impressive if he mentioned it back then. Let's face it, the choice to go with Microsoft was a given because of the Elop's history, not his ability to predict the future.

So Nokia went from undisputed market leader to fighting for market share with the likes of Sony and ZTE, and this is now considered 'not bad news'. As if going with Android would've not netted the same or better result with less risk. What a silly narrative.

 

[tuna]

Sorry, I mean FY2011-2012. And the annual report was just released.

 

[ERP]

I considered that possibility, but FY2013 just started, so how can tuna have results on it? Sony's FY2012 ended on March 31, 2013, and results were released a month later.

No in the US at least fiscal years are numbered for the year in which they end, not the year in which they begin.
So FY13 just ended.
Though I believe in Japan, they are numbered for the starting year, though I'm basing that on one rather confusing conversation I had.

 

[Silent_Buddha]

38% of UK Samsung Galaxy owners bought an Xperia Z over Galaxy S4

http://www.slashgear.com/samsungs-a...e-as-sony-grabs-apathetic-upgraders-01288565/

Also the AdDuplex report showed that the majority of Nokias sales are in the low/midrange. Lumia 920 was only 13% of the total Lumias out there in AdDuplex stats. Nokia has found success in selling cheap phones mainly in countries that prefer cash sales over contracts. But thats not really sustainable in the long run for Nokia, especially now that there is real competition coming for that market. Motorola X is rumored to be 199 no contract, and Motorolas brandname is far stronger in North America where Nokia is already failing to gain traction

iPhone Lite is rumored to be 299-399. We saw with the iPad Mini vs Nexus 7 that a lot of people are willing to pay more for the Apple brand alone

That doesn't say much as even with that, Samsung still has the second highest percentage of customer loyalty. That means more people abandon Sony after using a Sony product than leave Samsung after using a Samsung product. That said, Samsung is still far behind Apple when it comes to customer loyalty in the UK (59% versus 79% according to that article).

Also, all companies are having issues with high end phones as the previously linked article in this thread indicate.

http://www.cellular-news.com/story/60845.php

June sales look better in total volume, though the Premium segment continues to contract for the 4th consecutive month.

There is currently no growth for any of the major players in the high end smartphone segment. Virtually all growth is in the mid to low end smartphone segment.

Hence it comes as absolutely no surprise that most of the growth in the Lumia line is due to mid/low end offerings. It's also why it was so incredibly important that Nokia got the 520 and 620 lines out into the market.

Sony in comparison has had low end phones in the market for quite a few years now, so have been able to ride that growth better than Nokia has.

It's interesting that this particular article notes that the Xperia Z has been a global hit with 1 million units a month, but in the same article the Blackberry Z10 hasn't been a global hit with the same 1 million units a month. A company that is still in decline despite those numbers. Why? Because they have no compelling phones targeted at the mid/low end, unlike Sony, Samsung, Huawei, LG, and recently Nokia.

No in the US at least fiscal years are numbered for the year in which they end, not the year in which they begin.
So FY13 just ended.
Though I believe in Japan, they are numbered for the starting year, though I'm basing that on one rather confusing conversation I had.

That's dependant on the company and not the country. Some companies in Japan report on FY ending while some report on FY beginning. Same goes for the US and Europe. It does make it somewhat confusing if people don't use the proper terminology and assume that another person knows that X compay uses FY ending versus FY beginning.

Regards,
SB

 

[Jubei]

That doesn't say much as even with that, Samsung still has the second highest percentage of customer loyalty. That means more people abandon Sony after using a Sony product than leave Samsung after using a Samsung product. That said, Samsung is still far behind Apple when it comes to customer loyalty in the UK (59% versus 79% according to that article).

It says a lot since a number of Microsoft/Nokia fans seem to think its impossible to compete in the Android world because of Samsungs dominance, yet Sony came out of nowhere (look up their past sales) and started taking customers away from the 2nd largest phone brand in the UK simply by offering a competitive product. Xperia Z is their best selling Android flagship yet, LG is in a similar position with the Optimus G series. Clearly you can compete if the product is good

There is currently no growth for any of the major players in the high end smartphone segment. Virtually all growth is in the mid to low end smartphone segment.

There is no growth for Apple and Samsung anymore at the high end, that doesnt mean smaller players like Sony and LG cant grow in the high end by taking Samsung customers and to a much smaller extent Apple customers

Hence it comes as absolutely no surprise that most of the growth in the Lumia line is due to mid/low end offerings. It's also why it was so incredibly important that Nokia got the 520 and 620 lines out into the market.

