Nokia Dethroned As Top Phone Maker By Samsung

SternisheFan writes "PCMag's Angela Moscaritolo writes: 'Samsung is expected to account for 29 percent of worldwide cell phone shipments, up from 21 percent in 2011, when it nabbed the No. 2 spot in the market. Meanwhile, Nokia's share this year will drop from 30 percent to 24 percent this year. Nokia had held the top spot in the mobile phone market since 1998.'" Not just highest sales of smartphones, but of all cell phones.

Comments

Reduced share, courtesy of Microsoft.

[sethstorm]

When they moved from generally useful "multi-tool" phones to relatively functionless whorephone candybars, courtesy of Microsoft-owned executive Mr. "Burning Platform" Elop, market share took a dive. In addition, salespeople couldn't even figure out how to sell them.

That, and it didn't help that their "sold only in a Third World hellhole" N9 phone, which ran Meego Harmattan, has a better sales record than the Windows Phones that were "meant for the First World markets".

Re:Reduced share, courtesy of Microsoft.

[marcello_dl]

Nobody said that Nokia was in perfect shape before hiring Elop.
I'd say that hiring him and not dumping it pronto after an ex microsoft employee proposes a microsoft centric strategy defines perfectly the sorry state of Nokia.

They had the first real smartphones (after owning some android 4 and trying mtp and ftp to shuttle files around, I'd say the only real smartphones) and they were the best hardware manufacturers. If they screwed up there are two possible reasons:

1- their board was made of fools (I never believe in incompetence at those levels)
2- the financial/banking/media system which de facto owns all corporations didn't like nokia empowerment of individuals (AN OPEN NETWORKABLE DEVICE IN THE PALM OF YOUR HAND???) and they put them in line. Now that they sell toys like everybody else they might even see some resurgence, but my bet is they will get bought by MS.

Whilst it's easy to knock the MS angle here...

[HerculesMO]

Really it's a changing demographic that Nokia hasn't kept up with. They sold lots of 'dumbphones' and 'feature phones' in an era now, where consumers want smartphones. They were late to the game, and as a result their behemoth status doesn't help them.

That said, I have a Lumia 920 and really, really like it. OS aside, it takes amazingly good pictures and I can beat a person to death with it and not have to worry about whether it works afterwards. Those also, were my requirements for buying a phone... good camera and durable. I have kids, kind of a necessity.

I know you won't want to hear this

[Kupfernigk]

And whenever I post on this subject I get modded to -1 by Nokia fanboys. But I have quite good karma, and I do have this thing about living in the real world. So.

Look at RIM. They are trying to re-invent themselves with a QNX-based platform. In order to deliver that, they have basically abandoned their old platform to existing products and a new low-end phone to try to retain market share in places like Nigeria. Development on existing products has stopped. They know that they can only afford to do one OS and they must do it well.

We've already read about the internal fighting in Nokia around Maemo/Meego. It is fairly obvious that the investment wasn't there to take it forward as a new platform to compete with the iOS/Android bandwagons. It falls into the category of things with good foundations that didn't get a chance and lost momentum, like webOS. (I have an N900, I have a Pre 2 and a Pre 3, I do know what I am writing about).

Elop was right about the burning platform and he was between the Scylla of Android and the Charybdis of Microsoft. Regardless of where he came from, he could see that Taiwan and Korea were already ramping up Android and Nokia would be a me-too. Microsoft offered investment and a different offering. Basically, he knew that he would be screwed by Microsoft but he also knew he would be screwed by Samsung, HTC, LG, and even Asus. So what do you do in the circumstances? You cannot do both because having too many offerings - a long term Nokia failing - leads to excessive support and R&D costs, along with insufficient volume for a given product

Elop isn't a saint, he is a CEO. I am pretty sure that in the same situation anyone who understands the industry, and business in general, would have made a similar decision. It might be of the order of "do I abandon ship in this shark infested water or do I keep pumping and hope I get to Tahiti", but it still looks like a rational decision.

