59 thoughts on “The iPhone & Nokia's Troubles, By the Numbers”

  1. WinMo-using cellphones are really disappearing at an alarming rate. Apple’s growth rate is high, but they still don’t have very much market share, as usual. I think the only way for any company to get market share is to flood the market with the cheapest cellphones possible. Not a wise choice, but that’s about the only way to get quick results.

    1. I think that is why Android-based phones are going to have a major impact in 2010. HTC and Huawei are two companies with lots of cheaper smartphones on tap. Interesting times though…

      1. Don’t look for HTC for cheap smartphone. They simply don’t do that. At Borqs, we work with all the OEMs in the world on Android smartphones. You assessment is correct. 2010 is the year when Android will make a major impact on the market. In not too distant future, you will see game changing smartphones from major OEMs. I know since we work closely with some of them.

      2. OM, I agree about Android…2010 is it’s year, simply by the numbers.

        Android is being released on all major US carriers in late 09 and through 2010 and similiaring portfolio mixed as RIMM devices (meaning same mix amount).

        So, iPhone set aside, access to Android will be for the “masses” across multiple channels driving device prices lower and customer adoption.

  2. As you may recall Sony used to completely own the portable audio market with a brand called Walkman. Everyone used to have them. Bright shiny objects you carried around with you that played music brilliantly all over the world. Then one day Sony woke up and discovered that a computer company in California had created a portable digital music player called the iPod that integrated with a services and software platform called iTunes and Sony lost all of its customers. Sony is still in denial.

    Nokia is now on the same downward path as Sony. Apple is taking away all of Nokia’s customers in the smart phone market and Nokia has only itself to blame. Where the iPhone is sexy, Nokia’s phones are drab and functional. Where the iPhone is easy to use, Nokia’s phones are difficult. Where the iPhone integrates well with a great online store experience, Nokia’s phones rely on poorly built service platforms and stores that baffle customers. As the iPhone storms through the US market, Nokia retreats in disbelief.

    But if you want to truly know how bad it is talk off the record with Nokia employees and to a man and a woman they will tell you that the iPhone and its store is a superior product and Nokia can not focus in order to make a successful challenge to it. And just like Sony, senior management at Nokia is in very deep denial. A once proud company is stumbling very badly and it is sad to watch.

  3. ” The reason why Nokia is suffering is because it doesn’t have a hit device to address the fast growing smartphone market.”

    Ow! That must sting, considering Nokia invented it.

    1. @Zigurd…. I know it must hurt. Till two years ago, I couldn’t use any other device but Nokia. Two years later, they are still selling pretty much the same thing. Sorry but inventing the market doesn’t mean they will own it forever. I wish there was a better option at Nokia.

      1. Om,

        I think this is a story that requires more than a look at the overall numbers, on the one hand and press releases and bland corporate statements from Nokia, on the other. I think the numbers tell a real story, but why is Nokia unable to effectively combat its market erosion in a market (of smartphones) that it created. Someone, hopefully you, should be able to penetrate the cloud around Nokia to truly understand why Nokia is failing so completely. I wish you good luck in uncovering the truth. Please keep at it.

      2. Chris,

        I think it simply has to do with the ecosystem and tools. Developing for a common profile helps a lot! The question isn’t how does Nokia compete now, it’s how it does so in two years. I believe that this has to do with mobile web rather than applications per se. But, I also believe that these applications will be more widget/application like than on the desktop. Outside of games, WebKit can accomplish most of what is necessary.

  4. Without seeing the actual numbers for the previous year, the table shown is of limited relevance. I mean, even with a 19% loss year-over-year, Nokia still shipped *15 times* as many smartphones as either Apple or RIM was able to. Personally, I think that’s rather impressive.

    Also, the ‘Others’ category dropped a whopping 57% year-over-year.

    I’m not trying to say that Nokia doesn’t need to pay attention – you’d be hard pressed to find any sane person in this industry who would claim they don’t. However, the data presented does not really condemn Nokia in the slightest, imo.

    1. “Without seeing the actual numbers for the previous year, the table shown is of limited relevance. I mean, even with a 19% loss year-over-year, Nokia still shipped *15 times* as many smartphones as either Apple or RIM was able to.”