Actually it is a surprise since the fanfare in the media has traditionally been about Lumia 900 and Lumia 920. Lots of "Lumia 920 is sold out so it must be selling well!" arguments but now it seems like it was either artifically limited in stock by Nokia to create more desire or they themselves had low expectations for it

Either way, the low end is a good market for established players like Apple and Samsung to create new growth, its not that desirable for Nokia since the margins are slim and they are already bleeding to death .And its not that great for Microsoft either since people who buy these cheap phones are not likely spend money on the ecosystem, they simply dont use them that way. It was the same with Android until the Galaxy series, the apps didnt explode until flagships started to sell

Now Nokia is in a position where they have the best cameraphone ever but the platform doesnt even have an official instagram app. The fact that Microsoft is developing the OS at a snails pace is not helping either, WP is still lacking in basic features while the next major update is not coming until Q1 or at worst Q2 2014

 

[french toast]

Agreed microsoft is taking their merry time pissing about with wp...android moves along 3 steps to microsofts 1.

Why oh why are we still missing a unified notifications centre? System wide file system? Up to date hardware? Where are the vaunted xbox games promised?? (Would have been a game changer) why is their three different microsoft consumer operating systems spanning mobile, tablet and pc? When the market leaders apple and android have one spanning the high earners (phone/tablet)?

Microsofts distinct advantage coming into mobile was their xbox gaming brand and powerfull -do what you like- pc software/business expertise. ..
They decided to copy apple a few years after apple started by offering a stripped down locked in basic OS, and they hampered that further by equipping it with vastly out of date hardware and slow software feature updates.
Xbox games anyone??

Ironically, nokia which started with its head up its arse actually came up with a coherent OS strategy from top to bottom with symbian 3 /meego 1.2 harmattan.
Nokia also had huge cash reserves, a bank vault full of patents, sci fi like camera technology, class leading in house design team and lets not forget..the largest loyal consumer base back in 2010...when elop entered.

Ive said before I think elop was right to venture into wp...just the way he went about it was catastrophic, he should have gone multi platform.

#rant over.

 

[Mintmaster]

It says a lot since a number of Microsoft/Nokia fans seem to think its impossible to compete in the Android world because of Samsungs dominance, yet Sony came out of nowhere (look up their past sales)

I did look at past sales, and you obviously didn't. Sony did not "come out of nowhere". They were #3 in Android marketshare in early 2011, with 5% of the global smartphone market (up from 3% a year earlier). (Nokia's share was on a steep decline well before Elop arrived, so don't bring that up from the chart.) Sony then lost some share and came back a bit, but that is by no means an indication that Nokia could do better starting from 0% in 2011. Sony is still below where they were in 2011.

Xperia Z is their best selling Android flagship yet, LG is in a similar position with the Optimus G series. Clearly you can compete if the product is good

You say that, but there's little data that LG is in any better position than it's been in for years, and the same for HTC after its highly regarded One was released. A month of good Xperia Z sales really doesn't say much for Sony, either.

Again, don't forget that Sony has a big chunk of Japanese sales, a market of 2-3M smartphones a month. Nokia doesn't have that loyal market.

 

[Mintmaster]

Ironically, nokia which started with its head up its arse actually came up with a coherent OS strategy from top to bottom with symbian 3 /meego 1.2 harmattan. Nokia also had huge cash reserves, a bank vault full of patents, sci fi like camera technology, class leading in house design team

Sticking with Symbian/Meego would have been the worst possible strategy, because then they're on a sinking platform and missing out on the $250M per quarter that MS is giving them. I know you're an advocate of multiplatform, but I really doubt that MS would give them this if Nokia had Symbian/Meego competing alongside WP.

And huge cash reserves? Even with the MS bailout money, they're still dangerously low on cash today. Given the direction market share was heading from 2008-2010, it's unlikely that they would have any lower losses in 2011/2012 with a different strategy.

and lets not forget..the largest loyal consumer base back in 2010...when elop entered.

Loyal?!? Did you see the charts I posted on the previous pages? Smartphone buyers were choosing Nokia less and less for three years before Elop arrived. It got really bad in the two quarter preceding Elop's arrival.

Ive said before I think elop was right to venture into wp...just the way he went about it was catastrophic, he should have gone multi platform.

You're jumping to conclusions by calling it catastrophic.

We don't know if MS would give them as large support payments if Nokia put just one foot in. We don't know if those other platforms would go anywhere at all in the face of iOS and Android (there wasn't any sign of it before Elop arrived). We don't know how much WP's penetration would be slowed down with a second OS on Nokia smartphones. We don't know how much Nokia's costs would go up by maintaining two separate product lines.

 

[Mintmaster]

Nokia going with WP instead of Android hasn't done anything to make Samsung less of a competitor.

I'm not saying Samsung and Nokia aren't both smartphone makers, obviously. But being on WP8 definitely insulates Nokia from direct attack (as much as Samsung targets Apple, its #1 priority is maintaining dominance in Android), and it also gives them a unique angle of attack desired by AT&T's CEO.

Instead of marking the beginning of a strong Nokia ecosystem, the WP7 fiasco was entirely avoidable detour that cost the company dearly in inventory write downs.

Please, the "strong Nokia ecosystem" is a complete mirage.

