Nokia gets its chance to come back as Lumia 920 is hotter than iPhone 5 in China
China is the world’s largest mobile phone market. Early this year it has also overtaken the US as the largest smartphone market and by Q4 2012 exceeded 60m units shipped over one quarter, growing at 38% each quarter, according to IDC. It is no surprise that all mobile vendors have emphasised their focus on China, a market that can make or break their fortunes, especially considering the signs of saturation in some of the key western markets.
This includes all of the three biggest mobile device manufacturers - Samsung, Nokia and Apple. While Samsung’s position in the smartphone market in China last quarter was at no.1, followed by the local players, both Apple and Nokia have been struggling.
Apple’s position has slipped to No.6, while its market share was under 10 percent of all smartphone shipments. No wonder that before the launch of iPhone 5 they were trying so hard to sign agreements with all three major mobile operators in the country, but only managed to get two and missed on the largest one, China Mobile. Sales of the iPhone 5 over a three-day launch weekend a week ago have reached 2 million units - a muted success that was largely attributed to activity in the retail stores of China Unicom and China Telecom, where people were buying subsidised devices at a time when Apple’s own stores have seen very limited action selling iPhones at US $846 and above.
Based on the rate at which iPhone 5 has been selling at the launch weekend previously and the monthly units sold, I estimate that in China Apple is going to ship approximately at a rate of 4.5 - 4.8 million units per month.
Nokia has been ruling emerging markets over the past decade, however the move to be exclusively Windows OS has dropped its smartphone business in China to a 6 percent share in mid-2012. The choice to go with a single software platform (the wrong one at the time) and increasing availability of local substitutes meant that the shiny Lumia smartphones did not get a chance to prove their worth. With the release of Lumia 920 on Windows 8 (regarded by many as the most advanced device on the market) and a growing consumer demand for high-end devices in China, finally the timing seemed right for Nokia and start the comeback and turn back to growth.
Unlike Apple, Nokia have managed to agree terms with China Mobile, the largest mobile operator in the world with a base of 703m subscribers, to have Lumia 920T as the flagship smartphone on the network (as well as Lumia 820 and 620). This, together with a similar agreement with China Unicom, has massively boosted Nokia’s sales channel in China and prospects for a comeback on the back of its high-end device range.
It’s also helpful that the Chinese customers seem to have liked the device and stormed to pre-order online as well as buy in the retail stores, where Lumia 920T has sold out within the first two hours. The model has been outselling iPhone 5 on Amazon China, ranking at No.5 among the most popular mobile phones across all categories a week before launch, and No.1 at the US $300+ bracket.
Sounds like a great success story for Nokia, so welcoming and long-awaited by many (including me). It would have been, other than the fact I have just mentioned - Lumia 920T has sold out within the first two hours. There wasn’t enough supply to sell, therefore everyone stopped buying. A look at the Amazon China store eight days later featured Lumia 920T at No.73, while the top 8 indicates that the spot hasn’t been taken by any of the competing models.
Apparently Nokia cannot produce the quantities of its top phones it requires. In case the information is right that the Beijing plant can only produce 20,000 units of Lumia 920T per day and this is their main facility for the whole of AsiaPac, it won’t be possible to truly challenge the iPhone. I estimate Apple’s revenues from iPhone 5 in China to be around 10x of those Nokia would generate from Lumia 920T sales (based on the assumptions above).
Even taking into consideration the effect of “hunger marketing”, which might be applied, it does look like there is too much “hunger” (underserved demand) and a lack of a clear roadmap informing the consumer as to how it will be dealt with in the near future. Ramping up production, adjusting inventory, supply chain and logistics won’t be easy. The demand might shift to the best available alternative leading to an opportunity lost. Samsung will continue shipping a range of models on multiple platforms, including the rumoured dual-SIM Galaxy SIII. Apple is also expected to be on an upward trajectory, especially if they manage to get to an agreement with China Mobile. Nokia needs to be more assertive in the markets where it really matters and China is one of those markets right now. It would have to be the next big launch if Nokia were to seriously challenge for the leadership in China.
Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.
We are approaching an innovation paralysis where it is more profitable to kill (or get a license fee from) competitor’s products rather than invent something truly new.
I do believe that one needs to protect their IP, however it should be for something which presents a breakthrough to the mankind, a real invention in its classic sense.
What everyone needs to realise is that someone out there will do it to them one day, and it might happen quite soon. Attraction to short-term gains should surrender to the focus on long-term prosperity and sustainability, and this will undoubtedly come from someone who is able to innovate better and faster. And I honestly believe that if does not come from the big guys of today, it will come from the big guys of the future. And they aren’t necessarily going to be the same guys.
Source: The New York Times
While Nokia and Microsoft are holding an event, Samsung is busy selling phones
After the court announced it decision to punish Samsung and ordered to pay Apple over $1bn, many have said (and the stock markets agreed) that the true winners were Microsoft and Nokia.
We shall see very soon whether this is the case as Nokia and Microsoft are hold their event to promote Windows 8 and launch new Nokia phones (supposedly Lumia 920 amongst them).
I still think that looking at the outcome of the court case and trying to quantify what would be the scale of the benefit they get, Nokia should be biting their nails in anger and thinking “we could have been where Samsung are now”, and they will be right. Moreover, with one of the (if not the) richest patent portfolios in the industry, Nokia would have been more secure from the joys of facing the legal battles against Apple, which Samsung is having to deal with. It is still mind blowing how such a great company managed to disregard all its advantages and put itself at the bottom of the pile in the mobile market.
If I were Nokia right now, I’d rather be a Samsung.
Will mobile operators redefine the payments landscape in the UK?
