Nokia on the Global Market:

How to Compete with Other Companies?

Cissy Aixi Xu

Agenda• Introduction

Background InformationProblem of Nokia

• BenchmarksApple Inc.Samsung

• Recommendation

• Shareholder Concerns

• Conclusion

IntroductionLost mobile sales since April 2010

Background Information

a. Current situation of global smartphone market b. Current situation of Nokiac. Current situation of other main companiesd. Profit margins for smartphones

a. Current situation of global smartphone market 25% of worldwide mobile sales

Table 1 “Worldwide Smartphone Sales to End Users by Operating System in 2Q11”

(Thousands of Units)

http://www.gartner.com/it/page.jsp?id=1764714

Operating System 2Q11 Units 2Q11 Market Share (%)

2Q10 Units 2Q10 Market Share (%)

Android (Google) 46,775.9 43.4 10,652.7 17.2

Symbian 23,853.2 22.1 25,386.8 40.9

iOS (Apple) 19,628.8 18.2 8,743.0 14.1

Research In Motion 12,652.3 11.7 11,628.8 18.7

Bada 2,055.8 1.9 577.0 0.9

Microsoft 1,723.8 1.6 3,058.8 4.9

Others 1,050.6 1.0 2,010.9 3.2

Total 107,740.4 100.0 62,058.1 100.0

Table 2“Worldwide Mobile Device Sales to End Users by Vendor in 2Q11” (Thousands of Units)

 

http://www.gartner.com/it/page.jsp?id=1764714

Vendor 2Q11 Units 2Q11 Market Share (%)

2Q10 Units 2Q10 Market Share (%)

Nokia 97,869.3 22.8 111,473.7 30.3

Samsung 69,827.6 16.3 65,328.2 17.8

LG 24,420.8 5.7 29,366.7 8.0

Apple 19,628.8 4.6 8,743.0 2.4

ZTE 13,070.2 3.0 6,730.6 1.8

Research In Motion 12,652.3 3.0 11,628.8 3.2

HTC 11,016.1 2.6 5,908.8 1.6

Motorola 10,221.4 2.4 9,109.4 2.5

Huawei Device 9,026.1 2.1 5,276.4 1.4

Sony Ericsson 7,266.5 1.7 11,008.5 3.0

Others 153,662.1 35.8 103,412.6 28.1

Total 428,661.2 100.0 367,986.7 100.0

Calculation:

• Plays an important role

b. Current situation of Nokia

• 7.5% decrease in worldwide mobile sales

• Huge decline of smartphone market share:

27.5% Dec. 2010 to 15.5% Sep. 2011

http://www. gartner.com/it/page.jsp?id=1764714

“Worldwide Mobile Device Sales to End Users byNokiain 2Q11” (Thousands of Units)

27.5%Dec. 2010

15.5%Sep. 2011

http://www.allaboutsymbian.com/news/item/13121_Nokia_Q2_2011_results-smartpho.php

c. Current situation of other main companies• Six main manufacturers of smartphones:

Nokia, Apple, RIM, Samsung, HTC, and Motorola• Increase rapidly: Apple, Samsung, HTC

http://www.allaboutsymbian.com/news/item/13121_Nokia_Q2_2011_results-smartpho.php

d. Profit margins for smartphones

• Top-end smartphone: 36%e.g. Apple’s iPhone

• Mid-end smartphone: 1% -15%e.g. Nokia: 1. Mid-end & low-end smartphone

2. Big volumes & lower revenue

Problem of Nokia

a. Worldwide mobile sales declined quickly

b. Not improve technology of Symbian system

c. No powerful top-end smartphone

d. Weaker than its competitors

BenchmarksApple Inc.

• Fastest selling top-end smartphones of all time• Touch screen, advanced features, and minimal hardware• 2Q11: 19,628 thousands of units

2Q10: 8,743 thousands of units• Development of iSO technology• Release new phone on every year:

iPhone to iPhone 4S (since 2007)

iPhone 4S

BenchmarksSamsung

• Second highest percentage of global mobile sale• Refresh system • Select with latest innovations and most popular

features• Become first main manufacturer• Galaxy phones with Android system (2010) Samsung Galaxy S II

http://news.cnet.com/8301-13579_3-57318644-37/samsung-outshines-apple-in-smartphone-shipments-market-share/

Recommendation

1. Changing focus on top-end smartphone

2. New Windows phone with new technology

3. Keeping basic phone market

1. Changing focus on top-end smartphone

• Large sales on basic phone & low-end smartphone

• Need top-end smartphone

• Attract more top-end smartphone customers

2. New Windows phone with new technology

• New Windows phone

a) On Feb. 11, 2011b) began its partnership with Microsoftc) Nokia: hardware

Microsoft: Microsoft Windows Phone softwared) Aim at top-end & mid-end users: Lumia 800 & Lumia 710e) Powerful combination

2. New Windows phone with new technology

First Advantage:

• Having a top-end smartphone to compete

• Can succeed at top-end & mid-end market, Then reclaim the leadership position

2. New Windows phone with new technologySecond Advantage:

• Open doors to four largest U.S. operatorsa) U.S. operators: control > 90% of phone salesb) Acquirers of smartphone increase quickly (U.S.)c) U.S. smartphone market: world’s largest

http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-smartphone-market-android-is-top-operating-system-apple-is-top-manufacturer/

2. New Windows phone with new technology

Second Advantage: to U.S. smartphone market

d) Nokia: only 2% smartphone market share

e) Windows Mobile/WP7 Phones: only 8% shares

• Good opportunity to entry U.S. market

http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-smartphone-market-android-is-top-operating-system-apple-is-top-manufacturer/

3. Keeping basic phone market

a) 75% basic mobile sales

b) Large number of Customers: basic & low-end market

c) New Phone: need time to be accepted

d) Keep Symbian system & not lose existing customers

Shareholder Concerns

Q: Why not stick with the Symbian system and improve upon it?

A: The system 1. cannot be improved based on technology 2. cannot refresh with the latest innovations 3. cannot make more profit 4. cannot compete with other top-end smartphone

Conclusion

• Earn more Smartphone market shares

• More competitive

• Play an important and consolidated role

• Need long time

too late to enter top-end smartphone market

Questions?