Failure to beat iPhone puts Nokia sales at risk
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DIANABEN-AARON
Oluşturulma Tarihi: Haziran 25, 2009 00:00
HELSINKI - Failure to utilize the power of third-party applications and software in mobile phones is putting Nokia’s market share at risk, as even fellow Finns have started to choose iPhones and similar gadgets over Nokia. The Finnish company’s global sales of smartphones fell to 41.2 percent in the first quarter.
Like most Finns, Perttu Iso-Markku always bought mobile phones made by his country’s biggest company, Nokia.
Then in February, he invested in an Apple iPhone and started loading it with applications. He finds Helsinki restaurants using eat.fi, identifies songs on the radio with Shazam, checks the weather for cycling, follows the Huffington Post, and gets European football scores on his iPhone.
Nokia is unlikely to win him back anytime soon.
"If I just wanted a phone, I’d buy a Nokia," said Iso-Markku, a 34-year-old officer at OneWorld Finland, a non-government organization. "I wanted something more like a small computer."
Iso-Markku’s switch shows how Espoo-based Nokia, the world’s largest maker of mobile phones, is struggling against application-rich competitors such as Apple as customers increasingly want their handsets to be catch-all devices. As more and more of the industry’s battles are fought on content, Nokia’s piece of the $50 billion market for smartphones, the industry’s fastest-growing segment, is shrinking.
"The Apple store provided a very simple path for developers to create stuff and get it into the hands of users, and there’s no question they’ve done it more effectively than anyone else," said Nick Jones, a Egham, U.K.-based analyst with industry researcher Gartner. "Now everyone’s playing catch-up to Apple."
The irony is that Nokia should have been way ahead of rivals on software. It had the first Internet-enabled mobile device in 1996, even before mobile broadband was available. Its Nokia Communicator was a narrow handset the size of a paperback book with customizable applications and a full Web browser.
The failings on software are costing Nokia some market share even as it ramps up its own Ovi Store for applications. Nokia’s share of worldwide smartphone sales fell to 41.2 percent in the first quarter from 45.1 percent in the year-earlier period, according to Gartner, while Apple’s doubled to 10.8 percent. Smart phones run sophisticated applications and can handle large amounts of data. They accounted for about 13 percent of Nokia’s total sales of 468 million handsets in 2008.
Most phones Nokia sells are medium and low-end mobile phones, while Apple only makes the iPhone.
Nokia faces other rivals in this segment, including Palm Inc., which this month started selling its newest model, Pre, and opened its App Catalog with 18 applications. Research In Motion, maker of the Blackberry smartphones, and Samsung Electronics have also opened applications stores.
Management focus
Nokia’s weakness has been one of execution rather than of technology. It courted software developers for years, registering more than four million of them on its Forum Nokia service in the last decade. It hasn’t done as well at getting software add-ons to customers.
"Software distribution didn’t have top management attention or marketing power," said Ari Hakkarainen, a former Nokia manager and author of "Behind the Screen," a history of the company. Nokia also hasn’t made it easy for software developers.
"Apple has tools for developers that are attractive and make it a pleasure," said Tina Aspiala, the Helsinki-based founder of the eat.fi restaurant-finder service. "People go out
of their way to think up things they can do to use the tools. With Nokia, it’s like you have an idea and then you have to slog through the snow to implement it."
Nokia’s multiple devices with different configurations make designing more difficult, time consuming and expensive, developers said.
The company’s software efforts included Club Nokia for images and ringtones, N-Gage for games, Mosh for content sharing, WidSets, Software Market, and Download! Most are now folded into Nokia’s Ovi, which offers maps, e-mail, file sharing, games and backup of phone information.
Software downloads now have management attention. Ovi is central to Chief Executive Officer Olli-Pekka Kallasvuo’s vision of Nokia becoming a software provider that gets revenue from customers continuously, and not just every few years when they buy a new mobile phone.
Nokia has seen "double-digit daily growth" in users and downloads on Ovi, Marco Argenti, the vice president responsible for Ovi Store, said in a phone interview. He’s encouraging users to flag problems in the service, which is complicated by having to cater to dozens of handset types, carriers and countries.
The Finnish company is hiring more managers to improve the services experience, said Argenti, who joined six months ago from Italian Internet services company Dada to head Nokia’s entertainment and game offerings. "There’s nobody in Nokia today who thinks only about devices," he said.
Future prospects
By 2012 the company aims to have 300 million active users, who will keep in touch with Nokia, downloading upgrades and providing feedback, Chief Financial Officer Rick Simonson told investors at a Barclay’s conference last month.
"The strategy makes sense for future revenues, because if you can scale it up, you can sell the same software over and over for zero marginal cost," said Mikko Ervasti, a Helsinki-based analyst with Evli Bank, who has a "buy" rating on Nokia.
Nokia’s 5800 music phone accounts for 20 percent of touch-screen devices worldwide, the company said in April. The Ovi Store Web site listed 239 applications on June 16 - 50 more than the previous week. It had 831 available items in all, including 155 audio and video pieces, 123 games and 314 wallpapers and ringtones when accessed in English from Finland.
