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Spillikins #113. Nokia E7 is a Symbol of the Company's Fortunes

In the previous Spillikins I promised that Nokia will get a piece of bad news soon, but it happened even earlier than I anticipated. For the first time since 1998 the ranking of Nokia was lowered by Standard & Poor's from A to A-. The reason for the downgrade was the loss of its market share and the decrease in sales. It is only a beginning and Nokia will be face negative publicity regularly. We will talk about it, but first we have another important event.

Contents:

  1. First Call Anniversary
  2. How IDC Assesses the Market and Gives Funny Data
  3. Share of Windows Phone 7 in the US Started to Fall
  4. Nokia E7 as an Example of Symbian^3 Faltering Fortunes
  5. Sony Ericsson Fights for Xperia Play

First Call Anniversary

The first cellular call was made 38 years ago with the help of Motorola DynaTac on April 3, 1973. Dr. Cooper was near Manhattan Hilton Hotel in New York with the base station installed at the top of Burlington Consolidator Tower (later renamed as Alliance Capital Building). Cooper called his rival Joel Engel and said something like "Hi Joel! Do you know where I am calling you? I have a real cellular phone in my hands".

If you do not remember the names of Martin Cooper and Joel Engel read this article about the dramatic emergence of cellular communications.

Form-factors of mobile phones, part one

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How IDC Assesses the Market and Gives Funny Data

I came across the information on the Internet how IDC changed its position within the last 6 months. The original material is available here.

Let's look at IDC data for 2010 and their assessment of the market.

Now look at the data released in March 2011.

As everybody else IDC learned that Symbian is dying. The share of this company has disappeared, while it was partially transferred to Windows Phone. The trust is very questionable in this area. Surely the death of an OS does not happen every day and people including IDC can make mistakes. Nevertheless, in the middle of 2010 it was clear that Symbian is coming to the end of its lifecycle and the market share could not be so impressive. Specialists behind this research were just not aware of all latest developments. IDC also were not ready to greet new OS, which became extremely popular on selected markets. Dealing with newcomers is not easy. Moreover, as far as IDC gets data only from press releases and information provided by companies' offices I will have a lot of work to do. It is a key example how we should treat any analytical research. Think twice as it is an imperative. The same applies to Mobile Research Group where I work. Analyze data you are being spoon-fed at all times. You will often come across fairy tales, which are quite farfetched. Read about another research to emphasize IDC problems.

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Share of Windows Phone 7 in the US Started to Fall

American research company comScore measured the US market in items and in accordance with the use of OS. It is an ongoing research, which gives a clear picture of things happening there. Dynamic changes are obvious in the last review. The data in question deals with Windows Phone 7. Remember that the US market is the home of Microsoft, where its reputation is the highest. Subsequently, sales are the most impressive, but after the initial wave we get the following results from comScore.

Top Smartphone Platforms
3 Month Avg. Ending Feb. 2011 vs. 3 Month Avg. Ending Nov. 2010
Total U.S. Smartphone Subscribers Ages 13+
Source: comScore MobiLens
Share (%) of Smartphone Subscribers
Nov-10 Feb-11 Point Change
Total Smartphone Subscribers

100.0% 100.0% N/A
Google 26.0% 33.0% 7.0
RIM 33.5% 28.9% -4.6
Apple 25.0% 25.2% 0.2
Microsoft 9.0% 7.7% -1.3
Palm 3.9% 2.8% -1.1

The share of Android is growing and the same applies to Apple, while everybody else is bleeding, including Microsoft. This pessimistic situation will persist until Nokia enters the market. In the US the sales of Nokia will not be crucial as it is a minor player here. It is important for Microsoft that Nokia remains powerful in Europe and Asia. Behind the closed doors both companies conduct serious discussions. Microsoft insisted on absence of preferences for Nokia and they are likely to win as the Finnish manufacturer is in a tight corner and it management has to sign a deal at any price. Nokia spoiled everything itself and cannot develop Symbian. The majority of developers is ready to defect to Samsung, while the Korean company is more than happy to hire them. This move is stunning in its effectiveness. Nokia invested heavily in its developers for decades. They just lacked proper management and goals setting. Samsung will be able to provide both for these highly qualified professionals.

Look at the share of companies in the US. This table is illustrative and requires no additional explanation.

Top Mobile OEMs
3 Month Avg. Ending Feb. 2011 vs. 3 Month Avg. Ending Nov. 2010
Total U.S. Mobile Subscribers Ages 13+
Source: comScore MobiLens
Share (%) of Mobile Subscribers
Nov-10 Feb-11 Point Change
Total Mobile Subscribers 100.0% 100.0% N/A
Samsung 24.5% 24.8% 0.3
LG 20.9% 20.9% 0.0
Motorola 17.0% 16.1% -0.9
RIM 8.8% 8.6% -0.2
Apple 6.6% 7.5% 0.9

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Nokia E7 as an Example of Symbian^3 Faltering Fortunes

Every week I mention that all activities of Nokia are aimed at people not buying Symbian products, but even I could not see how bad it was. A good example is the sales of the corporate flagship model Nokia E7.

