Profits of doom...?
If you look at profit rather than just sales numbers, I suspect that Apple would turn out looking a lot rosier, don't you? Sales numbers in an increasingly commoditised market don't really tell you much these days...
Apple's iPhone is the Nick Clegg of smartphones: attractive, media-savvy, and firmly in third place when matched up against its more-experienced rivals. The top worldwide smartphone manufacturer - by a hefty margin - remains neither Apple nor Research in Motion but Nokia, according to the IDC's latest Worldwide Quarterly …
Apple's is a niche. A big niche, and a good one to have (huge margins), but nevertheless a niche of consumer-oriented devices and apps, somewhat similar to the wii's niche.
The ipad suggests they're very happy with that niche, and expanding it in directions where they're strong. That's pretty much the strategy that first brought us the iphone, when they extended their long-established desktop and laptop lines to a pocket-size device.
That's not to say Nokia has the mainstream to itself, with challenges coming from many directions. And you're right, it must hurt to see someone so meeja/PR-savvy as Apple occupying such a profitable niche ...
Like handset weight?
Big profits only tell you who is putting a huge markup on their hardware (Apple, I'm looking at you). Sales numbers actually give a comparable measure of market popularity.
Apple could gold plate 5 dog turds and sell them for £5000 each and mactards would snap them up. Huge profits, but no market saturation (if there is such a thing as a market for blinged up dog eggs).
Nokia's profit for Q1 of 2010 is $465 million, Apple's was $3,370 million. However, Nokia sells only phones, whilst Apple sells computers and mp3 players as well, so it's impossible to say how the iPhone compares with Nokia phones for profitability.
As for sales not telling you much... perhaps if you're buying shares they don't, but for those of us living in the real world, sales numbers (and trends) are very important. When you buy a smartphone, you're buying into an ecosystem of apps, official and unofficial tech support (from friends and on message boards), cheap Chinese accessories, interconnectivity between hardware vendors, business support for email etc etc. If you buy a more popular brand, the ecosystem is larger and more sophisticated.
For example, if you want a mobile phone you want to work with your company's email system, you should go with Windows Mobile first, then Nokia and iPhone because these three offer the best Exchange support. If you want a broad range of apps, go with iPhone or Nokia. If you want continuity accross generations, go with iPhone, Nokia or Blackberry phones. If you want to hack your phone, go with Nokia or the iPhone.
In other words, people aren't going to stop posting solutions to problems for your device simply because they're not very profitable!
One note: this article blames Nokia for not promoting itself enough. One thing I would ask is this: who does the media serve - the big corporations or the consumers? It isn't up to Nokia to persuade the press to provide complimentary articles about Nokia phones, it's up to the press to get off their lazy arses and go out and do some research. Rather than engaging in an iPhone love-in, the population would be better served by magazines, newspapers, TV shows and websites providing articles that more closely related to the purchasing behaviour of smartphone users.
Any statistic that shows the iPhone not at the top must be discounted.
Sorry.. Nokia sells more smart phones than Apple. Therefore more POPULAR than Apple. Deal with it.
Funny how numbers are a great way to measure popularity when the iPad has shipped a million units, but suddenly meaningless when not applied as a confirmation of the one true cell phone leading the way.
The RDS doesn't work on non iProduct owners.
Number of models not relevant.
Number of markets not relevant.
Profits not relevant.
Stock price not relevant.
Just the sales figures.
And no.. discounting figures until Apple comes out on top is also not acceptable.
It must be a European thing, the Nokia I had was not supported by any US provider NOR did I like the feel of the set. I had an N97 which was interesting, but clunky! I thought the touch screen was out dated and I could feel the inner workings of the phone each time I touched an app or swapped screens. I think that for the US and seriously the rest of the world, the Apple iPhone is the best bet. But I know there are those who are just as loyal to Nokia as I am to Apple, and if the European provider market is at all like the US market, chances are the iPhone isn't getting the support it needs to be a competitor for the European Cell Phone market just as the Nokia wasn't here in the US.
I didn't appreciate Nokia logistics prowess until I did that back of the fag* packet calculation. That's a lot of phones. Profit aside, the turnover is a good indicator of how many people derive their living from mobile phone through out the value chain.
* fag = cigarette for you yanks...
This really is meaningless when you consider that Nokia's main smartphone market is on the not-so-smart S60, maemo/meego/whatever they'll call it next month isn't really up to scratch compared with other platforms... and of course, Nokia's is usually giving phones away free with contracts - in poorer countries this means that they can easily grab a large market share.
Also, if you trim down these stats to countries which have iPhone/Blackberry devices (a lot of Nokia's market doesn't) then you'll also find that it's mostly nonsense from that angle too.
So a 40% global market share is meaningless? And the fact that Nokia sells into markets that RIM and Apple don't makes this more so? I don't really understand how you can justify this.
BTW, Nokia don't 'give away' their phones on contract; the network providers buy them from Nokia and then amortise the cost across the life of the contract.
