The Fall of Nokia: Apple, Google's Android and Samsung to Blame

Nokia's lost a fifth of it's market share in only a year. And worse than that, while it's still the number one handset maker, it's the others who are making all the profits. That's what happens when you've a cost base set up for making one third of the phones and yet your sales drop to only a quarter of them:

IDC reports that Nokia has lost a fifth of its market share in a year, falling from 33.8 per cent to 24.2 per cent. It is still No 1 overall, the analyst company reckons, but this is a pyrrhic victory, since others are taking the profits. Motorola is shipping lots of well-received Android handsets, but making a loss on them. Apple increased its distribution, and its market share doubled to 5.6 per cent. Not very much – but it meant that Cupertino is now soaking up two-thirds of all the profits being made in mobile handsets.

That's a scary figure about Apple: only 5.6% of the market but two thirds of all the profits in it. Something about the value of branding perhaps?

The basic analysis seems to be that Nokia really took its eye off the ball. It had a leading position in the smartphone market at one point but lost that to both Apple and Google's Android. Samsung's eating Nokia's lunch in the decent but not smartphone market and at the low end, where Nokia was concentrating?

Well, who really wants to be competing on price with a no name Chinese manufacturer in a mature (ish at least) consumer electronics market? Nokia's internal bloat (the tales of their bureaucracy inside the company are legion) doesn't help either but that real problem seems to have been in placing the bets on the wrong parts of the market.

There are excellent profits to be had (as Vodafone shows around the world) from providing mobile telecoms service to the poor. But hardware to the poor? As Nokia has found out, there's no profit there. In hardware the profit is in the rich world gadget geeks who are looking for ever more that they can do with what is rapidly becoming the replacement for the personal computer. Exactly the segment where Nokia doesn't have a decent offering.

source: http://news.yahoo.com/fall-nokia-apple-googles-android-samsung-blame-172910872.html