Re:I know you won't want to hear this

[Anonymous Coward]

They know that they can only afford to do one OS and they must do it well.

Lol. That must be why Samsung is doing so badly with at least 4 (in order of sales and popularity, Android, Bada, Windows Phone 7, Windows Phone 8). Besides, your comparison is flawed. RIM didn't abandon all R&D to become dependent on a untrustworthy competitor, like Nokia did. RIM is pursuing an alternative, and which might work or not, but which doesn't put them in the dependence of a convicted monopolist.

Regardless of where he came from, he could see that Taiwan and Korea were already ramping up Android and Nokia would be a me-too.

So he picked the worst solution, even inferior than being a me-too, being a me-too with a OS nobody wants and tied to a partner/competitor that had already betrayed several other mobile companies (Sendo, anyone?).

Elop isn't a saint, he is a CEO. I am pretty sure that in the same situation anyone who understands the industry, and business in general, would have made a similar decision. It might be of the order of "do I abandon ship in this shark infested water or do I keep pumping and hope I get to Tahiti", but it still looks like a rational decision.

Sorry, but no. The only way that a decision of destroying completely a major platform (symbian), abandoning all R&D, choosing a platform that nobody wanted and that isn't customisable and prohibits most differentiating factors, could look like a rational decision was if Elop wasn't thinking in what was best for Nokia, but instead was acting in what was best for Microsoft and for the flop Windows Phone.

If we were talking of a rational CEO, not only would he have abstained from the burning platform memo, where he destroyed symbian without having yet an alternative, but he would also have refused to put all eggs in one basket; or at least he would have prepared a plan B for when (as it happened) Microsoft would "osborne" his platform and/or start competing directly and/or started favouring a competitor. Two of these three situations have already happened. Since the only actions taken by Elop are more of the same, either he is not rational or he is not working with Nokia's best interests in mind.

Re:I know you won't want to hear this

[Anonymous Coward]

Dead. Dead dead dead dead dead.
Nokia is dead. They're just still staggering around from a fatal wound, much like RIM. It's only a matter of time for both. They're both pushing failed platforms.

RIM died by the sin of arrogance and by MBA. (My personal theory is that RIM execs fancied themselves infallible business gods, fired all the useless 'cost center' developers and replaced them with boot licking middle managers. Yeah, this is inflammatory but ask any ex-rim employee and they'll probably say I'm actually understating the problem)

Nokia had a chance to remake themselves. It was obvious that they had to ditch their old development practices that led so many dead end OSs. There are a whole lot of very detailed write-ups about the various things that went on in Nokia. Long story short: Death by feature creep, death by one piece of software doing too many things for too many people.

Anyway, just as Nokia could have been poised for their greatest victory.. Microsoft happened. They could have been the BEST andriod phone maker. They could have put out devices that made apple, samsung, and HTC look like flimsy unusable garbage. But no. They bought the lies. The hired that hatchet man. Their flagship device was obsolete before it was released, and nobody wants windows phones anyway.

RIP Nokia.
RI- No, fuck you RIM. Burn in hell. Burn in hell and may a tapdance stage be erected on your grave. (Former BES admin here)

Re:I know you won't want to hear this

[icebraining]

The N9 sold reasonably well but I suspect that Nokia could not have supported it alongside ramping up Windows Phone

That just proves the Meego supporters' point. The problem was not the OS, it was the lack of commitment.

and by then Android was a bandwagon that everyone was getting on to.

But the other nice thing about Meego is that, being a Linux platform, you can run Android apps with a compatibility layer, so Nokia could have had a different platform while letting developers sell adapted Android apps on its store.

Elop wants to make RT tablets now

[Anonymous Coward]

Latest news from Nokia is that they are in talks to make Windows RT Tablets, the flailing Windows tablet. I think it's pretty clear who Elop represents at this point and it ain't Nokia.

http://www.engadget.com/2012/12/19/nokia-windows-rt-tablet-hints/

So they could, right away built a competitive Android phone, just like every little player is doing, only they can make decent hardware still (well until Elop sells that side to Microsoft for a handful of magic beans, which I think is a given at this point), and Nokia still has its marketing. So they could still turn this Elop mess around.

