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Rory Cellan-Jones

How smart is Nokia?

  • Rory Cellan-Jones
  • 16 Apr 09, 16:45 GMT

Apple's iPhone may be the world's best-known phone, Google Android is making a growing impact, and Samsung, LG and Sony seem to bring out smarter phones every month - but make no mistake it's still Nokia which dominates the mobile phone industry. So when the Finnish phone-maker released results showing a 90% drop in profits the industry could have been excused for running in panic.

So has Nokia, which still has 37% of the global mobile market, lost the plot? Well its share price leaped ahead after the results came out, despite a fall of 19% in the number of phones sold this year compared to last. The market was happy because the news wasn't worse.

Nokia reaffirmed an earlier forecast that the overall market would shrink by 10% this year, pretty shocking for an industry which was used to 20% growth every year, but investors latched on to the idea that the gloom wasn't getting any deeper.

But there are still questions over how well Nokia is competing in the one area of the market that is still growing - "converged mobile devices", as Nokia calls them, or smartphones to the rest of us.

Nokia N97

The company only managed to sell 13.7 million smartphones in the first three months of 2009, compared to 14.6 million in the same period last year. But the company's CEO Olli-Pekka Kallasvuo still managed to extract some good news here, claiming that its share of the market had actually ticked up a little since Christmas.

He trumpeted the success of the 5800 Xpress Music phone which was Nokia's number one seller in the first quarter of the year. But this device, touted an iPhone rival, was the company's first mass-market touchscreen phone - and arrived many months after just about everyone else had brought out similar devices.

Nokia seems to have been caught napping by the way smartphones have moved from early-adopter business devices into the mainstream. I remember visiting their Helsinki headquarters in 1999 and finding everyone there tapping away on the first version of the Communicator - and telling me that it made business meetings a bit tricky because colleagues were messaging each other across the table.

That device seemed extraordinarily advanced at the time - and Nokia has continued to develop the kind of phones that appeal to well-heeled early adopter executives. Now, though, everyone wants a device that is both smart and simple, and Nokia has struggled to deliver that combination.

A lot is now being staked on the N97 which arrives in June, and looks an attractive combination of touchscreen and QWERTY keyboard. Olli-Pekka Kallasvuo told the investment analysts that he hoped it would sell a million a month, if the price charged by the operators was right.

But one analyst reminded me that June might be a difficult month to launch a smartphone because that's when a new version of the iPhone may be unveiled. Nokia probably sells forty times as many phones as Apple but the N97 could still find itself overshadowed by the glare of publicity surrounding a new iPhone. Perhaps the Finnish company needs smarter marketing, along with its smarter phones.

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Comments

  • Comment number 1.

    There is one important reason why Nokia should get worried - the popularity of the appstore and i-tunes means that the i-phone is becoming sexy as well as functional...

    Nokia need to find a niche or they will quickly lose ground in this very competitive world...

    At the moment the trendy go for the i-phone and the business bods go for the blackberry - This leaves Nokia trying to fill a very inconvenient gap in between - It has to find a third way and quickly in my opinion...

  • Comment number 2.

    While Nokia continue to demonstrate to end-users (us, not the telcos) that it basically hates them, by the way it arrogantly handles handset software updates, failure to recall faulty products and so on, they will continue to lose ground to the newer entrants to the market who get better publicity through word of mouth.

    To whit, the 5800 and the known faulty earpieces which it sold in the UK for weeks and refused to admit that there was any known problems - even though one of their own management in Finland was quotes in January as admitting was a problem. Every one of us "early adopters" was made to feel special - in a bad way - for daring to complain about the fault. This is even after staff at it's Regent's Park shop openly admitted that 80%+ of their own allocation had to go back for repairs.

    Not a sinlge public word on their web site or through their customer hate, sorry care, phone lines.

  • Comment number 3.

    I agree most of all with your last line - it's all about marketing, and about not much else, really.

    If it weren't for Apple's very good marketing, the iPhone would have completely slumped. It's a shame they're not as good at making phones as they are at marketing.