      Wrong. APPLE is killing NOKIA.

      Nokia sold 15 million phones (not smart-phones) total world-wide which includes the cheap throw-a-way phones. According to IDC Nokia sold about 1.7 million smart-phones to Apple’s 1.4 million. But Apple now rakes in 32% of all smart-phone profit with about 20% smart-phone market-share.

      Report: iPhone grabs 32 percent of smartphone profit

      I’d say Nokia is getting killed in the market that matters most to profit. Because theirs not much money in selling cheap throw-a-way phones at pennies a pieces. All of the big profit margins are in smart-phones.

  5. The soon-to-be-released Linux powered Nokia N900 pisses all over the iPhone in ability. I think it is a niche phone though, for power users. The Maemo OS is a lot more appealing to me than sandboxed phones like iPhone and Android to me, but as it is not going to be slick and easy to use as the iPhone (and not as sexy), I think it will get a worse reputation than it will deserve once it comes out, as I really cannot imagine people like my iPhone loving friends (and sister) being able to appreciate its strengths.

  6. A 19% market share drop is indeed alarming but they still sold over 15M units. They need more than a single smartphone hit, they need an ecosystem. They need to do a much better job than they did with the Nokia N97, the product was horrible! It felt cheap like it would easily break, not the quality I would have expected for the high price and a Nokia. Heck, I even felt sorry for Robert Scoble who flew over to Barcelona to be the first to cover it. Their app store was pathetic and seemed like a last minute thought. They need more touchscreen smartphones and If I were Nokia I’d write an iPhone to symbian (and their new Maemo linux based OS) port tool and give it to iPhone developers to get their app on Nokia appstore.

    1. Robb… and Ricky Cadden.

      This is the relevant problem as of now for Nokia:

      Smartphone sales were up 25 percent to 8.8 million units compared to a year ago, IDC says. That’s about 1.75 million smart phones for the quarter. Guess who is winning the sales in the smart phone category? Apple which sold about 1.4 million iPhones and RIM sold 1.2 million Blackberrys during the quarter.

      The new sales are not coming to Nokia and instead going elsewhere. I see it as a problem, you might see it other way.

  7. The Android devices are not the ones that will make a difference. Their sales are noise compared to Apple, RIM, and others. Android is still a very rough OS with lots of work needed on both the UI and the API. They are making many of the same mistakes that Palm made with Palm OS that lost them leadership.

  8. As a rather neutral observer (I love Apple stuff, I use Nokia phones because they are better PHONES, I am a long-time Palm fan), I call foul:

    Statistics, and other lies, are easily manipulated to show a distorted, convenient picture. In this case, I would say that others have made gains, but there is NO evidence at all that it is at Nokia’s cost. Instead, the smartphone market is GROWING, there are MORE PLAYERS, there is MORE CHOICE, and MORE PEOPLE ARE BUYING smartphones. Things are re-aligning, but to everyone’s benefit, and at no one’s cost.

    I am, however, a bit concerned by this stream of constant product-negative posts I read here. They read like a negative marketing campaign, and not balanced at all, and while they may address the “greatest market of all” (the USA), I need to remind everyone that things are VERY different in the rest of the world.

    For example, in Asia (which accounts for more customers than there are people living in the USA), Nokia rules, and for good reasons: Apple, Palm and others have completely dropped the ball in these regions when it comes to marketing or getting mindshare. But also because many devices (like the Nokia E71) simply made it to the USA much later than to Europe/Asia.

    There is world beyond the economic borders of North America. So maybe we could look at unbiased numbers from the rest of the world and have them interpreted honestly?


    1. Atul

      Read the chart… it shows actual units sold. it shows actual unit declines. It shows actual problems…. read this little bit about smartphone sales growth going to competitors such as Apple and RIM. The sales are diving for Nokia. The way I see it, Nokia is losing traction. As to Asia, I would love to know Nokia’s ARPU in Asia. Not as high as Western Europe.

      And what you thinking as negative posts; well I am keeping it real. Too bad you see differently, but I respect your point of view.

