Business Times

Nokia vs Samsung: The king is dead, long live the king

Battle of the mobiles
By Jagdish Hathiramani

What a difference a year makes... The shipment numbers for mobile phones and smartphones for the most recent quarter (1Q12) have finally heralded Nokia's fall from its position as world's biggest phone manufacturer, a honourific it has enjoyed for 14 years.

Now, Samsung has taken its place with 92 million mobile phones shipped in 1Q12 compared to Nokia's 83 million. And if that was not enough, this is not the first time that Nokia has taken a hit where it counts; its bread and butter segment, basic mobile phone sales, has been free-falling for four of the last five quarters, while competitors such as China's ZTE and Huawei have also been nipping at its heels.

But the bad news doesn't stop there, Nokia's share of the highly lucrative global smartphone market, where it had also dominated just one year ago with 24.2 million units shipped in 1Q11, has dropped to 11.9 million units. Not great considering Nokia was counting on this segment to reverse its stalled fortunes. However, with the overall smartphone market growing just over 41.1% year-on-year to 145.3 million units, it was newly crowned market leader Samsung that stole Nokia's thunder and shipped a whopping 44.5 million units in 1Q12, up from 12.6 million in 1Q11, a feat also closely followed by Apple's shipments of 35.1 million smartphones, which was a significant rise from its 18.6 million units just a year before.

At the same time, it is unlikely that Samsung will be dethroned any time soon, with aggressive expansion in the works, and the company signalling sales targets for 2012 including 380 million mobile phones, with 200 million smartphones, compared to 330 million mobile phones, and 97 million smartphones, shipped in 2011. This is an area in which Nokia has been sorely lacking in the recent times.

And it is not only in the area of sales that Nokia has been fairing poorly. Not only has the company been racking up successive quarterly losses, its stock price has also been what can only be described as plummeting; losing three quarters of its value in just a year. Also notable, ratings agencies have cut Nokia's credit rating to junk bond status, according to Reuters.

On the other hand, while it seems that Nokia has no choice but to 'go gently into the night', the company's new CEO Stephen Elop, a Microsoft veteran, is betting on a range of new products that are based on the just introduced Windows Operating System (OS). But, according to analysts, these smartphones, while positively received in the key US market, have yet to be rolled out far enough and wide enough to arrest the droves of customers overlooking existing Symbian OS based Nokia products in favour of Android OS based Samsung.

Talk about a case study for doing it wrong... While only time will tell Nokia's revised role in the new world pecking order, the cloud does still have a silver lining: At least it isn't Blackberry.

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