Samsung Galaxy Note. First Look
Today, large companies, especially corporate giants like Samsung, do not surprise users with extraordinary products...
|First look. Sony ST21i Tapioca Microsoft Windows Phone 7: Reasons for Failure First Look at Samsung Galaxy S3 as a 2012 Flagship|
Nokia Connection or a new company's strategy on the terminal market
Annually Nokia Connection Forum becomes the place where the company defines the main development directions, gives its vision of the market and changes that take place on it. Usually customers do not see the main development vector behind the announcements of separate devices. They do not notice the facts that are very interesting. So, let's try to understand where Nokia is going to, and which strategy will prevail on the terminal market in the nearest future.
Short before Nokia Connection the company announced two low-end models for developing countries. The announcement took place in Africa, and the company plans the devices will be popular there as well as in China, India, partly in Russia. Two years ago a similar enterprise was held in Moscow, and then the Nokia 1100 and 2300 were announced. The company didn't consider Russian market as quite deliberate, which lead to the shipments of low-end solutions like Nokia 3310. The model was popular at the price fall and remained one of the cheapest offers on the market for long. This very device combined up to one third of the total Nokia's sales on the Russian market, and it seemed everlasting. The Russian market was positioned on the same level with India, Argentina, some Third World countries globally. Thus a capacious name developing markets was applied to Russia also. But unlike other manufacturers Nokia didn't aspire to gain the fashion segment, and the sales there were not supported by ad and marketing enterprises actively till the 2Q 2004. Such companies as Motorola and Samsung gained the lion's share of the market for that time and pressed Nokia hardly, the company failed to return the leading position and takes the third position. The conclusions of the summer 2004 changed the strategy greatly, and Russian got some more priority, new financing for marketing and advertising, which helped growing the sales in the middle and high-end segments.
And Nokia Connection gave a belated explanation sounding intriguingly and is mainly targeted on the company employees who were responsible for making decisions but not the external world. The announcement of the research covering 8000 participants (both mobile connection users and not) may be taken as this explanation. The research territory covers Ukraine, Russia, India, Indonesia, Argentina. The selection is primordially strange, since considering all the joint indexes Russia comes as an evident favorite among other participants. Even a terminal ASP is two times higher on the Russian market than in Ukraine (precisely, 1.73), and the market capacity is much higher. Comparison with Indonesia shows even a greater gap.
One of the questions concerned how much users are satisfied with their operator. Averagely, 86 percent of the questioned answered they were pleased with the service quality. Indian and Indonesian results equaled to 90 and 91 percent correspondingly. About one third of the questioned customers used other operators' services and could make a comparison.
The research gives a wonderful conclusion the user is prompted to choosing this or that operator not by tariff plans, but the only reason is "signal level and good reception". That was the answer of 48 percent of the people, ad the price per a minute and tariff plans were determinant for 41 percent. However, the service price comes to the foreground when changing an operator (44 percent) and the connection quality gets the second place (32 percent).