    2. Atul,

      I do indeed read it to say that they sold 19% Less units than last year. How else will you read the line below? IMO – Om is keeping it real and identifying real issues. Yes – Nokia is a leader by far in Asia and owns 40% +/- market share globally. But that is also a cause for worry – a hungry pack of smartpone makers are gunning to change that market share negatively. Its so successful in Asia because it had the right price-feature device. Now that the mobile internert tsunami is in full swing, others have the goods AND the hunger. So lets see how it pans out.

      During the quarter, Nokia handset sales were down 19 percent (year-over-year), according to market research firm, IDC to about 15.3 million units.

    3. Dude, that’s what the chart says…. annual change. I know you don’t like to see this, but these are actual numbers…

    4. A-Tool – wake up brother. Nokia doesn’t get it – the mobile web that is. they made terrific phones, but you don’t see Western Electric dominating telecom hardware. Nokia will still post big#’s in developing countries, but even kidz in Mumbai want an iPhone…not an N900 Communicator that “Comes With Music” and or some N-Gage rehash.

  9. Nokia have the problem of any large successful company with an overwhelming lead in market share. Everyone is out to get them and changing what worked well in the past is much more difficult than doing something completely new. But I wouldnt write them off just yet.

    I would be interested to see a more detailed breakdown of the figures. Were the majority of those 3.6Million less units smart phones? How many were basic models thay just lost out on the basis of price in a difficult year all around?

    All I can really say is that the table was clearly designed to make you come to a certain conclusion

  10. “That’s about 1.75 million smart phones for the quarter. Guess who is winning the sales in the smart phone category? Apple which sold about 1.4 million iPhones and RIM sold 1.2 million Blackberrys during the quarter.”

    Umm… can you see why those figures don’t add up?

    1. Apple unit sales grew 600% year-over-year in the quarter: that is 1.2 million new iphones.
      Rim unit sales grew 50% year over year during the quarter: that is 600.000 new Blackberrys.

      Add that up: 1.8 million roughly equal to the total growth in smart phone market which grew about 1.76 million during the quarter.

      Hope that helps.

      1. Percentages are misleading. Apple gained 600% and Nokia lost 19%, but still sold 1093% more phones than Apple. Take which ever side of the debate you want and you can abuse the stats to validate your argument.

        Nokia are struggling to change from what has worked so well in the past, but they arent totally screwed just yet. Apple’s marketing machine have done exceptionally well and will continue to gain ground. I just think that its too soon to make any conclusions – especially if you are looking at it through a US lens where I think we can all admit the carriers totally get in the way and influence perceptions.

      2. @Allen:”Take which ever side of the debate you want and you can abuse the stats to validate your argument.”

        You try to abuse the stats and validate YOUR argument.
        2006, Apple was nothing in the phone market.
        2 years ago and Apple is ranking:
        2 in the smartphone wester european market
        5 in the global phone market (by units)
        Apple own 32 % of profit of the entire Smartphone market
        And growth 600% year by year
        Nokia is in big trouble. Tomorrow, there is a real chance they get only profit of very cheap market Phone. A second player in fact.

      3. Ahh, no, I think there’s still some confusion here, or you’ve got an error above. To take it piece by piece:

        “Smartphone sales were up 25 percent to 8.8 million units compared to a year ago, IDC says.”

        So TOTAL smartphone sales were 8.8 million. Unless you meant “up 25%, BY 8.8 million units”.

        “That’s about 1.75 million smartphones for the quarter.”

        Actually, likely more than that if you believe smartphones have out-grown to the rest of the phone market.

        “Guess who’s winning sales in the smartphone category? Apple, which sold about 1.4 million iPhones, and RIM, which sold 1.2 million BlackBerrys during the quarter.”

        So 1.4 million plus 1. 2 million = 2.6 million – which is more than that total number of smartphones sold in that quarter.

      4. That’s doesn’t look correct, Om.

        If RIM sold 1.2 million Blackberries in total, 600,000 unit growth would mean they sold 600,000 the previous equivalent quarter. But that would represent 100% growth, not 50%.

        The correct figure for RIM to have a growth figure of 50% YOY would be 800,000 sold in the equivalent quarter last year, 1.2 million this. Which means they’re selling 400,000 extra BlackBerries compared to last year, not 600,000.

