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Nokia's implosion has been dramatic. Its sales have dropped to a third of what they were last year in some reasons as demand for the defunct Symbian dries up.  (Source: atmospheric endeavours)

An analyst suggests that Samsung will knock Nokia out of the #1 spot for the first time since 1996. Samsung has been fueled by strong sales of Android handsets. Its latest star product is the Galaxy S II.  (Source: AndroidOS.in)
Nokia's dramatic fall continues

Finland's Nokia (HEL:NOK1V) has led the world phone market since 1996.  But even as Microsoft prepares to inherit market share from Nokia, the question is increasingly becoming not when that will happen, but what exactly will be left.

Nokia's implosion has been dramatic.  The phone maker had struggled in the wake of Apple, Inc.'s (AAPL) 2007 market entry and the rise of Google Inc.'s (GOOG) Android operating system.  But at the time that "struggle" merely amounted to slower growth than its competitors.

However, with the arrival of new CEO Stephen Elop -- a former Microsoft Corp. (MSFT) Canada executive -- the deal with Microsoft, and the decision to phase out Symbian for Windows Phone 7, that slowing growth has transformed into a free-fall of market losses.

Now Nomura Holdings, Inc. (TYO:8604), a leading Japanese market research firm, says that Samsung Electronics Co., Ltd. (SEO:005930) will pass Nokia in market share this quarter -- Q2 2011.  Nomura, goes on to predict in its research note that Apple is then likely to pass Nokia in Q3 2011.

The prediction follows a more reserved statement from Gartner, Inc. (IT) analyst Carolina Milanesi, who recently stated, "If Nokia's new phones are not well received in the third quarter and with the Galaxy S2 ramping up, Samsung might overtake them and become the smartphone leader in Q3."

Neil Mawston, analyst at Strategy Analytics, refutes the report in comments to Reuters, stating that he expects Nokia to stay ahead of Samsung for the time being.

But he adds, "There is certainly a very close three-way battle going on for top spot in global smartphone volumes between Nokia, Apple and Samsung during the second quarter. With Symbian demand crashing, there is growing opportunity for Samsung or Apple to grab the lead."

Samsung's success has come largely thanks to Android, which has freed it from struggling to design a capable OS to complement its hardware.

Nokia is hoping to see success from a similar approach, but it won't deliver a Windows Phone 7 handset until Q4 2011.  And it won't switch to a full Windows Phone 7 lineup until sometime in 2012 or 2013.  Investors are growing very upset with the company's leadership after it was forced to greatly lower targets for this year and pull earning targets for next year altogether.

In Britain, Nokia sales fell in mid-May to 10.6 percent of total handsets, down from 31 percent a year before, according to market research firm ComTech.  Nokia's sales numbers are only salvaged somewhat thanks to its high volume of basic handset sales to developing markets.  Unfortunately, these sales don't help its financials much -- they feature much lower margins than smartphones.


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LOL @ Investors
By gamerk2 on 6/13/2011 4:50:06 PM , Rating: 5
quote:
Investors are growing very upset with the company's leadership after it was forced to greatly lower targets for this year and pull earning targets for next year altogether.


Investors also elect the CEO. Sorry, they made their bed, now they have to sit in it.




RE: LOL @ Investors
By kleinma on 6/13/2011 6:04:45 PM , Rating: 3
The Win7Phone OS is actually a really nice well thought out phone operating system. It isn't a mistake that Nokia decided to go with it. Do you think if all they had still was Windows Mobile 6.5 that the ex-MS exec/current Nokia CEO would have used that? Android phones are great, but they have horrible fragmentation and its starting to really show now that android tablets are out.

I think the mistake Nokia made was telling everyone about this deal so far out from actually having a product in place to show for it. If they came out and said "we are going to use Windows 7 phone and here is our first model and it will be available in 6 months" it would have had much better reception than "we are going to use Windows 7 phone, we will have our first model in 12 to 18 months.. maybe..."


RE: LOL @ Investors
By Solandri on 6/13/2011 6:58:44 PM , Rating: 2
quote:
The Win7Phone OS is actually a really nice well thought out phone operating system. It isn't a mistake that Nokia decided to go with it. Do you think if all they had still was Windows Mobile 6.5 that the ex-MS exec/current Nokia CEO would have used that? Android phones are great, but they have horrible fragmentation and its starting to really show now that android tablets are out.

I remember this same argument being made in the 1980s, but with MacOS being compared to DOS/Windows. Microsoft was on the flip side of your argument back then. I'd say it's worked out pretty well for them for 25+ years - larger market share trumps fragmentation issues.

quote:
I think the mistake Nokia made was telling everyone about this deal so far out from actually having a product in place to show for it.

