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Spillikins No 82. X2 is a Music Bestseller from Nokia
Microsoft decided to start its life in mobile environment from scratch. As we remember after the undistinguished death of Windows Mobile it launched Windows Phone 7 and turned a new leaf in its history. This system has nothing to do with the predecessor apart from the name and the company. Microsoft will have to catch up with the rest of the pack and it does not have many trump cards. It counts on development tools, availability of Xbox games from the very outset, which was not used in mobile phones before. Another important factor is the loyalty of customers and good relations with ODM partners, which sell other Microsoft products and are ready to embrace Windows Phone 7. At first the models will be not numerous and the major players remain the same – Samsung, LG, and HTC. All three manufacturers have more faith in Android now and they do not hide it, but they are ready to produce models for Microsoft and try this niche. These products will not be special and flagship Windows Phone 7 models will be clearly behind their Android rivals (the parity will be possible in one or two cases only). The number of countries where Windows Phone 7 will be launched at the end of 2010 is also limited. The US market is the top priority, which is a smart move. You have to reinvent oneself in your main market. Many European countries will get this OS in the first or even second part of 2011 due to the absence of localization. There will be delays, but I do not think we will miss much.
Microsoft already prepared many surprises. In particular one top managers at his meeting with an analyst from Deutsche Bank mentioned that billions of dollars will be spent on the promotion of WP7. We know that the direct marketing of WP7 in the USA will require $400 million and $100 million will be spent in the rest of the world. $500 million will go to developers and partners during the launch (guaranteed payment to developers if the sales do not reach a particular level; development costs for vendors and so on). This significant amount will be predominantly spent in the US and here I instantly recall the example of Motorola DROID for Verizon. The carrier spent $200 million during several months, which elevated this Motorola model to the status of a bestseller, but the company could not ship enough quantities of it. Marketing is crucial in the US and sales figures usually confirm this.
Do I believe that WP7 launch will be an important event for mobile OS market? I am rather skeptical than enthusiastic. Its introduction coincides with the unveiling of Android 3rd Edition, which will upset all Microsoft plans. It took the company too long to offer its own vision of basic features. The question of WP7 is more important – it is right to start anew and enter the market for the second time, but how fast will it develop. The first step is the most important, but the road ahead is a long one. Let's see what happens next year and how dynamic will be the project development.
One interesting event has already taken place. Nokia decided to have another go at the US market. The Finnish manufacturer banked on MeeGo platform. It will become available at the same time with WP7, but its promotion will cost much less and Nokia does not have a name in the US. Years of futile attempts to get a foothold there did not pay off. Surprisingly, Nokia starts investing in the promotion of its platform in the hostile environment without any chances to succeed. We will see how it works out in real life, but the brand appeal and expenses on advertisement and promotion suggest that Nokia will inevitably lose there.
In the last Spillikins I included the link to the article in Unwiredview dedicated to the price increases for Nokia products. New models had their prices increased without much hassle. The table graphically explained that in terms of prices Nokia is not consistent even in its own shops. What can be more obvious? Nevertheless, during the week I came across the defense offered by loyal Nokia fans, who blame retailers, while the company tries hard to keep prices as low as they promised before.
Let's look at Nokia decisions in Russia. The table gives wholesale prices for new models excluding the VAT of 18% in Russia. However the table explains everything quite clearly.
Important. Wholesale prices were taken from the official Nokia price list for Russian partners as of August 17, 2010 (we have the original at our disposal).
I did not give the full list and selected only the latest models, but this trend is the same for other handsets as well. The models I included in the list are not the worst examples of the price difference. According to the manufacturer the retail price of Nokia X2 (taxes excluding) must be €85 in all countries. The table shows that this price is impossible in Russia, because even before the taxation the wholesale price for the model is still €85 (we can ignore 50 cents). How the company can quote its prices and not to follow this policy in one of its markets? It happens systematically and I am afraid it is a kind of fraudulent attitude to customers. I will be glad to hear how the recommended price of €85 can be reached unless you give phones for free.
For other models the price difference ranges from 5% to 12.5%. Is it enough to offer recommended prices? The answer is negative. The level of profitability for European carriers is 25% and up, while in Russia retailers need from 20% to 35% due to higher costs of business. So Nokia offers its partners the profitability of 5-12.5%, which is not real. What do we have then? Unfortunately, in Russia recommended prices from Nokia press releases cannot be observed. Unwiredview analyzes different countries and highlights difference in pricing policies. Price formation varies from country to country and the gap may be quite startling.
We should stop complaining that retailers raise prices to get more profits, because it is not true. They add a standard markup to the prices from the manufacturer. The facts were given above.