The PR department treated the launch of the handset no differently from other models. The start of sales for Nokia E7 was heralded on thousands of websites. Unfortunately, the more Nokia promotes its products the less consumers buy them.

Remember the words of Ukko Lappalainen who mentioned in his interview to the Finnish periodical Kauppalehti that "E7 sales will be of the utmost importance this year".

Let's check how well the handset is sold. During the first week of sales in Russia the flagship store in Moscow could sell only 19 items. Compare it with appropriate figures for Nokia N8, which ultimately failed to become successful (2200 items per week in the entire country of Russia is nothing taking into account massive promotion). Data for N8 still showed 120 items per day. 19 handsets per week cannot hold against 120 items every day. The prices are considerably different, but Nokia E90 fared much better despite the comparable price and positioning. During the first week all Nokia E90 handsets were sold and the resulting deficit inflated its price. During one week the first shipment of 2200 items was easily sold and consumers were not satisfied with the lack of available items.

I was shocked when I learnt about the sales in the flagship store and shared this information on Twitter. In an hour I was corrected by an employee of the company, which owns the flagship store. The true figure was 24 items, so I made a blunder by making a mistake of 25%. Official representatives of Nokia are obviously unavailable for comments. We should expect something like "Nokia is happy with sales results for the model, which are on par with other handsets in the segment and the new model remains popular". Sales of 19 or 24 items per week in the flagship store clearly illustrate popularity rates for Symbian smartphones, when Nokia officially decided to get rid of them.

Nokia E7 is offered in Russia at the price of И750, while Nokia N8 can be had for И340. The staggering difference is not justifiable.

It is silly to set a flagship price for a model from 2010 with a weak processor, 256 MB of RAM, mediocre OS and outdated interface. Would you like to know what happened next?

After one week of sales the hefty price in the flagship store was reduced by 16% and E7 can be purchased for И620. Did the sales go up after the discount? Unfortunately, the song remains the same. In other shops the price will follow suit. We already had similar examples in the past.

Popularity of Nokia C7 in Russia: a case study

Do you know the current price of Nokia C7 in Russian online stores? И260-330 sounds like a good bet, as the initial price was И440 in December. Many retailers cannot let the phone stay on shelves for months without any movement.

Within 4 months Nokia C7 lost almost a half of its price. No other Nokia model showed similar price fluctuations in the past. Nokia N8 can also be mentioned in the following context, though it shed 30% of the price during the same period. You can buy the model for И340 now.

What conclusions can we make? The first one means that the end of Symbian will come sooner rather than later and sales already give a grim picture. Unfortunately, it leads to the second point. Nokia is not going to develop the platform they label dead. Symbian brings more losses than income at this stage. It is logical to discontinue the support of Symbian^3 by offering one update (so called firmware PR 2.0) and shut down all active work. All forces will be used for the development of Windows Phone 7 apps, which Nokia views as the most effective OS for its handsets.

Users looking for a valuable purchase rather than a cutting edge or modern solution will find Symbian^3 attractive soon when the prices go down like a lead balloon. I am still amazed that the power of the Nokia brand lost its appeal even in its strongholds. Lower prices do not boost sales, while the number of customers willing to gamble on Nokia products and deal with service centers soon after the purchase is dramatically decreasing. For example, in Russia Nokia is now associated with low quality and defect products. Nokia was often reluctant to repair defected handsets (though later on they changed the position regarding C5-03 and ordered their service centers to fix the issue they initially did not acknowledge).

Do you know how Nokia deals with defected models in Russia? The blame is always shifted from sellers and Nokia on service centers, which were not given instructions to replace handsets. Nokia cannot punish themselves and pretend to be innocent. Enjoy Nokia service. Are you still eager to play the Russian roulette with Nokia? Go ahead if you are brave!

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Sony Ericsson Fights for Xperia Play

At the beginning of April in many countries the gaming smartphone Play will hit the shelves. At the same time Sony Ericsson is trying to ensure its position in the segment. By its request Google deleted from Android Market its PSP emulator - PSX4Droid. It allowed running PSP games on any phone. The emulator was available during 8 months. Google did not provide any explanations and just said it violated store regulations. Emulators of other gaming platforms are still offered in Android Market. This action and the release of Sony Ericsson Play is not a coincidence. Companies fight for supremacy. You can still find the emulator and install it on any Android device.

Do you want to talk about this? Please, go to our Forum and let your opinion to be known to the author and everybody else.

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Related links

Spillikins #110. Catastrophe in Japan and Early Warning Systems

Spillikins #111. Myths about Free Applications for Android/Apple iOS

Spillikins #112. Nokia changes image Ц rebranding of the company

Eldar Murtazin (eldar@mobile-review.com)
Twitter    Livejournal
Translated by Maxim Antonenko (maxantonenko@ukr.net)

Published — 04 April 2011

Have something to add?! Write us... eldar@mobile-review.com

 

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