Agreed. I really like Nokia, but I'm afraid we may be witnessing the largest example of the Osborne effect ever.
http://en.wikipedia.org/wiki/Osborne_effect


RE: LOL @ Investors
By someguy123 on 6/14/2011 1:31:02 AM , Rating: 2
Android also has the downside of being altered in negative ways by OEMs and having little exclusive developer support for the platform. There's also a lot more reliance on high performing parts when developing applications these days, causing a lot of things to literally not work or just completely bog down various handhelds as they're designed for the top end only with little to no scalability.

People have higher standards for what they expect out of personal devices compared to the 80s. Back then, outside of enterprise backend, if you could make text and charts appear you were good to go even on a complete desktop. Nowadays people want their tiny phones to do everything.


RE: LOL @ Investors
By mcnabney on 6/14/2011 2:22:18 PM , Rating: 2
You do understand that the exact same thing is happening with Apple. iOS5 will cut out the first two generations of iPhone completely. There is fragmentation everywhere, and it will continue as ARM-based devices rapidly increase in capability.


RE: LOL @ Investors
By michael2k on 6/14/2011 11:21:05 PM , Rating: 2
The iOS world survived and didn't fragment with the death of iOS1 and the advent of iOS4, why would it with iOS5?


RE: LOL @ Investors
By quiksilvr on 6/14/2011 12:31:51 AM , Rating: 2
It's only because of manufacturers that we have fragmentation. If everything ran Vanilla Android we wouldn't have this problem. Hell, the grandfather of Android (T-Mobile G1) has been modded to run Froyo (2.2).

By that logic, every Android phone in existence should be 2.2 and up.


RE: LOL @ Investors
By bug77 on 6/14/2011 4:02:44 AM , Rating: 2
Don't buy into competitor's propaganda, Android is not fragmented. Here's the status in March 2011: http://www.gsmarena.com/android_versions_distribut...

Over 90% of the devices were running 2.1 or better. I don't imagine things went downhill since then.


RE: LOL @ Investors
By michael2k on 6/14/2011 11:31:29 PM , Rating: 2
You're out of date already:
http://developer.android.com/resources/dashboard/p...

Only 9.2% are on 2.3 or higher. Over 96% of users are on 2.1 or higher.

In like to like, as of March 89% of iOS users are 4 or greater, 18% on 4.3, 46% on 4.2.1, and 15% on 4.1, which is quite the opposite of Android.

http://blog.jcmultimedia.com.au/2011/03/is-it-wort...

Especially interesting is that it only took 9 days for 18% of the user base to grab 4.3, while it's been almost impossible for Android to pick up any users of 2.3 or 2.3.3 in the six months it's been out.


RE: LOL @ Investors
By Flunk on 6/14/2011 9:21:52 AM , Rating: 2
Hardware is also quite different, software is not the only factor in fragmentation.


RE: LOL @ Investors
By mondo1234 on 6/13/2011 6:25:56 PM , Rating: 2
Do you have a link for that? Usually it is the Board of Directors.


RE: LOL @ Investors
By cochy on 6/13/2011 7:10:50 PM , Rating: 2
Yes and investors/share holders elect the board.


RE: LOL @ Investors
By gamerk2 on 6/14/2011 9:50:13 AM , Rating: 2
And who puts the board in place? The Investors. Its all investor controlled; coorporations are literally ruled by the investors. Why do you think the emphasis is on stock price? Because if it tanks, the investors get very upset, and sack the board.


So... are we assuming everyone has smartphones?
By Smartless on 6/13/2011 5:00:54 PM , Rating: 2
I liked Nokia's cheaper stuff which are still good. I wish they'd post how much sales are smartphones versus everything else.




By michael2k on 6/13/2011 10:47:08 PM , Rating: 2
Why does that matter? Nokia is still dying even if they sold all the dumbphones in the world. There's not much profit in $100 phones.


By mackx on 6/14/2011 1:22:35 PM , Rating: 2
$100 phones? you can get basic android smartphones (1ghz, 3.7" screen etc) from china for that amount - or thereabouts.

nokias must be going for less than a 100, surely.


As usual
By bug77 on 6/13/2011 4:56:13 PM , Rating: 2
Analyst #1 says: yes.
Analyst #2 says: maybe.
Analyst #3 says: no.

Remind me, why do we listen to them?




Indictment on Other Predictions
By bplewis24 on 6/13/2011 6:04:41 PM , Rating: 2
And yet, other analysts would have us believe that WP7 is going to be the #2 smartphone OS simply because of the deal with Nokia? A hardware vendor on the decline is not going to be the catalyst that takes them near the top.




"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer














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