Apple’s iPhone may be the world’s best-known phone, Google Android is making a growing impact, and Samsung, LG and Sony seem to bring out smarter phones every month - but make no mistake it’s still Nokia which dominates the mobile phone industry. So when the Finnish phone-maker released results showing a 90% drop in profits the industry could have been excused for running in panic.
So has Nokia, which still has 37% of the global mobile market, lost the plot? Well its share price leaped ahead after the results came out, despite a fall of 19% in the number of phones sold this year compared to last. The market was happy because the news wasn’t worse.
Nokia reaffirmed an earlier forecast that the overall market would shrink by 10% this year, pretty shocking for an industry which was used to 20% growth every year, but investors latched on to the idea that the gloom wasn’t getting any deeper.
But there are still questions over how well Nokia is competing in the one area of the market that is still growing - “converged mobile devices”, as Nokia calls them, or smartphones to the rest of us.
The company only managed to sell 13.7 million smartphones in the first three months of 2009, compared to 14.6 million in the same period last year. But the company’s CEO Olli-Pekka Kallasvuo still managed to extract some good news here, claiming that its share of the market had actually ticked up a little since Christmas.
He trumpeted the success of the 5800 Xpress Music phone which was Nokia’s number one seller in the first quarter of the year. But this device, touted an iPhone rival, was the company’s first mass-market touchscreen phone - and arrived many months after just about everyone else had brought out similar devices.
Nokia seems to have been caught napping by the way smartphones have moved from early-adopter business devices into the mainstream. I remember visiting their Helsinki headquarters in 1999 and finding everyone there tapping away on the first version of the Communicator - and telling me that it made business meetings a bit tricky because colleagues were messaging each other across the table.
That device seemed extraordinarily advanced at the time - and Nokia has continued to develop the kind of phones that appeal to well-heeled early adopter executives. Now, though, everyone wants a device that is both smart and simple, and Nokia has struggled to deliver that combination.
A lot is now being staked on the N97 which arrives in June, and looks an attractive combination of touchscreen and QWERTY keyboard. Olli-Pekka Kallasvuo told the investment analysts that he hoped it would sell a million a month, if the price charged by the operators was right.
But one analyst reminded me that June might be a difficult month to launch a smartphone because that’s when a new version of the iPhone may be unveiled. Nokia probably sells forty times as many phones as Apple but the N97 could still find itself overshadowed by the glare of publicity surrounding a new iPhone. Perhaps the Finnish company needs smarter marketing, along with its smarter phones.