    Nokia make very good phones, and I'm looking forward to the N97 coming out. But only people interested in technology will know about this, rather than pretty much everyone having at least *heard of* the iPhone, even if they wouldn't know as much about it as people like Gaz Thomas and the like.

    Nokia need to step up their game as far as marketing's concerned, their naming of phones is pretty boring (numbers...) and their advertising is pretty naff... take the TV advert for ComesWithMusic... it was so low quality it even looked like it was shot on a £99 camcorder, and it did nothing to explain and sell the service. Apple's TV adverts for the iPhones are brilliant as they're short, snappy, convey the information and make it look very easy and fun!

  • Comment number 4.

    Please let one of the previous 3 awaiting mods not have got there before me...:)

    But from what I have heard about the testing times in No 10, the production lines should have been running overtime to meet demands for replacements.

  • Comment number 5.

    Nokia produces great products for people who have yet to use an iPhone. Once you use an iPhone you realise it is not just a phone but a true communications and computer convergence device - Nokia has to do more than produce just another handset.

  • Comment number 6.

    Perhaps the fact that we are all slowly being moved to 18 month contracts by the Networks is causing a fall in mobile sales? If I'm on an 18 month contract I only "buy" a new phone every 18 months, rather than every 12.

  • Comment number 7.

    Nokia have been guilty of resting on their laurels after the success of the N95 which pretty much demolished everything in the smartphone market where Nokia have a presence. The N96 was a travesty - a much delayed slightly tarted up N95 just doesn't cut it and the endless - and pointless - variations of the N-series (stand up N81, N78, etc) just went to show how out of ideas Nokia were.

    Fortunately the 5800 is a breath of fresh air now that the launch issues - again for which Nokia must take full accountability for shockingly bad QA - have been resolved. It's a really nice phone even if it is an obvious test platform for devices to come.

    I'd be interested to see a comparison of 5800 sales vs iPhone sales over the last quarter in Europe and Asia as I think the results would surprise a lot of people.

    On the subject of the iPhone, I tried it for a while and it just didn't cut if for me - too many missing features (and, sorry, having to wait months for SMS forwarding just isn't good enough) and, frankly, too big. Also, the initially lauded UI is pretty limited and actually a bit stupid. 9 pages (or is it 11 now?) for apps with no folder structure? Ridiculous. The 5800 feels like a proper phone - one handed T9 texting, easy to dial one handed, voice commands, etc - and just suits me better.

    That said, Nokia do need to up their game. The N97 looks promising but I'm not entirely convinced.

    Time will tell I suppose.

  • Comment number 8.

    Nokia do indeed need to improve their marketing and bring attention to the advantages of their products.

    I tried out an Apple Iphone 3G and was seriously unimpressed.

    Reminded me of a 1980's American car.
    Lots of Chrome, bit too wide for the road, underspecified and incompatible with other stuff.
    The main thing to admire about the Iphone is the marketing and hype.

    Compared to the cheap and cheerful first mass market Nokia 5800.
    Where are the Iphone's powerful stereo speakers,
    3.2Megapixel Zeiss camera, Camera Flash, AutoFocus
    Long battery life, replaceable battery, expendable memory with microSD,
    Cut and Paste, Video recording, Video light,
    Voice dialing, Handwriting recognition, Stereo bluetooth support
    Full bluetooth support, Multitasking, Tasks in background,
    BBC Iplayer program download, Flash support in browser.
    and many other more detailed features missing in the Iphone 3G.

  • Comment number 9.

    I'm sick of all the touchscreens! I have an HTC Touch HD for work, and after the initial novelty factor, it's just an occasional pain. I still think monoblocks and sliders, with number pads, d-pads/joystick and a few specialist buttons (eg. music, camera), are the best form.

    I think it's a shame in the N-series that started off in nice stainless steel (for the N90, N91), that they had to downgrade to cheep plastic. Now I have a digital camera (so am no longer too bothered about the lack of flash, camera button and low res), my only real gripe with the N91 is that there's not quite enough system memory to make the web browser work well.

