Home Your Tech Mobility Nokia – a tight Finnish

Nokia – a tight Finnish

Nokia is a Finland based mobile technology company. It is named after the Finnish city of Nokia (surprise, surprise) and where its pulp mill origins date back to 1865. Thankfully it was not named after its current headquarter city Espoo.

You may as well disregard any history of the then world’s largest mobile phone maker prior to February 2011 when, in what many analysts considered a desperate move, it decided to back Microsoft’s Windows Phone 7.X operating system (OS). A move that caused many sleepless moments for shareholders but in hindsight was entirely right for the time.

Nokia’s aging Symbian smartphone OS was good but not up to the task of beating the apparently unassailable lead of Apple’s iOS and the Android cesspool held little appeal. But things certainly changed quickly and in 2013 and Samsung leads as the world’s largest mobile phone maker.

Stephen Elop is a shrewd CEO. He knew that “the battle is not with other device manufacturers – it is with Google” and after two years of angst and nail biting its fortunes are turning around.

The Lumia range is extensive – currently 520, 620, 720, 820 and 920 with variants and new models coming, covering a price range from AU$200 to $500 although the new 925 may be closer to $800 on arrival here.

But the key to Nokia’s resurgence is not just the Lumia – more than half of its handset models range in price between AU$50 and AU$200 and many are feature phones marketed under the name Asha.

Feature phones may be the next big thing (see iTWire article here) and have most of the smartphone features like touch screen, internet (browsing, email and social media), contacts, calendar, recorder, camera, music and video player, Bluetooth, GPS, 2G/3G but without the smartphone complexity enabling long standby and talk time – typically several hundred hours standby and days of talk time.

Reports of Huawei and Microsoft opportunistically buying Nokia have not really done any good to its share price. Nokia has to complete vast structural change first and then its shareholders should be rewarded with far better returns. Those changes could be sooner rather than later.

“The company is not in a crisis like it was a year ago. That makes Nokia now more likely to be a target of a merger or acquisition” said Mikael Rautanen, an analyst at Inderes equity research.

Analysts say that the present share price of EUR3 is well below the company's underlying value of around EUR5 if you take into account its intellectual property, its navigation business HERE and the stake in NSN. Most give it a ‘BUY’ rating.

The near future for Nokia

The new 925 or 928 (iTWire article here) is expected to gain high penetration in the US, Australian and European markets.

A new advanced aluminium body ‘superphone’ with a 41MP PureView camera codenamed EOS will be a category leader.

It’s HERE mapping and navigation is now on all its smartphones and providing by far the best GPS offline navigation experience of all smartphone platforms. The evolving City Lens feature (point the camera at a street scene and it will identify all points of interest) is a most innovative use of this technology.

Nokia Music is reportedly doing very well since its April launch in Australia with good take up of the $10 per month ‘all you can eat’ streaming package.

And Windows Phone continues to gain market share. In the US it is now at 5.6% and in the UK at 8.4%. It is the fastest growing smartphone OS, albeit from a low base. Worldwide it sold 7 million handsets in Q1, 2013 and BlackBerry sold 6.3 million. Android has 75% of the market and iOS 17.3%. Analysts are anxiously waiting for Q2 figures due out late July as Windows Phone is expected to be closer to 10%. See table here.

Part of Apple’s Q1 sales weakness was the company’s lack of any new hardware or significant new announcements (since addressed at the WWDC conference). Apple is now at its lowest global smartphone market share ever, less than a quarter of Android’s size, with 37.4 million iPhones sold to Android’s 162.1 million. Apple is at risk of being in Microsoft’s sights for the number two position in the global smartphone market share battle. To put that in perspective if Windows Phone keeps gaining at the same rate primarily at the expense of iOS then it could easily overtake it in a year. Stranger things have happened.

Nokia accounts for 79% of all Windows Phone sales and that equals well over 20 million phones since it launched the Windows 7.x Lumia series last year.

Feature phones previously mentioned are the star performer - 55 million of these sold in Q1, 2013 alone. Nokia has plans to move Windows Phone 8.1 to some lower cost feature phones as soon as it gets the right ARM system on a chip.

If Apple does not counter with a cheaper iOS smartphone Nokia may well become number two again.

Windows Phone 8.1 OS

The overwhelming opinion of analysts is that Windows Phone 8 was a defining moment that got Microsoft back in the game. From what I have seen of iOS 7 its very Windows like (see iTWire article here) and while imitation is the sincerest form of flattery it has sent Microsoft Phone developers a message that iOS is a threat that needs to be eliminated.

We know that 8.1 will have a much more feature rich notification centre (good), new Calendar (more Outlook like), better Voice (Siri look out) and Bing is being touted as delivering more unbiased, less advertising driven results than Google as a search engine.

Canalys recently projected that Windows Phone will claim 12.7% of the market by 2017 but I think long term projections like that are ripe for disruption and you may find a more optimistic review when Q2 market share figures are released.

The lead in photo heralds a major announcement scheduled in New York on 11 July.


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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!