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Nokia's Smart Phones

20 June 2004

 

I recently purchased a new Nokia “smartphone” – the midrange Nokia 3200.   I’m very impressed.  The phone is a Swiss army knife for the information age – it provides a large number of functions in a very small case.

 

 

 

Nokia 3200…

 

 

… the only mobile phone with a flashlight

Unfortunately for Nokia, it appears that I’m one of the few customers who like the phone.   According to a 1 June article in The Wall Street Journal, Nokia’s global market share has declined from 35% to 29% over the last year because the company bet on smartphones rather than on simpler products with clamshell designs.  Nokia had hoped to sell 10 million smartphones in 2003, and instead sold 5.5 million, according to estimates from International Data Corporation.

 

 

 

The clamshell

 

Today, most new mobile phone buyers want relatively simple phones, with clamshell designs and cameras.  Nokia wants to sell them phones with internet access, voice recorders, radios, calendars, and flashlights.  The Nokia 3200, for example, has all of these features, and a camera as well.

 

Last week, Nokia moved to fill the hole in its product line.  On 14 June, Nokia’s CEO Jorma Olilla announced five new Nokia phone models, including Nokia’s first-ever clamshell designs, the Nokia 6170 and 6260.  Both investors and commentators were unimpressed, sending Nokia’s share prices down slightly on most markets.

 

 

 

Nokia 6170 – its first clamshell design

 

 

“My overall impression is that these are useful, pragmatic additions, but nothing earth-shattering.”

 

Peter Firstbrook of the META Group, quoted in The New York Times

 

 

“Mistaking yourself for the market” was the title of last week’s update.  Nokia’s leaders certainly appear to have lost their hearts (and wallets) to the smartphone approach.  According to The Wall Street Journal, Nokia spends about $3.6 billion annually on software development, most of it intended to make phones smarter.

 

Nokia may prove to have been farsighted.  In several years, we may look back on Nokia’s current smartphones and see them as pioneering in both design and technology.  A recent set of articles in Business Week announced (once more) the advent of telecomputing for the mass market.   Nokia’s phones have the features to fit into this new environment.

 

But after investing many billions of euros in smartphone hardware and software, Nokia now has two pressing challenges:

 

Ø      Creating customer demand for these devices, and then

Ø      Competing with the attractive new products being launched by Korean companies like Samsung and LG.

 

The danger -- Nokia pioneers smartphones, while Samsung prevails.

 

More Information

 

  1. The New York Times covered the launch of Nokia’s first-ever clamshell design in its 15 June 04 issue.  Here’s a link: http://www.nytimes.com/2004/06/15/business/worldbusiness/15wire.html

 

  1. The Wall Street Journal article on Nokia’s smartphones was on the first page of its 1 June 04 issue.  The WSJ site doesn’t let me link to the article.
  2. Business Week’s 21 June 04 issue reports great potential in smartphones and the services that come with them.  Here’s a link: http://www.businessweek.com/magazine/content/04_25/b3888077_mz054.htm

 

  1. I wrote an update on Samsung in May 2003, titled “What’s behind Samsung’s profitable growth? Here’s a link: http://www.biz-architect.com/Samsung%20profitable%20growth.htm

 

 

  1. Last week’s update used Iridium as an example of mistaking yourself for the market.  Here’s a link: http://www.biz-architect.com/mistaking_yourself_for_the_market.htm

 

  1. I am a Nokia stockholder.

 

 

 

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