"Nokia’s not the most creative handset company, but they seem to be making a concerted effort," said Wendy Trevisani, who helps manage $22 billion including Nokia stock at Thornburg Investment Management in Santa Fe, New Mexico. "They’re putting some money into it and they’ve got bright and ambitious people and a decent track record of making things work."
Then in February, he invested in an Apple iPhone and started loading it with applications. He finds Helsinki restaurants using eat.fi, identifies songs on the radio with Shazam, checks the weather for cycling, follows the Huffington Post, and gets European football scores on his iPhone.
Nokia is unlikely to win him back anytime soon.
"If I just wanted a phone, I’d buy a Nokia," said Iso-Markku, a 34-year-old officer at OneWorld Finland, a non-government organization. "I wanted something more like a small computer."
Iso-Markku’s switch shows how Espoo-based Nokia, the world’s largest maker of mobile phones, is struggling against application-rich competitors such as Apple as customers increasingly want their handsets to be catch-all devices. As more and more of the industry’s battles are fought on content, Nokia’s piece of the $50 billion market for smartphones, the industry’s fastest-growing segment, is shrinking.
"The Apple store provided a very simple path for developers to create stuff and get it into the hands of users, and there’s no question they’ve done it more effectively than anyone else," said Nick Jones, a Egham, U.K.-based analyst with industry researcher Gartner. "Now everyone’s playing catch-up to Apple."
The irony is that Nokia should have been way ahead of rivals on software. It had the first Internet-enabled mobile device in 1996, even before mobile broadband was available. Its Nokia Communicator was a narrow handset the size of a paperback book with customizable applications and a full Web browser.
The failings on software are costing Nokia some market share even as it ramps up its own Ovi Store for applications. Nokia’s share of worldwide smartphone sales fell to 41.2 percent in the first quarter from 45.1 percent in the year-earlier period, according to Gartner, while Apple’s doubled to 10.8 percent. Smart phones run sophisticated applications and can handle large amounts of data. They accounted for about 13 percent of Nokia’s total sales of 468 million handsets in 2008.
Most phones Nokia sells are medium and low-end mobile phones, while Apple only makes the iPhone.
Nokia faces other rivals in this segment, including Palm Inc., which this month started selling its newest model, Pre, and opened its App Catalog with 18 applications. Research In Motion, maker of the Blackberry smartphones, and Samsung Electronics have also opened applications stores.
Management focus
Nokia’s weakness has been one of execution rather than of technology. It courted software developers for years, registering more than four million of them on its Forum Nokia service in the last decade. It hasn’t done as well at getting software add-ons to customers.
"Software distribution didn’t have top management attention or marketing power," said Ari Hakkarainen, a former Nokia manager and author of "Behind the Screen," a history of the company. Nokia also hasn’t made it easy for software developers.
"Apple has tools for developers that are attractive and make it a pleasure," said Tina Aspiala, the Helsinki-based founder of the eat.fi restaurant-finder service. "People go out
of their way to think up things they can do to use the tools. With Nokia, it’s like you have an idea and then you have to slog through the snow to implement it."
Nokia’s multiple devices with different configurations make designing more difficult, time consuming and expensive, developers said.
The company’s software efforts included Club Nokia for images and ringtones, N-Gage for games, Mosh for content sharing, WidSets, Software Market, and Download! Most are now folded into Nokia’s Ovi, which offers maps, e-mail, file sharing, games and backup of phone information.
Software downloads now have management attention. Ovi is central to Chief Executive Officer Olli-Pekka Kallasvuo’s vision of Nokia becoming a software provider that gets revenue from customers continuously, and not just every few years when they buy a new mobile phone.
Nokia has seen "double-digit daily growth" in users and downloads on Ovi, Marco Argenti, the vice president responsible for Ovi Store, said in a phone interview. He’s encouraging users to flag problems in the service, which is complicated by having to cater to dozens of handset types, carriers and countries.
The Finnish company is hiring more managers to improve the services experience, said Argenti, who joined six months ago from Italian Internet services company Dada to head Nokia’s entertainment and game offerings. "There’s nobody in Nokia today who thinks only about devices," he said.
Future prospects
By 2012 the company aims to have 300 million active users, who will keep in touch with Nokia, downloading upgrades and providing feedback, Chief Financial Officer Rick Simonson told investors at a Barclay’s conference last month.
"The strategy makes sense for future revenues, because if you can scale it up, you can sell the same software over and over for zero marginal cost," said Mikko Ervasti, a Helsinki-based analyst with Evli Bank, who has a "buy" rating on Nokia.
Nokia’s 5800 music phone accounts for 20 percent of touch-screen devices worldwide, the company said in April. The Ovi Store Web site listed 239 applications on June 16 - 50 more than the previous week. It had 831 available items in all, including 155 audio and video pieces, 123 games and 314 wallpapers and ringtones when accessed in English from Finland.
"Nokia’s not the most creative handset company, but they seem to be making a concerted effort," said Wendy Trevisani, who helps manage $22 billion including Nokia stock at Thornburg Investment Management in Santa Fe, New Mexico. "They’re putting some money into it and they’ve got bright and ambitious people and a decent track record of making things work."