Let's face it, the choice to go with Microsoft was a given because of the Elop's history, not his ability to predict the future.

First of all, I didn't post that to make Elop out as some sort of soothsayer. His arguments are pretty obvious, and have been made by many others. It just confirms that Elop came up with the same conclusions. Secondly, do you think Nokia just blindly handed the keys to Elop? He made and presented the business case before becoming CEO.

So Nokia went from undisputed market leader

Give me a break. They were far from a market leader when Elop took over.

As if going with Android would've not netted the same or better result with less risk. What a silly narrative.

Sony lost market share from Q4 2010 to now. Motorola hasn't gotten anywhere with Android despite being bought by Google. If my narrative is so silly, why don't you show me the non-Chinese makers of Android smartphones that have grown faster than the Lumia line has?

 

[wco81]

They're low on cash despite MS payments and 2 years of WP phones?

 

[Silent_Buddha]

Either way, the low end is a good market for established players like Apple and Samsung to create new growth, its not that desirable for Nokia since the margins are slim and they are already bleeding to death .And its not that great for Microsoft either since people who buy these cheap phones are not likely spend money on the ecosystem, they simply dont use them that way. It was the same with Android until the Galaxy series, the apps didnt explode until flagships started to sell

The mid/low end is going to be the bread and butter for all smartphone manufacturer's except possibly Apple.

The Experia Z moves as many units as the Blackberry Z10, 1 million units per month.

Blackberry is a sinking ship while Sony is treading water (up some quarters, down other quarters). Why is that?

Pretty simple, Sony has an extensive and vetted mid/low end smartphone lineup. Blackberry doesn't.

Despite that they still haven't regained the position they held in the smartphone market back in 2011.

High end smartphones are nice halo products to get people thinking about your brand. That halo does nothing for you if you don't have an extensive mid/low end lineup to service the majority of smartphone consumers. That was a serious problem for Nokia prior to releasing the 620 and 520 lines, especially in 3rd world countries like most of those in Africa or S. America. Prior to the 620 and 520 there was nothing Nokia could offer there with WP OS to replace lost Symbian sales.

Another potential problem looming for various smartphone manufactures is that all or most of them overshipped this quarter (way more shipments than sales) meaning next quarter might be pretty bad for a lot of companies.

Regards,
SB

 

[Florin]

I'm not saying Samsung and Nokia aren't both smartphone makers, obviously. But being on WP8 definitely insulates Nokia from direct attack (as much as Samsung targets Apple, its #1 priority is maintaining dominance in Android),

Surely its #1 priority is maintaining dominance, period. Samsung has no great loyalty to Android - Bada, Tizen as well as their WP phones are testament to that.

This is a company that will try anything at least once. Which is also why they preempted almost everyone else with their Slate 7 Windows 7 tablet, why they have the premier Chromebook, and why they've got more tablet (and phone) form factors out there than anyone else. Heck, they've shown they'll give most any CPU vendor a shot, too.

So it turns out that WP hasn't worked out that well for Samsung, but that's hardly a suprise considering that HTC, LG, Dell and even Nokia are hardly doing great.

Nokia doesn't even have exclusivity, how does this insulate them from attack even if you think that WP is somehow on a different playing field than other ecosystems? If anything, they're boxed in.

and it also gives them a unique angle of attack desired by AT&T's CEO.

Another explanation after the fact by Elop that you seem to accept as gospel. Hey, AT&T also hates Skype, but somehow that isn't a factor for Elop.

At least the man realizes that his track record so far requires a lot of justification.

Please, the "strong Nokia ecosystem" is a complete mirage.

What does that mean? Is building a third ecosystem outside of Android useful or not? Which one is it?

First of all, I didn't post that to make Elop out as some sort of soothsayer. His arguments are pretty obvious, and have been made by many others. It just confirms that Elop came up with the same conclusions. Secondly, do you think Nokia just blindly handed the keys to Elop? He made and presented the business case before becoming CEO.

It might've confirmed this if he said it before it came to pass. Right now it just confirms Elop will say anything necessary to justify his choice to go with Microsoft by default.

Frankly, I can't tell you what Nokia may have been thinking. At least Sony has managed to secure its home market, and that's presented as some sort of doesn't-count-as-it-is-inevitable advantage. Nokia can't even claim that anymore though.

Give me a break. They were far from a market leader when Elop took over.
Sony lost market share from Q4 2010 to now. Motorola hasn't gotten anywhere with Android despite being bought by Google. If my narrative is so silly, why don't you show me the non-Chinese makers of Android smartphones that have grown faster than the Lumia line has?

Well Samsung, I guess? But what difference does it make? Nokia could've had all of the advantages of name recognition, quality hardware, camera functionality and what have you on Android (and they wouldn't have had to wait for the software to catch up with support for high res cameras, more than single core processors, or resolutions higher than 800x480, and now 1280x720). They might well have posed a stronger challenge to Samsung than others, and they wouldn't be stuck in an anemic app environment today.