It's worth less than Apple's share, which ultimately renders it meaningless. I know which position I'd rather be in financially, and it ain't Nokia's! Look at the bigger picture; Apple still make more money from a lower volume than Nokia. With the best will in the world, Nokia need to turn that around to make their market share count, otherwise it *is* meaningless. What is being suggested by your and other posts is that market share proves which phone is the best. I'd argue that it merely proves which phone is the cheapest at PoS!
It's also worth noting that Nokia's share is made up of at least 10 different devices, while Apple's is with essentially 1. Apple's 16.1% (and growing *despite* the HTC/Android 'onslaught') when all is considered is impressive--Nokia's share-per-phone is around 4%. I suppose it could be argued that Apple have 2 models on sale, even so that equates to twice as much per device share. So Apple's share is more *valuable* and more *profitable*. Figures like market share are meaningless without context or analysis. Another good comparison would be BMW vs Ford. BMW have a relatively small share of the car market with fewer models than Ford, yet their operating income was nearly twice that of Ford--$65.9 vs $38.4 billions. Ford's market share whilst not meaningless when purely measuring sales volume, it's clearly worth less than BMW's and actually, in context, *meaningless*...
"and of course, Nokia's is usually giving phones away free with contracts - in poorer countries this means that they can easily grab a large market share."
... except, in poorer countries the proles will go down the PAYG road instead of chaining themselves into an 18-month contract. No free phones, and the cheapest smartphones are somewhre around a $300 or $400 price tag.
So smartphone users are weeded out to those who do have the money to buy 'em, or those who actually want to get into a contract; Blackberries, iPhones and even the Nokia smartphones are on par over here. Yet most people are flocking for Nokias and Blackberries... and I've seen *THREE* of my friends with an iPhone. One of 'em is a 2G, the other two 3G. No 3GSs here, and one of them lost her iPhone ... she hasn't replaced it.
If any smartphone is gaining traction over here, it seems to be the Blackberries.
By the way, comparing Apple gear to Porsches isn't quite right. They're Hummers ... expensive, rich status symbols but ultimately just an expensive toy doing the same stuff that other vehicles do. A Porsche actually runs real fast... the iPhone doesn't even multitask in the real sense of the word. And it still won't do it with OS4!
I think a significant reason for the increase in smartphone sales is that people who bought iPhones previously never had smartphones.
I'm basing this purely on personal observation, but it would explain why phone geeks (and I include myself in that) critercised Apple for lack of multitasking, etc. and people who bought iPhones didn't really care (because no phone they'd had previously did those things either).
Rupert is right. Apple is making right now more money with their high-end smartphones. But so what?
They are in different market positions. Nokia have been and still is mass-market phone manufacturer that produces all kinds of handsets. It's totally different strategy than Apple's. Nokia couldn't even replicate Apple's strategy and Apple couldn't replicate Nokia's because both companies are result of their history. Good example of Nokia's strategy is N8: good spect, low price.
At present time it seems that Apple's strategy is winning: more profit, more goodwill, more headlines... But no-one knows about future. High-end smartphones are the most competetive part of phone market these days becoming more and more competetive. It's entry level for new brands: margins are wider and possibility to make money is bigger (no need for huge volumes).
Apple position is not as solid as it seems. They are doing everything to cement their position but it will not be easy and there is lot of competitors coming at their direction.
Next year Nokia, Google, Microsoft, Samsung ... everybody has their new OSs ... I'm also exited to see also Apple's new tricks.
For the most recent quarter Nokia announced $465 million profit, Apple announced $3.38 billion for the same period.
If Nokia could 'sell their story' better then that might improve too.
But Nokia's smoking gun is that Symbian is still very fragmented from a developer point of view. Until they solve that, Apple, Google and RIM are going to grow faster than them.
And why would you do that? This is a news item about a report on market share.
Apples high profits indicate only two things. Firstly Apple charge outrageous prices for what they are offering and iPhone users are willing to pay over the odds.
It doesn't actually show how popular their products are in comparison with somebody else.
Contrary to you statement sales numbers give you plenty of information (or why would they bother gathering them!). This reports clearly shows more people chose Nokia than chose Apple, therefore Nokia is more popular. I find that *very* interesting seeing as so many people out there keep writing Nokia off.
This is not a "increasingly commoditised" market either, there are several operating systems, and lots of different hardware at play.
Er .. isn't that the point - large volume of sales at low margins = large imcome/profit. Tesco (NO not Tescos) have been doing it for years and lat time I looked this meant mucho profit, (then again, Tesco isn't a company I would want to support)
Disclaimer: I have owned/own a Nokia 9500 and 9300 and they've been excellent. 9300 could have been an Android phone except I only use 60GBP a year on PAYG and could not justify a £35/month vs 9300 on eBay @ £65...
So you are saying that Apple can make or break both Nokia and RIM? They are the king makers? They control the market (hung parliament), set the future direction (policies), propose and execute a game changing handset (PR) ... they may not have the biggest market share by handsets sales (seats) but they do have higher profits (share of the votes)?
Yeah, spot on analogy.
And I for one have both voted LibDem and have an iPhone and all for the right reasons.