  • Comment number 10.

    I am growing increasingly frustrated at Nokia's impotent marketing abilities and failure to produce bug-free smartphones.

    Nokia were one of the first to include wifi and (near) full html support in the N80 in 2006 yet no-one knew except people interested in technology.

    Nokia were the first to integrate GPS into a phone with the N95 in 2007 yet most people still think the iphone is the only device that has GPS.

    It beggar's belief that they have not leveraged their superior technological offering with effective marketing and by producing decent software we know their phones can handle.

    After the painfully disappointing N96, the N97 will be make or break for Nokia smartphones.

  • Comment number 11.

    Not sure why everyone's raving about the 5800, I tried it and was very disappointed with the clunky interface, inaccurate touchscreen, and just the general feeling that everything was being squeezed in to fit the smaller screen dimensions. The iPhone on the other hand while having acres of space (especially for web browsing and games) is just too big for me for a daily use phone. I think I'll be going the slimline phone paired with iPod Touch route to get the best of both worlds.

  • Comment number 12.

    Ive long been a symbian fan, having had 7 of them, but the time came for me to move on. I got tired of the downgrading build quality as new models came out. Although there are thousands of apps, they are often a bit ugly and rarely get updated properly. I still love the interface though, supremely easy to use quickly, like no other phone on the market. Its the only smartphone that can reasonably hide its smartness and not frighten off the casual user.

    I jumped ship this year though, but not to Apple. I jumped to Windows Mobile. I found Apple to be all show and no go, no real substance. Flashy apps that do nothing useful, its a kids phone. Winmo however is more functional and has more useful apps.

  • Comment number 13.

    Dominance in technology sometimes breeds complacency (consider Internet Explorer, PlayStation), but it doesn't always lead to failure. Nokia hasn't been cool since the 8210. But there's lots of room in the market for inexpensive mass-market consumer phones and higher-end bricks for the iPhobes.

  • Comment number 14.

    The problem Nokia have is they have no real 'smartphone' that comes close to the iPhone.

    It's the software that makes the iPhone so good. Pure and simple. Until Nokia produce decent software and something like the App Store, they will continue their downhill slide.

    My iPhone is my No.1 device. I tend to think of it more as a pocket Mac that also happens to make phone calls and receive SMS & MMS (yes I am an iPhone developer and I'm using the 3.0 beta 3 software).

  • Comment number 15.

    Apple use aggressive marketing (something I don't particularly agree with but it is effective) and produce trendy technology.

    Nokia on the other hand seem to be stuck in the vacum of previous success. Much like Atari or more recently Sony have found themselves in.

    Personally I have a G1 and find the fact that calls, sms and emails all come straight to it extremely useful. Catching emails on the fly like an sms is possibly the most useful feature to have on my mobile now. I was waiting for the N97 but read the various bad reports on the N96 and that made my decision for me. Shame really as the Nokia 3310 was possibly the best phone only device I had along with the first gen Razr.

  • Comment number 16.

    Am I the only person who finds Apple products a bit dull?

    I actually prefer other brands, and am even tempted by a Z*ne...

  • Comment number 17.

    Nokia will really struggle in the next 5 years. The iPhone and its app store will come to dominate the market in an area where nokia could have sewn up completely. They have apps, but not all in one place and certainly not easy to install and pay for. They completely missed the rise of the use of phones on the internet in the wider sense of the user experience with the browser on a smaller screen.
    I'm no Apple fanboy, but the iPhone is an absolute triumph of hardware and software working in complete union to deliver a whole user experience. It doesn't need a manual that looks like a book, it's intuitive and it works.

    The market doesn't stand still. Those that don't change, die. Nokia isn't there yet, but my god it needs to rewrite its phone software quickly.

  • Comment number 18.

    I have been repeatedly stung by Nokia, with phones like the N93 which was not finished properly before it was released, didn't function properly or live up to the claims and has never been properly fixed.

