February 22, 2013

Nokia Prepares to Do Battle on the Low End of the Smartphone Scale


Just about a month ago, we wrote a story that pointedly suggested that Samsung would not dominate the smartphone space over the next five years. Yes, it will certainly continue to grab its fair share of the market -- especially at the low end -- but for those among us that believe Samsung is winning the war on both mobile device technology innovation and the "cool" factor, we can only shake our heads at such utter silliness.

The common wisdom of the moment is that Samsung will hold its own on the high end and will completely dominate low end smartphone sales not only within the Android market, but generally across all smartphones in this market segment, whether they run Android or Windows Phone 8 or perhaps one of the alternative emerging mobile operating systems, such as Firefox Mobile. As is often the case with common wisdom, it is simply wrong.

One of the reasons we've bet against Samsung dominating the market overall -- and we specifically noted that most of Samsung's sales come from the low end of the market -- is that the rest of the low-end smartphone players are only now beginning to ramp up their low-end operations. Samsung has had almost entirely free reign in this domain, but that is about to change significantly.

Huawei and ZTE are moving quickly to deliver their own devices here, and price will be a key competitive differentiator. Samsung will be hard pressed to maintain current pricing and margins, and will find itself undermined by the Chinese players.

HTC, which has now delivered two new and very cool devices, the DNA and the just-announced HTC One, now has devices on the high end that will pose their own challenges to Samsung's similar products. The HTC One, as far as we are concerned, is a distinctly superior smartphone relative to the Galaxy S III and the DNA holds its own on the large format phone front. If these are any indication, HTC's lower cost phones to come will also rove a threat and a challenge.

Now, as we've long anticipated it would do, Nokia, having straightened out its high end priorities with the Lumia 920 and especially its anticipated successor, will be turning its attention to the low end of the smartphone market. This is the now "old feature phone market" Nokia has long dominated but tried to hold on to for way too long.

At the 2013 Mobile World Congress being held in Barcelona, Spain next week, we can expect Nokia to unveil its plans for how it will attack this market. We can expect to see new much lower priced Windows 8 phones that we believe will find a ready market willing to try them out and be convinced they are the smartphones to buy. We are speaking here not of a revamped Lumia 820, but true low-cost designs that will look to regain the dominance Nokia once held through its cheap feature phones. This is a segment of the market Nokia should truly understand, and it is vital to the company's success to grab hold of it and take it back for itself.

Also, it is vital to Microsoft's own Windows Phone 8 market stare statistics ; it is here that Microsoft has always planned to see itself become the dominant player, and where it will begin to move that 3 percent share up to 15 percent and then 20 percent. Perception is vital to the mobile game all of the vendors here need to play, and a 20 percent market share made up of 17 percent share through the very low end of the market makes no difference to that perception. It is vital to both Nokia and Microsoft that Nokia wins this market.

Nokia also continues to expand its Asha models, which run Nokia's really old S40 operating system. These phones still have some legs left in them and Nokia will continue to use them to bolster its share of the developing markets in China and India. But the Asha line will not really cut it as ZTE and Huawei start to deliver true modern smartphones based on Android, Firefox or another OS such as Ubuntu. It is Windows Phone 8 that Nokia needs to deliver on with the low end.

We hope they do. Next week we'll know more about it and more about whether or not Nokia is on the right track or not.




Edited by Rich Steeves



Related Tags

Microsoft    Wireless    Smartphone
       

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