Project Oscar is reported to be given the green light today by the European Commission. This is a JV between major UK mobile operators, Vodafone, Everything Everywhere and O2, to provide a mobile payments solution to the UK market and was supposed to be in-flight before the Olympics.
It was, however, delayed by the EU and taken up for additional probation, especially in the light that 3UK opposed to the JV after they hadn’t been invited to the party.
Oscar is expected to produce an m-wallet solution, which will be open to other operators and banks, however is meant to position the JV parties at the face and a key broker of mobile payments to consumers. This is the reason why Google, for instance, are in opposition as they are, quite rightly, trying to lure customers with their mobile wallet product.
To make it work, Project Oscar will need to avoid the pitfalls of a similar initiative, Sixpack - a JV between banks and operators in the Netherlands, which was canned about a month ago, many say due to difficulties with EU and internal stakeholder dynamics. It will be interesting to see how different parties in the UK will be collaborating under the Oscar format, considering that all of them have already announced their separate partnerships and aspirations towards their own mobile payments products.
They will also need be mindful of what Apple is up to - Passbook seems like the first step and NFC is expected to play major part of the iPhone upgrade with the release of iPhone 5 next week. We know that iPhone devices might act as a great catalyst for adoption of technology, which so far hasn’t been able to find a lot of traction despite some serious efforts from major players in the payments industry. Moreover, they’ll have to understand that NFC itself isn’t the only solution to the problem, or rather is a solution to the problem that might not actually exist.
Instead, they might want to see where the real problems are and how to best solve them - something that Square have been doing really well up to now, and retailers are getting closer to touching on (see the latest Walmart’s trial initiative for example), which is about improving customer experience.
Finally, operators should watch Google - having faced some issues previously with its Google Wallet partners, they seem to have realised that too many partners can often be detrimental to the success. I like how Google have tweaked their strategy for the wallet and are now in a position to take on the challenge to become the frontrunner in owning customers’ mobile payments experience.
It’s only the business model that everyone have to figure out still - it won’t be just about the interchange - not for operators and tech giants anyway, and will the couponing play work well (considering doubts around sustainability of the couponing model as been shown by Groupon)? The magic answer to this problem is a seven-letter word…
Is Facebook doing its best to keep gaming hot?
Smaller game developers were finding it harder to compete with the big boys on the Facebook platform. FB had to begin promoting some of them, otherwise the likes of Zynga is able to just pay their way to popularity. At the same time developers are moving out of the Facebook platform to find their own distribution channels, empowered by mobile.
“Tom Byron used to spend a couple of hours each day playing games on Facebook, attending to his virtual diners in “Restaurant City” and waging war against the Raven in “Empires & Allies.”
Global Mobile Consumer Survey 2012 - Contrasting early and late adopters of mobile
When we look at the latest trends of how people interact with mobile technology, it is always tempting to assume that we represent the average consumer and our desires would be mirrored by the majority of the local population. This is not the case.
The infographic presents some of the insights from our 2nd Deloitte Global Mobile Consumer Survey and shows the stark contrast of mobile ownership and behaviour between early and late adopters.
The sad truth about Nokia in mid-2012
I have been saying this in November 2010 and it is becoming quite obvious now - the right strategy for Nokia was to adopt Android as quickly as it was possible. At that time Nokia was still a clear No.1 with a 28% market share of mobile phone sales, while Symbian had 37% share ahead of 26% share of Android in smartphone sales.
If Lumia 900 and the rest of the lineup were Android-based devices they would have been flying off the shelves right now further than a certain far-away galaxy.
It might have been the right long-term decision to partner with Microsoft for Nokia, however the timing of this was clearly wrong. Nokia might not be in existence by the time Windows becomes popular again.
The one important thing that Nokia have failed to realise unfortunately is that there was a major shift in the consumer behaviour where the ecosystem and software have become the main selection criteria of mobile devices, ahead of the hardware and brand (as proven by Amazon recently, for example).
Nokia have chosen to shut down Symbian at a time of its peak, when its smartphone sales were dominating and still growing, albeit losing share, and Android was gaining momentum and a clear no.1 growth engine in the industry.
It is very sad to see that such a wonderful brand as Nokia totally destroyed its value. The markets have lost belief in ability of the company to perform a turnaround.
All Nokia’s eggs, despite some recent messages from the leadership, are in one basket and make Nokia slave of the future destiny of Windows 8. I hope the company still exists by the time we see first Windows 8 Nokia phones released.
Will Facebook Be the Catalyst for Airtime’s Success as a Mega Video Chat Service?
The mysterious and much hyped up Airtime is finally out. Both Sean Parker and Shawn Fanning took inspiration from the sudden success of Andrey Ternovskiy’s Chatroulette, who they both have been advising for some time, until they decided to make one of their own.
I think it will be difficult for Airtime to find its sweet spot in a market, which is dominated by Skype for both professional conferencing and home video chat, Google Hangouts for multi-user conferences and broadcast, UStream, again for broadcast, and a number of other more niche players.
Chatroulette has discovered a new market for entertainment video chat service and failed to capture it due to challenges with curation and maintaining “fit and proper” use.
Airtime is faced with a similar challenge where any extra control over user behaviour is likely to discourage usage and move customers back to conventional video chat services.
My hypothesis is that Airtime is trying to fit itself for the Facebook audience and usage profile, in order to create a natural FB video chat experience. One big question in this strategy, however, is ability to monetise the service. Extended user engagement on the site won’t necessarily lead to increased ad sales, while the last thing Facebook needs right now is another acquisition that won’t provide a straighforward mechanism to bring additional revenues into the pot.
Airtime Adds to a Growing Choice of Video Chat Services: