Nokia reported results for the second quarter of 2011, and they are terrible. As expected.
Competition knows about weakness in Nokia Symbian portfolio, and the inability of the platform itself to compete on anything else but price. If rivals could match Symbian handsets on price, with good enough, similarly featured Android devices – 9 customers out of 10 will leave the shop with new Android device in their pocket.
And, as of this spring, competitors like Samsung and HTC are matching Nokia Symbian device price points aggressively. Take a look at this Infographic (price data from Amazon.de):
Things were over for Nokia Symbian smartphones in the second half of last year, when Android phones got good enough and cheap enough for most of the former Nokia smartphone buyers.
A year ago Nokia started losing market share by 5-6% (of the total) a quarter. It went down from 39% to 33% in Q3 2010, then another 5% – from 33% to 28% in Christmas quarter. In Q4 2010 Nokia managed to slow the decline a bit with a boost from from the novelty and pent-up demand for terribly delayed Symbian 3. In Q1 2011 they floated on air by stuffing Nokia distribution channels in China and Europe to the hilt. Unfortunately, distributors can take and move only so much of old crappy phones, and with nothing interesting to stimulate the demand, Nokia is now paying the price. With smartphone market growing by leaps and bounds, Nokia sold 8.5 million less then they did last quarter. Nokia sales in China dropped by 53%, in Europe by 21%.
Of course, some Nokia/Symbian fans and analysts who consider Stephen Elop, the strategy shift to Windows Phone, and “Burning Platforms” memo to be the root of all Nokia troubles, where quick declare that they have been proven right, and that Nokia Q2 results show that all of this is happening only because of February 11th.
Sorry to disappoint you, guys. Nokia’s current state of affairs has little to do with Feb 11th, and everything to do the mistakes/failure to react to disruption by former management. Symbian is just not good enough to compete with the latest versions of Android, and it’s improvement is way too slow. It was way too slow 3 years ago, it was way too slow last year, and it is way too slow today. February 11th, or not.
Symbian’s efficiency was a big competitive advantage when processing power in a phone was scarce and expensive. The key selling point for most of Symbian devices these past few years was the price. Unfortunately Moore’s law works almost just as well in mobile, as it did in PCs. Computing power got cheap and plenty enough this year, and Symbian lost the only competitive advantage it had.
Nokia N8 and other Symbian devices were positioned to compete on price with Android flagships like Samsung Galaxy S and HTC Desire. Unfortunately, Nokia’s competitors introduced next generations of their flagships this year, and slashed their last year model prices significantly. While Nokia launched X7 and mostly cosmetic S^3 make-over that is Symbian Anna.
Right now, Nokia rivals have several Android handsets, that are cheaper and, in many cases, better then anything Nokia has to offer in the same price range. The only feature that Android vendors arguably could not match yet – is camera. But very few customers will chose a phone simply because it can take better pictures.
It’s simple – if offered to pick between Nokia N8 and cheaper Samsung Galaxy SL, or X7 and Galaxy S that costs 20% less – the choice is obvious. For consumer and the sales guy in the shop. It’s Galaxy S. You do not need to invent some imaginary Nokia boycotts caused by Nokia’s February announcement, to understand why almost nobody wants to buy Finnish smartphones anymore.
Nokia will continue to bleed market share, and, most likely, lose unit volumes for the rest of this year. It is very likely that they will end 2011 with the market share in a single digits. But it does not matter much in the long run. What’s done is done, and Nokia has to pay the price for it’s hubris of the last 3 years.
What matters – is whether Nokia’s bet on Windows Phone pays off or not. We should know that by this time next year.
If you liked the post, you might find these interesting too:
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- Nokia posts Q1 2010 results. And no, Symbian^3 and Symbian^4 are not delayed
- Nokia posts Q1 2011 results, signs definitive agreement with Microsoft