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Nokia and Windows Phone’s demise

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nokia_phonesI still remember when my aunt handed me my first cellphone at the beginning of 2006: A Nokia 1100 with an Econet 099 SIM. Back then if you did not want to go wrong you bought a Nokia phone: they were cheap, reliable, user friendly and the accessories were everywhere. It was a phone for every man and women who could not afford the other fancy and pricey models. Nokia had the largest market share and made more phones than anyone.

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Fast forward to 2013 and the affordable phones are all but gone and so is the largest market share and user friendly interfaces. It is not clear what went wrong at Nokia. Reports indicate that Samsung shipped close to 107 million mobiles phones in the first quarter of this year which translates to 29% of the global market. When compared to Nokia’s shipments of 62 million phones, around 16% of the market, it is obvious that Nokia is falling. This fact is further reinforced by the fact that last year Nokia shipped 83 million phones in the same quarter.

I attempted to unravel the mystery and somehow Windows 8 mobile keeps popping up. The smartphone industry is a very competitive cut throat place where profit margins are very tight. Nokia decided to bet on Windows 8 Phone and lost big. In addition to being accused by both experts and bloggers of having a horrible unintuitive interface and lacking an app ecosystem, Microsoft also demanded their traditional business model licence fees resulting in expensive devices that are likely to disinterest potential customers. People already have the iPhone and iPad on the expensive end of the spectrum both of which have a vibrant app ecosystem and a familiar user interface that is well tested and trusted. On the affordable side Google’s Android is making a killing with its 52% of the market share.

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Knowing Zimbabweans, and a lot of the world’s consumers for that matter, to be very price sensitive; it is mind boggling therefore that Nokia, the company that made the user friendly 1100 and the N-series does not have Android phones for sale. Android is free and might allow them to compete better with the tight margins. Instead they have stuck with Windows 8, the pariah of the smartphone OSes. To give credence to my argument that a lowly priced device would go a long way in regaining lost market share, they piloted a new device, the Nokia Lumia 521 on Home Shopping Network which was priced at around $150 and it was quickly sold out.

On this continent where Nokia was king, half the story is about price. The other half is about support and accessories. Nokia (and their Asian copycat accessory suppliers) used to be good at providing these more than anyone but now I wonder if I buy the Nokia Lumia, expensive as it is, where I will get it repaired or serviced in Zimbabwe. It seems with their shunning of budget phones they have also decided to hold back on support and accessories.

Nokia needs to join the Android bandwagon or risk joining Blackberry on the peripheries of the smartphone market. They can keep their Windows 8 hobby but it is doubtful this will bring much bread onto their tables. As more and more people buy smartphones they hazard losing their brand appeal and I would not be surprised if they start downsizing.

Is there anyone out there with a Nokia smartphone with Windows 8 or any other phone with Windows 8? I cannot think of ten people who have that.


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95 thoughts on “Nokia and Windows Phone’s demise

  1. I find the assumptions and conclusions in this article to be the kind of material I say would expect from someone who is only casually familiar with Nokia.

    The reduction in units sold was primarily in the feature phone segment, and smartphone volumes and ASPs are the main reason that the sharp drop in feature phone sales hasn’t resulted in a catastrophic loss in profit.

    Windows Phone is increasing share worldwide and even in the US, with 1.4% increase between February and March according to Kantar. It is growing faster than iPhone did the first two years it was available.

    Your coverage of other reviewers’ feedback is decidedly hand picked – there are hundreds of positive reviews that diametrically contradict your reviewers’. That, or your (perceptibly inadequate) research was too cursory to find a sufficiently comprehensive cross-section.

    If Windows Phone license fees are so much of an inhibition, how is Nokia selling the Windows Phone 8 Lumia 521 through WalMart for $130 without a contract? You mention this device as a “pilot” but it is in full production in multiple countries worldwide already selling the devices… It’s not a “pilot,” it’s a fundamental rung in their ladder! You on one hand say “Fast forward to 2013 and the affordable phones are all but gone” but later acknowledge their lowest end smartphone… Maybe you could proofread your articles once you have completed them?

    Android phones may be “free” to license (with legal strings as a catch), but the hardware required to have a comparable experience leaves price-compatible Android handsets out of the running. Windows Phone 8 just doesn’t need the same amount of power to provide the user a very positive experience. I see comments all the time from budget Android users that complain about the experience.

    “It seems with their shunning of budget phones they have also decided to hold back on support and accessories.” Really?? Nokia is one of the best accessorized brands out there – there are quite a number of OEM accessories, and third party accessories that are available even before some phones have been announced!! (Google “nokia 928 accessories”).

    Nokia should NOT join the Android bandwagon, where only Samsung is turning a profit. The platform requires more compute power to deliver the same experience, there are uncertainties about the code as patent cases can affect the cost or even availability of Android, which has been repeatedly found infringing. The carriers want an alternative that makes the duopoly of Apple and Google/Samsung come to the table to negotiate. Windows Phone 8 corporate/enterprise capabilities, Windows 8 adoption & development, Win8 tablets, and a bunch of other factors will combine to continue to fuel the brand, the OS, and the ecosystem.