But not with Elop in charge.

They sold the *MOST* smartphones

[Anonymous Coward]

You can pretend Symbian phones are 'feature' phones, they aren't, they're full smartphones. They had the top slot for smart phones until Elop took over. Just not in the US. He was supposed to deliver their US market, instead he took away their world market, sacked the OS side, signed up to Microsoft for a short term wad of cash, destroyed Symbian by announcing its future planned death.

Yet they could just make Android phones and its a booming market they're familiar with. So why don't they? Elop won't let them presumably, or he's got them into a poison pill contract with MS perhaps.

It's such a head scratcher, you can see he's a failure, the numbers are crystal clear, the dumb noobie mistakes he makes, the graphs don't lie, at what point are the board going to eject this idiot before the shareholders eject them???

Re:They sold the *MOST* smartphones

[plover]

Bull. The "burning memo" was an honest assessment of Nokia's relevance: they weren't, and they knew it. A loyal but small group of people liked Symbian OS, but no one else cared about it, and Nokia knew they had *nothing* of lasting value going in the smartphone market. They knew exactly what their cash cow was: it was the ordinary mobile phones that they sold by the millions. The trick is that when people are buying non-smartphones, they're making the decision based on price above all else. Those customers don't care much about durability or features or any other differentiators, because they don't have the money to make a different choice. There are a billion of those people on the planet. And once you settle for customers who are buying on price, you're in a commodity market, where the lowest price will dominate.

A Chinese foundry started making cheap chipsets available that enabled any factory in Shenzhen to crank out an adequate phone for about $20 per copy. Since Nokia's phones cost them about $50 to make, it was obvious to them that their cash cow was going to stop producing. Doesn't matter who the CEO is, Nokia was facing a long steep slope downward.

So they had two options: they could try to lower the costs on their cheaper phones, or they could try to find a way to produce a differentiating phone again. Competing with the Chinese on price is impossible, because the playing field isn't level - lacking adequate governmental oversight they have shown they will pollute, they won't provide safety equipment for their workers, they'll copy or steal R&D instead of paying for it, and they'll pay their labor a lot less than Europe. If they can't compete on price, that leaves creating a differentiating phone, one that makes people want it because of its cool features. The marketplace for phones has proven the only way to compete on features instead of price is to play in the smartphone market, and that market is very tough: Apple and Android have both shown to the world that you don't just sell a phone anymore, you sell a phone connected to an ecosystem, a marketplace with thousands of apps. So if you want to enter the smartphone world, you have to bring a smartphone OS and you have to entice hundreds of independent developers to port their popular apps to your platform. That means convincing hundreds of people like you and me that Symbian was going to be wildly profitable and all the porting expenses would be worth it because I would be selling my apps to a market of millions. I don't know about you, but they couldn't bribe me enough to believe a story like that. Lots of app developers can't afford to port to multiple platforms today, and produce only Android or iPhone apps. If they already can't afford to gamble on a proven platform (iOS if they're Android, Android if they're iOS), what would entice them to gamble on an unproven platform?

So instead of investing the billions of dollars it would take to build yet another smartphone ecosystem with no guarantee of success, a different tactic is to stop trying to build your own, and to buy into an existing OS and marketplace instead. Microsoft has the money and OS to realistically provide a potential third marketplace, but it's a gamble and they know it. Microsoft is certainly trying: they've spent the money on the software and are spending it on the marketing. They're out there convincing developers to port their apps. They're providing the tools to build them. They're convincing non phone Windows developers to create Windows phone apps. They're cutting deals with individual industries to provide custom phones for specialized purposes. And a few customers are even buying them. But will Nokia see enough customers before they go out of business? Who knows?

What I do know is that Elop is in a tough spot, and that changing CEOs isn't going to change their position. Maybe what they need is to start producing a different product, like car electronics or cheap and simple home automation systems.