More that half of the respondents told they found voice calls important and they planed to increase their number in future. That is more than real with the current tariff plans, but the question is how necessary that is. And here is the main idea of the research, it consists in the brand name is one of the basic factors when choosing a device, ad its technological saturation often plays not the least role. That is the terminal price goes to the background, and the main thing is voice service quality and the number of offered technologies, and a brand name allows taking extra charge. The company makes a conclusion the determining role of the price (which is an entry ticket for the cellular connection world) is not as important, the market is different now, and the ASP may be higher than the present. In another words, the brand name extra charge will grow starting with this year, that is one of the Nokia development lines. Besides a standard markup for middle-class devices (which is a markup of a similar device with comparable functions by the second echelon manufacturers or direct rivals in the Top5), the company plans to take up to 25 percent and even 35 percent for high-end products. A true example is the premium segment and the Nokia 8800 represented in it. The example is not demonstration, since the premium-segment distinguishes with high extra primordially. Then let's take the art-deco collection including the Nokia 7260, Nokia 7270, and Nokia 7280. Against a background of the last model having no copies on the market and even in own model line, which allows practically any price, two other models are now very peculiar. For instance, the Nokia 7270 is a bit retouched version of the 6170 with some hardware and software changes and, which is the main, another positioning. And here is the very extra we are speaking about. The experience of positioning a separate collection in the context of a product line turned out to be successful, and thus the company represents a series with separate numeration starting with letter N. These are multimedia devices with the maximum set of characteristics and focus on this or that function. And if the N70 is a classical smartphone with average characteristics (which users wanted to see in a model of the Nokia 6630 class), then the N90 is predicted for shooting, the N91 for listening to music. Considering the platform used in other models, the same soft which is only developing, we can say something beyond the given functions to draw attention and explain the prices was necessary to devise. Using various body materials, for instance, stainless steel (N91), and co-branding (Carl Zeiss and glass optics in the N90) became an evident way out. And thus the company explained the users what they pay for. The N70 and N90 differ in the optics (plastic and glass), the absence of autofocus in the younger model. Adding autofocus to the N70 would mean a lot of work, but then the model would have no evident differences from the N90 in the picture quality, which broke a primordial idea of different positioning.
Two conclusions are made. The company plans to increase the extra for high-end models, and that is the first time the research showed it was possible. The second conclusion is the material quality, product design but not functionality will form the difference from many phones. An at the same time, younger models will be kept in the background of the elder ones, they won't be so actively advertised and will be promoted as the solutions for discerning users.
Two clips demonstrating using Nokia's phones for business were shown at the conference, they were to illustrate the change of the company's strategy, a more precise product segmentation for various consumer categories. The first clip showed an Indian fisherman with a low-end phone. According to his words the device is not used to call for help in extreme case, not for calling home or his relatives, but first that is a business instrument. The explanation was quite original - after fishing the man phones port markets to know where the price for fish is the maximum and goes there with all his catch. As for me, the story is too artificial leaving more questions that answers. Straight off we supposed those very salesmen on the shore may use the phone for making a cartel agreement, and fishermen are unlikely to neat down prices then.
The second sample represented a mid level manager in Poland using the Nokia 6600. It was closer to the impressions of the device, its possibilities than any forced situations.
The idea standing behind the clips and actively promoted by Nokia's top manager during the conference sounded like: "Innovations for billions of lifestyles". The new paradigm of the company tells the phone has to response to one's personal life experience, and since we are different, the devices should vary also. Creating various models is possible due to offering a basic operating system, its primordial tuning for user's needs, active work with other providers, application developers. Doesn't it resemble a smartphone development concept? That means building various devices starting with the appearance (youth or classic, vivid or monochrome) and ending with the set of preinstalled applications (not at all or only business utilities included for free, the basic functionality is the same) is possible on the one platform. Also variation of technical parameters is possible, that is operating system versions, processor clock rate, memory type or capacity, the presence or the absence of extra functions, like radio. The company started following the strategy wholly in 2004, and we'll see it developing in the course of some next years. It seems the Nokia Connection announcements bring nothing new, everything was clear before. But really, the company told publicly it would starts manufacturing more phones which were gain all the price niches on the market. Basically the models will resemble each other but resulting differences will be quite serious. Just remember the comparison of the Nokia 6630 and Nokia 3230, despite all the paper similarity; in actual fact these two phones are absolutely different.
