What will Nokia do when the smartphone bubble bursts?
Smartphones are currently the most exciting component of the consumer electronics industry, achieving new sales records every year. It’s undisputedly the fastest selling category of consumer electronics market. Every new version of flagship smartphone is setting higher sales mark than their predecessors. But like every other innovation, will the smartphone importance wane away with time?
After five years of rigorous growth in the smartphone arena, it finally looks like the smartphone bubble is about to burst. The profits have gone down drastically, thanks to cut-throat competition. ARM had already warned about smartphone bubble bursting right in 2012. HTC, Blackberry and Nokia are some of the brands suffering declining returns in a crowded market.
Even current industry leaders like Apple and Samsung are experiencing a growth rate plateau in their smartphone business. European smartphone sales growth has been at a nine year low of 12 percent. Samsung shares have dropped 17 percent since June. Apple is working hard on a plastic iPhone, called the iPhone 5C, to expand its sales in emerging markets further.
The market is flattening out between both big and small players. India is seeing growth of local brands such as Micromax, Lava and Karbonn, who no one knew three years ago. Apple, Samsung and Sony have anchored their places in the top three when it comes to smartphones, but are constantly facing a threat from local vendors.
If Nokia manages to weather the tide, it will be smooth sailing
Nokia already took a bold step two years ago by stepping aside and choosing Windows Phone instead of the alluring Android bandwagon, in a bid to “be different” from the league. In spite of releasing smartphones with excellent hardware, be it camera quality, screen quality, build quality, or battery life, the company isn’t able to sell itself to consumers and is losing its smartphone market share even in India, which was once considered its surviving grounds. According to a report, Windows Phone has just crossed 170,000 apps, which is a lot less than the amount of content that is available on Android and iOS.
If Nokia somehow survives this slump, it will survive for a very long time in the portable consumer communications market. The only thing working for the company is cheap Windows Phone 8 devices like the Nokia Lumia 520 priced at around $160 (INR 10,000) without a contract. But it can’t win only on the power of cheap Windows Phone 8 devices and such amount of business will not earn them good amount of cash flow or cash reserves. Are there any other options apart from smartphones for their uprising? A new outlook or a new device?
Nokia could turn things around with a tablet
According to these charts and numbers, tablets have managed to attain explosive growth rate, even when compared to smartphones, let alone other slow moving consumer electronic categories. Android recently overtook iOS even in the tablet market. It is clear that by now, most major manufacturers have gotten into the tablet game and are intensely vying for a slice of the market share. Nokia is conspicuously absent in the tablet segment, but with the smartphone sales plummeting, is this an area of focus for the Finnish manufacturer?
Is early rumors are to be believed, then yes. Nokia is reportedly in the works to build a new tablet which runs on the Windows 8 operating system, although it is not clearly known if the device runs Windows 8 or Windows RT. Asus and many other OEMs have stopped working with Windows RT, thanks to its incompetency when compared to iOS and Android. Tablets based on Windows 8 face the same issues that the mobiles running on the Windows ecosystem face. There is just not enough content to justify consumer interest.
Microsoft is still marketing heavily on a feature that tablets running on the Windows 8 ecosystem come with Microsoft Office. But we’re at a stage wherein there are a multitude of viable contenders in lieu of Microsoft Office on both Android and iOS. Also, the inability of Windows RT to run desktop apps means that it is a hard and time consuming job for developers to create apps for the current Windows 8 ecosystem, which contains different platforms like Windows Phone 8, Windows RT and Windows 8 (desktop). It faces an uphill battle with the ultra-popular and revolutionary iPad on one hand and ultra-cheap Android tablets on the other hand. There is absolutely no way that Nokia can win over Android and iOS through Windows 8 as their primary operating system.
What about wearable computing Nokia? Weren’t you the one who first showcased the whole idea?
A growth rate plateau for any industry means that it is waiting for a new breed of devices to take over current ones. Such is the case with the smartphones. Now, all the big brands like Apple, Google and Samsung are banking on the growth of wearable computing. Wearable computing is one such area which can take portable computing to the next level.
It has long been rumored that Apple is working on a smartwatch that could be groundbreaking and can open up the demand of wearable computing devices in consumer electronics. Google has already unveiled its offering, the Google Glass. Samsung has also been rumored to be working on a smartwatch that is set to be launched later this year.
Nokia had the earlier momentum in this segment with its Morph concept watch, but failed to take the idea from the stage of a concept to reality. The current state of consumer electronics is such that a manufacturer cannot afford to lose ground in any one segment without suffering heavy losses, as Microsoft has learn’t with its Surface RT tablet, and its Kin series of mobile devices that were launched in 2010. While the wearable computing segment is still in its infancy, Nokia doesn’t look like it is focusing its energies in this area, which might be a cause for concern later on.
Nokia is two steps behind the market leaders currently, be it in smartphones, or tablets, or smart watches. Unless Nokia stops being exclusive to slow Microsoft Windows Phone, they are going to risk losing more ground in the smartphone battle. And coming over to tablets, Nokia needs to have a strong contender that can challenge the likes of the iPad and the Nexus 7 2013 for the brand to stand a chance in the tablet segment.