Re:They sold the *MOST* smartphones

[PRMan]

A Chinese foundry started making cheap chipsets available that enabled any factory in Shenzhen to crank out an adequate phone for about $20 per copy. Since Nokia's phones cost them about $50 to make, it was obvious to them that their cash cow was going to stop producing. Doesn't matter who the CEO is, Nokia was facing a long steep slope downward.

Or they could have started making high-end Android phones. They are a well-known brand name. Few people would have batted an eye buying a Nokia for $199 when HTC was $99 or Nokia for $99 when HTC was free with contract. Nokia=indestructible quality in most people's eyes and if they just hired the right design studio, they were all set to compete with Samsung and Apple on the big stage, leaving the middle and lower tiers to the LGs and HTCs of the world.

ME too

[tuppe666]

he could see that Taiwan and Korea were already ramping up Android and Nokia would be a me-too....You cannot do both because having too many offerings - a long term Nokia failing - leads to excessive support and R&D costs

Skipping the waffle. You seem to not have been aware that HTC; Samsung; LG; Dell; ZTE; Alcatel; Fujitsu Toshiba; Acer all have offered windows phones. Its not tied to any one product....those look like Taiwan and Korea manufactures to me. Although the list is getting smaller [HTC looks likely to drop Windows phone] simply because of its massive failure....Oh and it has closed all its factories, and has moved production from Finland to China.

Samsung [Then a quarter the size of Nokia...now Nokia 10th largest smartphone manufacture] Bada; Tizen; Windows ;) and Android, I belive they are kissing ass and taking no prisoners right now.

Looks like an insane decision then however you try and spin it. The fact that is has proved to be stupid just shows how irrational it really was.

Re:I don't feel sorry for Nokia

[Dcnjoe60]

They became #1 and got complacent and lazy with only half hearted efforts to push and market anything that wasn't a feature phone and with half finished OS's running on them. They could have been Samsung if they weren't too busy counting their money when Apple brought out the iPhone and had pulled their fingers out and produced a serious competitor.

Actually, that is called the "fat cat" syndrome and many leaders in their field go through it, particularly tech fields. When companies worry more about protecting their existing profits and product lines instead of innovating, others can come up and knock them off their perch. Happened with IBM, Microsoft, now it looks like Apple might be going through it, plus a myriad of other companies. It isn't just for tech companies, either. The US auto industry went through it in the 60s and 70s and now play second fiddle to Honda and Toyota.

To remain a leader in a field, one has to continually lead. To use an american football analogy, once you sit back in a prevent defense, you might protect against the big play, but you enable your competitors to chip away at you until they no longer need a big play, just a short play.

Fat cats either have to go on a diet and become lean, like IBM did, or they simply starve and die, like most others do.

Nokia 2007 share: 39%, 2010:36.6%

[Anonymous Coward]

Market share:
2007: 39%
http://www.nytimes.com/2007/10/18/business/worldbusiness/18iht-nokia.4.7948524.html?_r=0
2010: 36.6%
http://www.sramanamitra.com/2010/05/05/nokias-market-share-declines/

Market value:
$115B in 2007, PE 11
$50B in 2010, PE 12.95
$15B now, PE - (loss)

http://www.stock-analysis-on.net/NYSE/Company/Nokia-Corp/Valuation/Ratios#PE

Zune.
When he made that decision, the flaws in the thinking were pointed out then, it's not like he made a *good* decision at the time and somehow it turned out bad, Microsoft already had Windows phones out in the market, it already couldn't sell them. It had failed badly with Zune. It already had a search engine that wasn't winning against Google, it already had a maps system not winning against Google's maps.

I mean, the guy made a bad decision, he was told it was bad, it was demonstrably bad, it turned out bad, and people defend his bad decision based on some imagined *badder* reality.

Re:So...

[arekin]

My Samsung laptops are amazingly good, and I have had a Samsung washer and dryer in a rental unit that were very nice. Also the Samsung microwave works rather well at work. Sadly, you have to use HR's break area to use it. I would say that their product line doesn't stop so simply at displays or phones, but I would definitely say that apple supports their products better if you do get a crappy one.