Nokia refocuses for success

Devices

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In 2009, Nokia - the world's largest device manufacturer - managed to ride out the financial storm by throwing out costly components but failed to come up with appealing new devices in time for the Christmas season. In the mid- to high-end price segments, Apple, Samsung and HTC have been gaining strong momentum by expanding and refreshing their data-friendly capabilities whilst Nokia has been building on the legacy of its Comes with Music and navigation portfolios based on its rigid 10 year-old Symbian OS. Moreover, Nokia announced that it will reduce the number of smartphone models next year from 20 to 10 despite the fact that it foresees a 10% rise in global device shipments in 2010 and intends to connect 300 million users to its Ovi platform by the end of 2011 as part of its major new push into Internet services.

We believe that capability has always been Nokia's biggest stumbling block: it lacks the breakthrough innovation that will disrupt the market (especially from a user interface perspective), but it definitely has the intent factor to become a threat since it is highly skilled in scaling out global mass-market solutions. The Finnish vendor has at least recently answered certain questions related to the capability challenge by stating that it will migrate smartphones to lower price tiers and will launch more Qwerty and touchscreen devices based on its upcoming new Symbian user interface, as well as its Maemo 6-powered mobile computer by the middle of 2010.

Nokia could regain momentum in the US market (where shipments dropped by 31 percent in Q3 2009 year-on- year) as Motorola's mobile arm is less of a threat and is likely to be traded out next year. RIM and Apple will be the two strong contenders to outperform in the large US enterprise segments. In addition, Sony-Ericsson is likely to undergo a massive shake-up as well under which Sony Japan might gain more control over the failing joint-venture. Time to market is critical for handset vendors; get it wrong and it could rapidly shake up an entire company - but Nokia knows it.

(This article is part of a series of predictions for 2010 from the GSMA Intelligence team.)

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