Another conclusion is not as evident. The device life circle will shorten due to higher segmentation and targeting on a certain group. And if earlier a new model remained up-to-date at least for a year or even more, then now this time will shorten and will form about 6 months this year. Then even a 3-4 months period will be possible. That will make the company produce more and more intermediate models. However users won't rush for changing their phones so fast and will do that once a year or more seldom as before. And here are several solutions of the problem. An evident and direct one is the fast fall of the price shortly, which is unacceptable for a brand with high extra for a brand name. Another solution is more refined and offers setting primordial prices on the level with the rivals or lower and then keep them high. Thus making the rivals dump and sale own products with a certain margin. Fats model line renewal solves the question of demand for "old" devices, they got outdated and no lead out of the market is necessary, just manufacturing capacity should be decreased. The situation will get paradoxical; with time the company's margin of the old products and the income itself will not decrease and on the contrary will rise. And also the question of rival companies is solved, they either will have to start cloning the phones or start loosing the market. Not just technical saturation of the model is meaningful when producing many models, but design solutions and material. And here Nokia has a traditional advantage using it now fully. Thus, the company managed to dictate the development line to its rivals for several years, like happened with the 40th platform. The result of turning to the only platform was the Samsung's answer step, which showed mass of alike products different in one-two features and design. Then this strategy brought profit, but will it remain successful today?
The customers' discontent is one of the Nokia's threats connected with a rapid shortening of the separate product's life circle. Buying a device with a certain set of characteristics we do not expect a much better device will be produced or announced in 4-5 months. For instance, the Nokia N90's customers will be "glad" to know Carl Zeiss optics may be integrated into the N70 size, but the main sales will have been committed by then. The comparison with Sony and its fast development of the PDA direction comes to my mind. New devices overtaking the previous ones in ergonomics, possibilities were represented every 3-4 months and they attracted their users. Customary users were dissatisfied with the fact their investments into PDAs depreciate in their sight. The moral obsolescence was so fast that pushed a part of potential audience away. And in the Nokia's case this is also possible.
A necessity of using all the possible phone variations became one of the side effect of a wide product line. The company started offering new form-factors (clamshells, sliders) and didn't bother of producing models similar to Samsung phones (being very popular). And this means Nokia will produce more clamshells and sliders in short time. If the Rotate form-factor gets necessary popularity, such devices will also be manufactured.
The changes in the company's strategy are very serious and hard to describe in the only report, there are many nuances and small details influencing the whole situation. We tried to give a general view of the company's strategy and describe evident consequences of its implementation. In the future half year we'll see the results of the made decisions, and then the events will happen even faster, which will bring many new models.
P.S. Nokia leads negotiations about licensing the Picsel Viewer and Picsel Messanger technology for both smartphones and phones. If the company licenses the technology after Motorola, Samsung, Panasonic and some other manufacturers it will take a serious step forward in the business segment. Read about the technology in the Samsung D600 review these days.
Published - 15 June 2005
Have something to add?! Write us... email@example.com
[ 31-07 16:21 ]Sir Jony Ive: Apple Isn't In It For The Money
[ 31-07 13:34 ]Video: Nokia Designer Interviews
[ 31-07 13:10 ]RIM To Layoff 3,000 More Employees
[ 30-07 20:59 ]Video: iPhone 5 Housing Shown Off
[ 30-07 19:12 ]Android Fortunes Decline In U.S.
[ 25-07 16:18 ]Why Apple Is Suing Samsung?
[ 25-07 15:53 ]A Few Choice Quotes About Apple ... By Samsung
[ 23-07 20:25 ]Russian iOS Hacker Calls It A Day
[ 23-07 17:40 ]Video: It's Still Not Out, But Galaxy Note 10.1 Gets An Ad
[ 19-07 19:10 ]Another Loss For Nokia: $1 Billion Down In Q2
[ 19-07 16:57 ]iPhone 5 To Feature Nano-SIM Cards
[ 18-07 14:20 ]What The iPad Could Have Looked Like ...
[ 13-07 12:34 ]Infographic: The (Hypothetical) Sale Of RIM
[ 13-07 11:10 ]Video: iPhone Hacker Makes In-App Purchases Free
[ 12-07 19:50 ]iPhone 5 Images Leak Again
[ 12-07 17:51 ]Android Takes 50%+ Of U.S. And Europe
[ 11-07 16:02 ]Apple Involved In 60% Of Patent Suits
[ 11-07 13:14 ]Video: Kindle Fire Gets A Jelly Bean