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Nokia, err Windows Phone, is gaining ground – not by stealing market share from Apple or Android – but by attracting existing feature phone users and first time users according to Kantar WorldPanel ComTech.

“This third operating system is emerging as a real adversary. Nokia’s Lumia 520 now represents one in ten smartphone sales in Britain, France, Germany and Mexico. Windows Phone in Mexico has 11.6% of the market and has reached 8.2% market share across five major European markets,” Kantar’s Dominic Sunnebo said.

Windows Phone growth is not coming from Android and Apple users as they already have an investment in apps, music and more - only about 27% of these users swap OS at replacement time. It is coming from first time smartphone users - 42% from existing feature phone users.

Clearly Nokia has a winner with its 520 handset selling at under US$150 - an attractive brand, a fully featured smartphone, and amazingly wide telco carrier coverage in more than 180 countries and 50 languages.

Feature phone users represent more than half the current global mobile phone users. “The brand that wins this market will be the one that understands and addresses the needs of consumers in terms of price, content and handset quality – not having millions of apps” Sunnebo said.

Apple and Samsung have saturated the mature markets like Great Britain, Europe and the US where (a) smartphone ownership is already over 66% and (b) 85% of devices sold in the May-July quarter were smartphones. Simply put it is harder to grow market share in a mature market which has entered the typical replacement cycle phase.

Opinion

I have been reading a lot of rubbish lately about why Microsoft bought Nokia.

First let me tell you that Nokia was not, repeat not, looking at developing an Android range. Its major thrust at present is to get the Asha range (feature phones) into Windows Phone to add quarterly sales of some 200 million handsets to the Windows count. These phones will sell for less than US$100 and help keep Nokia’s factories churning – economy of scale. For example Nokia has more than 700 million Asha users in India where the brand is the word for ‘hope’ and is considered a status symbol. It is also a market that does not care about one million apps – food on the table is more important. Note that Apple’s rumoured 5C cheap iPhone is likely to sell for $300+ - Asha has no real brand competition in emerging markets.

Nokia is a brilliant fit for Microsoft and its manufacturing capability alone (shown below) will make Microsoft stronger and enable it to make tablets and other devices without relying on Samsung and other Asian contract manufacturers as Apple et al do.

Brazil - Manaus established: 1998
China - Beijing established: 1995
China - Dongguan established: 1995
Hungary - Komárom established: 1999
India - Chennai established: 2006
Mexico - Reynosa established: 1996
South Korea - Masan established: 1984
Vietnam - Hanoi established: 2013

And just as companies rise and fall in areas like profitability and simply being cool – let me say that a week at TechEd has left me convinced that Microsoft and Nokia both have very cool technology, their intentions are honourable, and are both definitely on the ascend again.

Microsoft bought Nokia because the time had come to transform Microsoft into a devices and services company – not a Windows and Office company.

Imitation is the sincerest form of flattery – Apple and Google are now devices and services companies and Samsung is careering rapidly down that slippery slope.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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