    Nokia *IS* Windows Phone right now. They failed to produce a home-grown competitor to Apple, and by “outsourcing” OS development to MS, they can focus on what they are truly best at – world-class hardware and customer support.

    I’m not saying WP8 will explode – even the iPhone took time to really take off – longer than Windows Phone has, anyway. But it will indeed erode the share of the two big boys, and they probably won’t notice as they continue to scrap with one another.

    1. You may be right about the increase in Lumia shipments from the previous quarter as compared with the current quarter, however my assertion was that the MS licence model might close out the less rich. I am skeptical about the so called unsubsided model which is selling for around $150. I have a feeling it is subsided by the manufacturer themselves as compared to the tradition where it is subsided by the operator. I could be wrong but in the event that I am right it would not be a sustainable. I am not saying Nokia will disappear as you have pointed out they are still very much in the game. My fear is that they are at the crossroads and if they take the wrong road they would end up at RIM.

      1. I don’t think that Nokia is in a position to offer a model with negative return, unless maybe Microsoft were helping out – which is a possibility. But I tend to believe more that Nokia’s experience in mass production and efficiencies, global parts suppliers, and other institutional knowledge, drives the ability to produce a good phone at a competitive cost.

        Personally, I think that Nokia would have gone the road of BBRY if they continued down the road of trying to build their own OS and ecosystem. I don’t have confidence that – given the leadership of Nokia at the time – they would have been able to produce, evolve, maintain, and grow both an OS and an ecosystem.

        There are many Nokia loyalists from “the Olde Nokia” that disagree, and think that Nokia could have pulled it off with Meego/Maemo. But I don’t think they were agile enough, from the top down.

        Now, however, I see real evidence that they are getting lean and responsive. The fact that they are attacking all price points and markets globally, while BB is high-end only and their most anticipated device is still not even available in the US, points to the difference in strategy.

        1. This should be a joke of you people discussing a possibility of Nokia selling Lumia 521 at a loss.No manufactures sell phones at a loss.they might reduce their profit margin but not at pure loss.Look at the specs of Lumia 520 its low end enough to be sold at at $150 or $160 (depends which country).

  2. I don’t own any Nokia smartphone, not a fan of WP, but can’t help laugh at this stupid biased article.

  3. Actually margins are not tight in the smartphone business. Apple which is the king of margins makes 60-70% margin per phone, hence why every phone maker is trying to muscle into the smartphone space. Android margins are much less but definitely in the double digit range. And yes Lumia/Windows market share is actually rising. My problem with the article is that you took a personal observation at a micro-level and insubstantially extrapolated to the global scale. If you simply wanted to express an opinion about Windows I think if you had said so it would have absolved the bias coz as a blogger you have every right to express your bias

  4. Guys the bottom line is nokia has not made a mistake it all about the money.
    They have a market to bad its not us casual users but the business users.
    How many non tech professionals wouldn’t mind having the same OS on their desktop/laptop and mobile or tablet. Considering windows is the no 1 desktop OS.
    Plus Microsoft has ties with many large corporates. Meaning they could easily push millions of nokia handsets with out breaking a sweat.

  5. Avoiding the flaming and fanboism, both Nokia and Microsoft decided to partner at a time when both were overtaken by the smartphone disruption. In the end, they saved each other.

    – Microsoft had ignored placing itself in this new market and had no viable point of entry

    – Nokia had also been overconfident and was too slow to adjust to the new (touch-based) smartphone frenzy.

    So Microsoft offered the development and R & D capacity, and Nokia offered the brand reach.

    Both got saved.

    Looking at financial history and projected demise of Nokia, its position today has more chance of growth than it was if it had totally gone on it alone.

    So whilst the figures are low and the consumer market is focused on the iPhone and Android platforms, there’s still room and time. I agree with many that believe Microsoft had an excellent opportunity to put a foot in the door by creating office applications for both iOS and Android. But they chose to stall that and prioritised the Surface and Windows 8 platform

    IMHO, the Lumia is a good bargain for the features in it, especially for a first-time-smart-phone-owner but for the rest of us who have been exposed to the iPhone and the Android platform, its harder to move. The experiences are totally different. Windows is less traditional to what iPhone and Android had established as a norm

  6. PS: There are NO phones running on Windows 8 as your article suggests.

    I’ve actually seen a few people using WP phones locally. I myself use one. As far as Nokia jumping on the Android “bandwagon,” I’m not sure how that’d help them as that “bandwagon” is already crowded. Look at HTC, they have competitive, impressive hardware and yet they’ve been plagued losses just like NOKIA.

  7. Technology + Zimbabwe

    couldnt have though of a better Oxymoron if i tried

    Go figure out how to end Human Rights abuses than bashing Nokia and Windows Phone 8

  8. All this hypersensitive reaction from people, in response to a guy expressing a pretty well-reasoned opinion analyzing Nokia’s current position in the smartphone market, is just infantile. The market facts are the market facts. Nokia’s market share is waning; clearly the status quo is not working, and its strategy needs to change. Business is business; don’t get emotional about it, or take it personally. Having this fanatical allegiance to companies and their tech, akin to the fervor fans feel for sports teams, is simply absurd. Really, some of you guys need to go discover women, or find a non-tech hobby, or something.

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