Did Nokia make a mistake by not developing touch for S40? Samsung’s numbers say – Yes.

The introduction of iPhone in 2007, changed mobile industry dynamics in a major way.

It introduced extremely usable full touch UI, and shifted the competition from innovation in hardware, to innovation in software, services,  user interface and usability of mobile devices.

At that point in time both, Nokia and Samsung,  were at about the same place, in regards to this shift towards full touch UIs. Both had their own proprietary OSes (S40 for Nokia, own real time OS for Samsung)for their feature phones, both of them dabbled with smartphones.

Well, we can say that Nokia more then dabbled in smartphones, their N-Series handsets were pretty impressive, and had some good sales. They also had a major potential  hit – Nokia N95 – about to ship. But, overall, I’d say that the smartphone category in the beginning of 2007, was a small part of Nokia business, with S40 and S30 devices being the major cash cows.

Samsung’s reaction to iPhone

When the iPhone announcement came, Samsung’s reaction at the time seemed like unwarranted, thoughtless haste, even panic.

Samsung announced their first iPhone response device – F700 Ultra Smart-  within a month from the iPhone’s launch. And, judging from lack of leaks and the lead time between announcement and shipping of F700 (about 10 months) – I suspect that in February 2007, it was not much more then an early design prototype, hacked between Jan. 9th (iPhone launch date) and the start of 3GSM show in Feb.  2007.

All Samsung full touch phones, launched in late 2007 – early 2008 (F700, F490, Armani P520) were pretty lame and awful to use. As was the Croix interface used to run them.

But Samsung  kept pouring resources into full touch R&D, and things evolved rapidly since then. The next generation of Samsung full touch UI, now called TouchWiz was unveiled in February 2008, at MWC (former 3GSM)  show in Barcelona. With the first device running it, Samsung F480 still selling briskly today, reaching a total sales volume of over 9 million units recently.

In the meantime, Samsung continued it’s work on touchphones, churning one  full touch handset after another, selling 10 million of them in 2008. And it went into a full touch phone overdrive this year, shipping more 40 million touch devices in the first 11 months.

Samsung also continues to evolve the TouchWiz UI, separating it from the underlying proprietary OS, porting it to Windows Mobile, Symbian,  Android and opening it to third party developers. First, only for Widgets, but soon, when TouchWiz 3 comes in the form of Samsung Bada, for native applications as well.

Nokia, Touch UI and the cost of ignoring it for S40 feature phones

Nokia, on the other hand, decided to play it cool, when they heard about the iPhone.

They took their time to think about it, decided not to bother wasting a lot of time with touch development for S40 feature phones, and chose S60/Symbian as their platform of transition to Touch. And  spent the next 20 months patching S60 UI to work with finger touch, readying their first full touch S60 device (5800 XM) for the market.

Nokia also went on, to create N97. Which, I suspect, was supposed to run the same S60 5th edition as 5800 XM. Only competing UIs moved so far ahead in the meantime, that it was embarrassing to have it on a flagship device. So new features – like live desktop, web runtimes, etc; were added, making the handset’s hardware only marginally able to cope with increased software requirements.

So did Nokia make a mistake, by stopping S40 development too early, ignoring the opportunity to give it touch overhaul, and concentrating on bringing touch UI only to it’s smartphone platform.

In the short term, the answer is definitely yes.

If you listen to Nokia, they are  telling us that they are doing great. They’ve sold 10+ million touch devices in a year. But Samsung’s numbers are telling us otherwise. They’ve sold 40+  million touch handsets in the same time. They are beating Nokia to pulp, everywhere related to touch, and are starting to make serious inroads elsewhere too.

Samsung Star/Preston are outselling Nokia 5800 XM by at least 2 to 1 margin. For Nokia 5230 and 5530 XM it’s too early to tell, but preliminary indications are that Samsung Corby will outsell them by at least 3:1. It turns out, that at EUR 150-300 price points, consumers do not care much whether your handset is a smart or dumb phone. They just want a nice touch UI, and with a dedicated proprietary featurephone OS, Samsung is faster, leaner and better equipped to provide that.

In the high end smartphones, Samsung i8910 HD, WinMo Omnia family and Android devices should be able to more then hold their own against Nokia N97, N97 mini and N900, too.

In the long run, Nokia should be OK.

They have Maemo, which is changing the ways Nokia designs advanced handsets, like N900. Nokia has almost figured it out,  how to do a modern touch UI, and should have one even for a mass market Symbian devices, in a year or so. With QT, they will soon have what seems to be a very attractive offer for mobile developers. And Nokia has been heavily throwing resources at  OVI service/portal for two years now. Eventually they are bound to make something work over there.

But in the meantime, by drastically underestimating the consumer demand for full touch devices, and the speed this category will take off, Nokia has given an opening to Samsung. 2 years ago, Nokia’s top spot among handset makers seemed unassailable. Samsung was able to grow to #2 only at the expense of underperforming smaller rivals like Motorola, Sony Ericsson, and Siemens Mobile before that.

Today, boosted mainly by the success with it’s touchphones, Samsung is hitting Nokia on every front it can. And, as last quarter numbers, and 2010 forecasts show, is starting to chip away at Nokia’s market share too.

Samsung still has ways to go, but that “biggest cellphone maker in the world” title, does not seem so unattainable anymore.

It will not happen anytime soon, but,   especially if Fins do not get their act together real quick, I wouldn’t be too surprised to see Nokia and Samsung going neck to neck for the #1 spot in mobile industry, in 2 or 3 years.

Author: Stasys Bielinis

While I like to play with the latest gadgets, I am even more interested in broad technology trends. With mobile now taking over the world - following the latest technology news, looking for insights, sharing and discussing them with passionate audience - it's hard to imagine a better place for me to be. You can find me on Twitter as @UVStaska'

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