I just got back from the link to the IDC site. It seems like this report is talking about SALES. I.E., how many, and of what, was sold to consumers in this past quarter. If Nokia fell to 5% of the smartphone market in the next three quarters, how many people in the world would still OWN (or lease, if you will) a Nokia smartphone ? Metinks these numbers can be a bit deceiving.
While they are an indicator of profits and (probably) trends, they do not describe the existing market. This can give folks a false sense of dominance by a particular manufacturer. Yes, of course, if I was the CEO of Nokia, and I saw my sales drop to 5% for ONE quarter, I would be doing a lot of prodding and cajoling (the designers) and ass kicking (the marketing/sales force) immediately !!
@rcossebo said "I think that for the US and seriously the rest of the world, the Apple iPhone is the best bet."
The iPhone models cost around $400, Nokia offers a range of smartphones down to about $100 ... as Giles Jones said, Ford sell a lot more cars than Porsche, I own a Ford, I've owned three Fords before ... would I like a Porsche? Give me one for free, and sure. Or sell me an old one cheap and I'd consider it (I have a second hand first gen iPhone along with my old E71 and new E72).
Most of the world is not the first world ... it's India, China, Africa, Central and South America etc. Places where spending $400 on a phone is *expensive*, as in a month's salary or more (in some places much more). And "all you can eat" data plans can be very expensive in these regions. The iPhone *expects/requires* cheap data plans ... I'm on a PAYG deal with O2 for my iPhone. I forgot to top up my balance when the last £10/month for "all I can use" data went past, so it started charging me per megabyte, and I couldn't find all the apps that were trying to check for updates or otherwise doing data stuff and it wiped out the rest of my call balance in under a day. When I went to the US in March, I switched my iPhone off, because I couldn't begin to imagine how much it would cost me in roaming data charges ... so I used my E72 to check email and do the occasional bit of surfing (yes, there were times when I had access to free wifi when the iPhone was switched back on of course :-) )
Do Apple make a great phone that's easy to use? Sure do! If they were half the price I'd seriously consider getting a 3GS ...
I'm a bit of a geek, I want to write apps for my phone, could I do that for my iPhone? I'm told I can't, because I don't have an Apple MacOS computer. However I can write apps for my Nokia on my Windows PC, so that's cool, and all the tools I need are free, that's cool too.
@anonymous coward said "This really is meaningless when you consider that Nokia's main smartphone market is on the not-so-smart S60, maemo/meego/whatever they'll call it next month isn't really up to scratch compared with other platforms... and of course, Nokia's is usually giving phones away free with contracts - in poorer countries this means that they can easily grab a large market share."
Er, this article is about market share, it's totally meaningful. Also S60 and Meego are different operating systems and don't run on the same phones. And millions more people use them than the iPhone OS and they seem to do all the important things ...
Sony TVs are more expensive and better (in my opinion) than LG or Samsung or Philips, yet people still buy the cheaper ones that do everything they want ... strange that.
... Nokia don't give away anything (ask my friends who work for Nokia!)
If an operator in a particular country gives away a handset with a contract, it's because the handset is cheap enough they expect to make enough profit on the contract to cover the handset cost. iPhones are too expensive to give away except on the very expensive contracts.
Re the reply to the AC; Market share is an interesting metric in all business. It's a nice thing to have *if* it's profitable, but as this article clearly shows, Nokia's market share is ultimately worth less than Apples (NB; Nokias share isn't worthless!). So what if more people use the product. If those people combined are paying less that the ones using your competitors product, what good is the lions share of the market, especially when the competitor with less share is making *significantly* more profit? Business, like it or not , is about profit, you lose if you make less than your competitor, *even* if more people own and use your product.
"For the most recent quarter Nokia announced $465 million profit, Apple announced $3.38 billion for the same period."
A lot of Nokias cash is spent on R&D
proper R&D that is - not nicking something and putting a flashy GUI on it for peanuts.
These innovations bring in cash over decades.
e.g. lots of 3G stuff that everyone bar apple licences - because they dont have to as they are super , gorgeous , amazing.
R&D - not really sure what your point is, but your comment about cash over decades doesn't make sense if they lose market share and sell fewer and fewer of these devices, does it? Or, is their plan to become a company that merely owns a bunch of patents and runs around the globe taking other companies to court as an alternative to actually selling products? Oh, actually, that's what they're doing now.
If Nokia, Samsung or LG can produce a phone that has 90% of the shininess factor (UI wise) of an iPhone they can produce it for a lot less than Apple can or would ever sell it at and most people won't care enough to pay the massive Apple tax.
As the Android phones and Meego / Symbian^4 devices improve, Apple will need to quickly extend their lead over the others as those marvelous profit margins will evaporate pretty quick as Motorola found out in the post Razr years and Nokia are increasingly finding (they aren't in the dire straits people make out)
Apple does currently make the others look bad (issues with the iphone notwithstanding, ie shit call quality) but the gap will close and I personally can't see what they can do next that would be the same sort of step change to differentiate them from their competitors (This lack of foresight obviously being why I'm not rich)
What Apple are doing and others are increasingly aiming for is that they can lock people into the ecosystem because of the sunk costs of their apps etc and then that makes them less likely to leave when the 'new' uberphone comes along that likely as not won't be created by that manufacturer.