    All of Nokia's "smart" phones suffer from their desire to put profit above customers' needs, shown most ably by their supposed phone lifecycles and evolutions. The most common reason for a Nokia smartphone to become outmoded is because the software on newer phones gets updated and more features, meanwhile older (and usually even only slightly older) phones get left to die off quietly.

    The N97 will be my next phone and I'm hoping that they'll realise and start treating customers better from this one onwards but if not - my next phone will be something else like a Samsung.

  • Comment number 19.

    @D4lien N96 & N97 have almost nothing in common; 5800 is the halfway step to N97.

    I agree with most of the comments here in regards to Nokia and marketing. I think the iPhone is a nice product backed up by an even nicer backend (iTunes). However the device is quite limited and what makes it really stand out is the appstore.

    So the question here is how useable and enjoyable Nokia's upcoming Ovi Store will be....

  • Comment number 20.

    "They have apps, but not all in one place and certainly not easy to install and pay for."

    Ovi store, due at the end of May, will correct that.

    I doubt Nokia will struggle short term. It'll be interesting, for example, to compare the 5800's European sales against the iPhone's this quarter. I suspect it'll be pretty close.

    Which is the point, really: the phone market is extremely diverse. Nokia understand this which is why they have a broad proposition. Apple have chosen to focus on a much more specific sector. This may be their undoing in the end.

  • Comment number 21.

    Whereas most of the previous commentators have foccused on Nokia's failings when faced with the marketing machine that is Apple and the Iphone, the other end of the mobile market is being completely glossed over - whilst Nokia is still hell bent on telling us music and touch this touch that is what we want, up sneaks 3 with its in-house produced INQ1, possibly one of the cheapest handsets on the market (under £80 on PAYG) with MP3, real email, RSS feeds, Windows Messenger, Skype, half decent web broswer and the real killer app for the moment, completely integrated Facebook. OK the camera lets it down and a BBC Iplayer app would be the bees knees but Nokia need to pay more attention to what the mobile owning public want if they want to stay in the game !!

  • Comment number 22.

    I think hashwartt's comment (number 10) is incorrect;
    "Nokia were the first to integrate GPS into a phone with the N95 in 2007"

    Completely wrong - I had a Motorola A920 in 2003 that had inbuilt GPS.

    Nokia's problem is that it's GUI was great in the creaking old basic function monochrome days, but doesn't cut the mustard now. Add in also their inability to innovate.

    I would liken them to a band that once had a massive hit record, and then has released subsequent records that have failed to make the same impression and are just the same old regurgitated formula.

    The giant will undoubtedly see its market share diminish in coming years as other companies gain more of a foothold.

  • Comment number 23.

    Yes, the N97 will find itself overshadowed by the iPhone because you will ensure that that happens. How much is Steve Jobs paying you?

  • Comment number 24.

    Nokia annoys me everytime they go to release a new phone. They pretend to "leak" their protoypes and they won't generally release their new product until half a year later. Take the new N97 for instance, due any moment now, but was announced last Christmas 2008.

    It's teasing. I have searched Google every week for new info, and by the time of six months, competitors have probably released better phones, but Nokia got what they wanted - idiots like me who desperately want the phone no matter what! It's not fair. Maybe I do want the iPhone over the N97...? Now I have to wait until my operator carries the phone, or I will switch networks.

  • Comment number 25.

    I've used the iPhone for half a year and switched to a Nokia N97 for about 2 months.
    For me, the Nokia has been much better than the iPhone. It takes better pictures, records superb videos in DVD-quality & tons of free applications are available on the Internet from tons of web-sites which are not owned by Nokia. I think it's Apple's superb marketing and the "Apple Factor" that has made it so popular. If one pre-assumes that the iPhone is the best and expects a Nokia device to mimic the iPhone, he'd soon realize that that's not the case. Like they say- To be better-it has to be different. It all depends on the users taste & its wrong to say-"Nokia needs to do this and that". Nokia is doing what they think they should do. Use it if you like it, use something else if you don't like it-& taking a quick look at the numbers-a lot more people are liking Nokia than the ones who are not. Thank you.

 

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