Nokiaâ€™s Bad Q1 Results: Will Windows Phone Change Anything?
Several days ago famous phone manufacturer Nokia announced their preliminary financial results for Q1 2012, and the numbers were… disturbing. For 14 long years Nokia was recognized as the biggest phone manufacturer, but now, despite all their efforts, the company is losing its title. Why is this happening? What has Nokia done wrong? Will their new Windows Phone strategy help them?
One of our guest writers explained: Since 2000 (or even earlier), Nokia was one of the best phone manufacturers, famous for making really good-quality phones with nice design. Their feature phones were extremely popular in Europe and many Asian countries, even though they were more expensive than many other phones. My first two handsets were Nokia phones: in early 2000s I bought a Nokia 6100 — one of the best devices back then, and later, in 2007, I replaced it with a Nokia 6131. Back then Nokia’s feature phones were still very popular — after Europe they conquered the markets in developing countries, too.
Then the first smartphones appeared and started gaining popularity. I didn’t switch to a smartphone back then, however; my 6131 worked really well, had great audio quality (I like to listen to music via my phones, so it’s important for me), and I wasn’t afraid to drop it, so I used it for several years, and only in 2011 I first thought about buying a smartphone. I wanted a cheap device, since it was going to be my first smartphone ever, and I wasn’t sure I would like those touchscreens and all the other “smart” stuff. I was thinking if I should by Nokia’s C7 or Samsung’s Galaxy Ace — both had similar features and both looked great. But the Galaxy Ace ran Android instead of Symbian (and I read many articles claiming Android was cooler), plus it was about 30 percent cheaper than the Nokia C7, so I decided to buy it after all.
I guess here’s the moment when everything went wrong for Nokia: their Symbian smartphones were not competitive enough — their ruggedness and good features couldn’t justify their high prices, so many people, including me, chose to buy devices made by other manufacturers, since they had similar features but lower prices. Last year Nokia understood that their Symbian smartphones weren’t selling well, and the situation was becoming dangerous, so they signed a contract with Microsoft to start using Windows Phone as the main platform for their upcoming devices. That’s when the first Lumia phones were announced.
Nokia hoped that WP would bring their phones to a new level and help the company regain the popularity they once had. Well, the Lumia phones were received rather warmly, but Reuters, for example, doesn’t think they can really help Nokia rise again — the news agency has interviewed several European mobile operators and found out that the Lumia devices were not as competitive as Nokia would like them to be, since they didn’t have any interesting innovations, and though there are many affordable Lumia 710 and Lumia 800 deals (at least in the UK), the SIM-free versions of these phones are still overpriced.
As a result, those phones don’t sell well in Europe, since there are far better deals for the same prices. They don’t sell well in countries with lower incomes, too (which used to be Nokia’s main markets when their feature phones were still popular), because they’re too expensive for their residents.
Some operators are sure that the Lumia phones would be much more popular if they came with Android instead of WP. Truly, Windows Phone dictates some restrictions, like maximum screen resolution and type of processor, plus it doesn’t support microSD cards, and this makes Nokia’s Lumia phones less competitive. So what should Nokia do in a situation like this? Despite their hopes for WP, they are still losing their popularity, and the Lumia strategy doesn’t seem to work at all. If last year Nokia was still the biggest manufacturer, this year they had to yield this position to Samsung, which had shipped more devices in Q1 (for the first time!).
Perhaps they should first of all try to understand what makes Samsung so popular now. First, for those who love cool high-end phones Samsung has made the Galaxy S2 — the best phone in the current market, and they have a number of other good phones from the same line, and none of them is overpriced — the S2 has almost the same price as the Lumia 800. Second, the same Galaxy line has a number of really good mid-range devices (including the Galaxy Ace I mentioned before), and they’re very cheap. Third, for those who don’t like smartphones, Samsung has a number of feature phones — maybe they’re not as well built as Nokia’s phones, but they’re still good, and they come at low prices.
So Samsung manages to cover all three sectors in the mobile market, while Nokia covers none at the moment. So the best thing in this situation would be to:
1. Make cheaper feature phones, but not at the expense of quality and specs.
2. Make several mid-range phones like the Lumia 610 and sell them for a possibly low price.
3. Introduce one or two devices that could really compete with the Samsung Galaxy S2, the upcoming Galaxy S3 and Apple’s iPhones.
These devices can, of course, run Windows Phone, but perhaps the next version of the platform knows as Apollo (which is coming this year and will most likely add some flexibility to the OS and its restrictions). Of course, many geeks think it would be better if Nokia chose Android for its high-end phones, but we all understand this is unlikely to happen. The company will also need some revolutionary innovations (and NFC won’t work!), something only Nokia’s phones will have — it’ll help to attract some attention.
If Nokia manages to do this, I believe they’ll start selling a bigger number of devices, and by the end of the year they’ll take back the title of the biggest manufacturer from Samsung.