        For Apple to achieve 600% growth YOY, on the other hand, it has to move from selling around 230,000 units to selling 1.4 million – an additional 1.25 million units.

        That’s a total additional smartphone sales for RIM and Apple combined of around 1.6 million units.

        This nicely illustrates why sales growth as percentages is misleading, and why it’s much more interesting to look at actual numbers of units sold. Apple’s growth looks amazing, but it was effectively starting from nowhere. This gives the misleading impression that Apple is a major player, which it isn’t (yet).

  11. When you only sell a few phones, it’s easy to show what looks like stellar growth. Look, Apple is up 700%! That’s better than Samsung’s 12%, right? Sadly, no.

    Look at those figures in terms of actual units sold, and LG’s 71% growth amounts to around 2m units. In other words, LG’s additional, incremental units sold amounted to more than *all* the units either Apple or RIM sold. The same is almost true of Samsung, which sold an additional 1.2 million (or so).

    Although both LG and Samsung make what they call smartphones, it’s semi-smartphones like the LG Renoir, Chocolate and Prada phone or Samsung Tocco, Omnia or Pixon that are providing the majority of unit growth. None of those are smartphones in the way that you or I understand it: they don’t focus on apps, but on simply cramming in more hardware features and a touch screen.

    And those are the kinds of phones that are causing Nokia the most problems, because they’re actually taking away former Nokia customers. Once you’ve had an N95 (which, you should remember, is/was free here), you’re not going to drop down to the iPhone’s crappy camera: you’re going to get a Samsung Jet or LG Arena. For free.

    1. That exactly what I see in the numbers. The LG and Samsung figures are much more relevant than Apple ones to explain the Nokia problems.

  12. It’s a shame we can’t get some more detailed figures – if Apple +RIM are 2.6 million of the smartphone total of 8.8 million (growth of 25%), where are the other 6.2 million smartphones hidden? Obviously they must be somewhere in the Nokia, LG, Others categories etc, but as these have shown negative annual change, how much worse would they be without smartphones in their line-up, and how much is being carried across to HTC?

  13. OM & the rest of the readers here:

    Do you not think that one of the big issues with the Nokia platform, apart from hardware, is their interface to the internet which provides a sub-optimal user experience in comparison to other up and coming platforms?

    Would you agree that a good, albeit short-term, solution would be for them to acquire Opera Software?

    One more thing! (off topic):
    How’s your noodling coming along about how one quantifies and values social networking “subsystems” such as commentage platforms (Disqus / JS-Kit / IntenseDebate et all); distribution platforms (addThis / ShareThis …) and micro-blogging enablers (TweetDeck / Seesmic et al)?

    BTW, in the case of how one would truly value Seesmic you may find my views interesting. However, you will need to email me directly or DM to hear them off public forum. Why? I like Loic too much to go on record!

    I think this “subsystem value/valuation” subject is an interesting convo in light of the recent $100 B Twitter valuation. I wonder if you’ve seen this hilarious take on the news from 37 Signals chaps:



  14. Got my myTouch – don’t plan on buying another smart phone anytime soon – wouldn’t think of changing carrier.
    Bottom line: he who strikes first wins the prize … at least for the next few years. When contracts expire, then it can be a competitive market … but not as long as a particular phone line is limited to one carrier.

  15. Ouch, that must hurt people in Espoo. However, better to get a rude wakeup-call than sleep til it’s too late.

    Judging from the people I got to know at Nokia, they are very aware of this and are working hard on turning things around. I dont believe Nokia management is truly in denial, though PR-statements may suggest otherwise.

    Knowing some Finnish people – some with Nokia, some not – they generally strike me as hard working, realistic, pragmatic and, most of all: easily underestimated.

    1. Martin,

      Everything you say about people at Nokia and in Finland is correct. However, this threat from Apple has caught them unawares and senior management is in serious self denial. As I said in an early post, it is eerily similar to how Sony responded to Apple in the portable audio market, too little, too late and not properly understanding what is at stake. I don’t think they realize that Apple has fundamentally changed the nature of the game and consumers love the new game that Apple has created. Nokia, in order to compete, has to now play on Apple’s turf.