I had no time for Nokia X2 during my vacations, but the model was already waiting for me. It is one of the key handsets for Nokia as it replaces successful Nokia 5130 XpressMusic and automatically becomes the most accessible music solution on the market. I like the model, especially its price of €85 Euros (0 Euros with a contract and €85 to €100 in different countries as a prepaid option). In Russia the model is available from Nokia branded shops or in Euroset for $180-190.
I updated the firmware to 4.80 straight away for the old software not to influence the impression. The model features Compact UI (S40 6th Edition), which is good. The back panel has two loudspeakers and they really offer powerful sound. Plastic elements near the loudspeakers wore away in a pocket (no keys or coins!) within several hours. Plastic has clear traces of roughness and it is likely to be the weak point of the phone. The metal battery cover has no vertical or horizontal looseness. I heard comments on the web about minor chances of looseness, but I did not experience it. May be I was lucky.
TFT screen has minimal viewing angles. If you turn the handset a bit, the screen fades away and becomes invisible. Minimal price is obvious here. The radio works without the headset and it is a definite advantage. Music sounds loud enough in earbuds from the box, but if you change them for something more purpose built the resulting sound will show an improvement. Sides of the phone host player controls.
The camera again underlines the end of the megapixels race. A 5 MP module without the autofocus is enough here. There were no apparent bugs in the model or its software. Somehow the text input in Java applications is slow, though in 6300 and other models of that generation it was never a problem. From time to time the camera was also slow to react.
Taking into account the future price decrease for the model it has no rivals and will become a bestseller in its price range. Samsung cannot offer anything comparable. S7220 Ultra is old and more expensive, while Shark loses out in terms of features. Sony Ericsson Elm supports 3G and multitasking, but is more expensive and belongs to another class.
Other advantages are the charging via microUSB, support of high capacity microSD cards with the hot swap option. The downside of its music part is the impossibility to play folders in the player, but it is not new.
All advantages and problem areas of the model will be covered in its review, which will be published this week. I think it will be interesting. My preliminary verdict is that despite some issues (body and software) we have a bestseller on our hands.
That is why I have a rhetorical question. How Sony Ericsson plans to sell its "green" models if Nokia products are decent and relatively inexpensive?
That's a shame that once again new voice services from Google will be launched not in Russia, but in the USA (surprisingly, some treat Canada as a distant part of the country). So, users from these two countries can call through Gmail to local phone numbers. Until New Year the calls in the USA and Canada will be free, but we do not know what will happen with prices next. We know the rates for calls to other countries, though. They are quite aggressive and lower than those offered by Skype. It looked as if Google would take this saturated market by storm. Within 24 hours Google announced that the first million of calls had been already made. To my mind this figure is ridiculously low for Google. For a long time I thought that Gmail was one of the leading webmail services, but I was massively surprised once learnt it was not that huge. I think a similar story will be repeated with voice calls. Remember the hype around the sales of Nexus One via Google online shop and the subsequent fiasco. We should not overestimate the power of Google brand. It is not all conquering and calls from Gmail cannot lure all Skype users overnight. People need something extra to make the shift. I will not say more.
The official unveiling of Samsung tablet will take place on September 2 in Berlin during IFA. We edge closer to the event and there is more information available every day. You can even watch a video.
Characteristics of the tablet show that Samsung will not compete directly with iPad and will operate in another niche. 7″ (800х480) screen uses traditional TFT technologies, because the company faces the deficit of Super-AMOLED displays for handsets. In-built memory is offered in 16 and 32 GB with 1 GHz processor and voice calls for 3G version (through the headset). WiFi b/g/n is also available. The device is highly original and much will depend on its price. I don't believe it will be the main market player. It will enjoy good sales, but will not make a tremendous splash. This model may be important for Samsung, but not for the market in general.
This week I came across Leica S2 with a 70 mm lens. I have to admit there are 5 lenses and all of them are fixed ones, but a 70 mm deserved special attention. If anybody expects me to come up with a detailed review this week, then I have to disappoint you. I am not so overconfident as to test professional cameras and waste your and my time. I was interested in another fact. Several years Leica was firmly out of the spotlight. Now the company returns to the frame and uses its own brand. People who saw me with Leica S2 remarked that I had a high class camera. They did not know me and never tried any Leica, but the power of the brand was enough to connect words "quality" and Leica. From my childhood I had the similar associations about Pentax.
It was interesting to try a Leica DSLR. It is a new world different from Canon, Nikon, or second tier manufacturers I never tested. The price of €12 thousand cries for attention. I have not decided on my personal impressions yet, but I think that Leica can attract rich amateurs, though some professionals may also find it interesting. This camera can lead you to the universe of amateur photographers. The power of the brand does the trick again. I will stop here and you will read about the details in a separate article this week. If you have any suggestions as to this upcoming material write on our forum. I will gladly follow you.
Have a nice and happy week!
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Published 31 August 2010
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