Nokia Q1 2010 musings. 18% ASP decline, OVI store grows 70%, rethinking Symbian^3, S^1/S60 here to stay

As you probably already know, Nokia has announced their Q1 2010 financial results today.

We already covered the official Nokia first quarter figures earlier. Now it’s time for some reflections of what these numbers, and things Nokia discussed in a conference call, tell us about the state of things and future of the Finnish mobile powerhouse.

IMHO, despite short term market jerkiness, and traditional U.S. press headlines about how Nokia is getting squeezed by iPhone and Android, things are looking pretty good in Espoo today.

Nokia has managed to keep it’s 1/3 share of mobile market, and, contrary to the predictions of all the naysayers, has strengthened the  positions in a smartphone category – to 41% from 38% a year ago and 40% last quarter.

About the only negative thing in today’s results was a drop in an Average Selling Price for Nokia devices – 7% drop (from EUR 66 to EUR 62),  overall, and a whopping 18% (from EUR 190 to EUR 155) drop for Nokia smartphones. But there isn’t much of a surprise here.

This big smartphone ASP drop reflects a gaping hole in Nokia high end smartphone portfolio. It’s been almost a year now, since Nokia shipped their last new high end flagship – N97. And a year with only a single high end handset – is way too long, if you want to keep your prices high. (Yes, I know there was N900, but that’s more of an experimental device, and isn’t a high volume seller like N97).  There also was N97 Mini, but that’s just a cheaper version of N97, which, probably, contributed to the drop of ASP, as customers chose cheaper Mini , instead of a more expensive N97.

And then there were cheap touchscreen handsets  like Nokia 5230 and 5530, which, probably, contributed significantly to that  57% increase in overall Nokia smartphone shipments, but also depressed average selling prices.

So what’s next? For the next quarter, probably more of the same.

Since the launch  Symbian^3 based handsets has now been officially pushed to Q3, Nokia still will have nothing to show a new customer at the high end of their portfolio. And smartphone  ASP will probably decline even further, as the handsets like new Nokia C6 and E5 start shipping and eating into sales of more expensive N97 Mini and E72/E63.

But, with the growing line-up of affordable smartphones shipping worldwide, Nokia should be able to keep and even grow their overall smartphone market share.

As for smartphone ASP, I expect situation to start improving this fall, with the launch of Symbian^3 based Nokia N8 and other handsets.

Nokia services, OVI store and some interesting stuff about Symbian^3

Some other interesting tidbits from Nokia conference call:

  • Since they have made Navigation for OVI maps free in January, ten million copies of the application have been downloaded.
  • OVI store downloads grew 70%, from 1 million to 1.7 million a day,  in the first three months of the year
  • Nokia added 3 million new OVI mail accounts, to a total of 8 million, in the first quarter of 2010. Nokia messaging has 3 million accounts now.
  • While Nokia keeps adding new countries to it’s Music offering, judging by the lack of any other numbers to brag about, they still haven’t found any success with it

For me, personally, the most interesting part of the conference call was Nokia’s discussion of Symbian^3.

It’s a common wisdom by now, that the main problem with Symbian OS these past few years, has been User Interface, which has been rendered obsolete with the arrival of iPhone. And, for almost three years now, Nokia seemed unable or unwilling to do anything about it.

However, for most people watching developments in Symbian world, Symbian^3 seemed a somewhat intermediary/bridging release, until the next generation UI is introduced in Symbian^4. Turns out, that is not how Nokia sees things.

According to Nokia CEO Olli-Pekka Kallasvuo, from the OS development point of view, all the major heavy lifting has been done in Symbian^3. It is the key upgrade to the high end line-up. Symbian^4 will be just an incremental improvement over S^3, requiring much less effort and investment.

OPK actually cited Nokia’s heavy focus on developing Symbian^3, as the main reason they did not have any high end product announcements  in the past 6 months. And, having learned their lesson from N97, Nokia is trying to make the new Symbian^3 handsets work well from the start. Nokia CEO was pretty adamant that they “will not  ship Symbian^3 handsets until they are ready”. Which is the main reason why Nokia had missed the internal launch milestones on the new handsets, by a few months.

But once the first Symbian^3 device is ready to ship and OS is stable enough, adding the new S^3 devices to Nokia’s high end portfolio is a much easier task. So we can expect several more high end Symbian smartphones to come out this fall.

And Nokia seems pretty confident about the upcoming success  of Symbian^3 devices. According to them, S^3 delivers “key usability improvements” and partner responses to new handsets are great.

Nokia  also is in no hurry to rush  Symbian^4   smartphones to the market.  According to OPK: “Looking at the market conditions, we believe Symbian^3 will be competitive even next year. We don’t need Symbian^4 this year”.

Another interesting news tidbit to come out from conference call, is that Symbian^1/S60 5th and 3d editions are here to stay for a while. In fact, it’s an OS of choice for Nokia’s low end smartphones for the foreseeable future.

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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  • Alpha

    Excellent write-up, much better the AAS's.