  16. Am I missing something here? where is Motorola? Where is HTC? Are they lumped into “other?” I can’t imagine their market shares have dropped so much

  17. I read through this thread and as a non-Nokia Finn I must say that I find it flattering and amusing. The people at Nokia are btw not only Finnish, they are global. Its also funny to seee how passionately someone takes sides in thi matter 🙂

    From here its easy to conclude: our pride the big N is a global market leader with not only huge market share but also a load of cash. Come recession, why not buy market share like MS did. Apple will be bigger in share, but Nokia may be able to deliver in Asian market with cheaper 4th or 5th gen smart phones better than Apples expensive touchscreen.

    All are still learning, Apple is leading the way in better usability and apps, but the apps came to windows, and they will come to Maemos and even symbian.

    What sucks about Finnish tech is that we have always been damn good in tech but often forgotten to try and make it big in services. But I am glad Jobs tewaches us effectively.

    One q: how do you see Apple and corporate mobility in large companies?

    BTW, I write this on N97. Its muh easier with this than my iPhone.

    1. Heiskan, Jobs may be teaching, but it is not clear whether or not Nokia is learning. I would argue that Nokia is so far not learning. You are right that Nokia is a global company with employees throughout the world. However, it’s corporate culture and all its senior decision makers are totally Finnish and the blind spot it has is the service business. Put in a nutshell, Nokia does not understand “sex appeal”, the core competency of entertainment. This is where Apple is very strong and I would argue further it is because it is an American company. Again, I repeat, look at Sony and where it stumbled, global in its reach, yet dominated by a Japanese corporate culture, it also has stumbled because it did not understand the internet services business. Apple ate its lunch. It is doing the same to Nokia, and it has just begun. What is the phrase? “Pride goeth before the fall.” Unless Nokia learns its lesson quickly, it should get ready for a slow but steady decline in the smartphone business. Because it is not about the device —it is about the experience the device delivers. It must be entertaining.

  18. iPhone surely is a great device, but the game has just begun. Android is likely to grab its share and Maemo 5 is looking real good. When these open platforms start rollin in my bet is that Apple will end up with the same kind of marketshare as they have in personal computers. Nice products for a relatively small audience.

  19. I am not big fan of Mac, but iPhone as a platform was brilliant approach and it will gain even more advantage in a nearest future. The problem I see is that Apple will stick with design for a long time, and will be difficult for them to introduce something new on this scale.

  20. This article is US-centric and has no or superficial analysis.
    Nokia is dominating smartphone market even more than it’s dominating handsets market with several best sellers like 5800XM and N97… No iconic-elite-showoff phone but a series of “devices for the people” packed with added value services like car navigation or push email.

    1. The analysis may not be as deep, but the data is clearly NOT for the US – it is for Western Europe (according to the article above). Rest of your comments (“elite”) depend on one’s perspective.

      “during the second quarter of 2009 in the company’s home market of Western Europe.”

  21. The real winner is SAMSUNG.
    They are the only company that controls the production process and retail distribution process.
    Additonnally they supply most of the components to other manufacturers under OEM agreements.
    The iPhone has Samsung components.

    If you go into a retail store and want to buy anything: changes are high you will consider a Samsung.

  22. If you consider Nokia’s handset sales, which are still fully an order of magnitude greater than Apple’s, “trouble” then you need to go back and review your basic grade school math before writing any more posts like this one. We could all wish for Nokia’s “troubles” in this case. Apple’s iPhone is just a one-trick pony and it’s pitiful little circus of fully-conned suckers is TEN TIMES smaller than Nokia’s. Wake up and make your way to the grand egress, Apple will never dominate the handset market.

  23. Like the heavy bulky dinosaurs, who couldn’t fit into an evolving environment and extinct, together with IBM, Digital and others, Nokia will eventually vanish. The reason is that their phones sucks, they are uncomfortable with a low-end, ancient, unreliable OS – and aside from western Europe people do not really like them. Apple’s iPhone is only one of the mammals that announces its end as a single behemoth in the cell phones market.

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