Does Nokia Have A Good Future?
Yasir is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nokia (NYSE: NOK) has gone through a wild ride, from being a leader in the mobile phone industry to just another company looking to survive in the industry dominated by Apple (NASDAQ: AAPL) and Android. Many analysts claim that Nokia wouldn't survive after losing significant market share -- but Nokia has come back stronger with Microsoft as its partner.
Both Nokia and BlackBerry (NASDAQ: BBRY), have been struggling after losing market share in the smartphone industry. While BlackBerry's future is uncertain, Nokia just released a stunning Windows-based smartphone, the Lumia 920. Even though Nokia's Windows Phone 8, or WP8, devices are packed with a lot of features, there is still doubt on whether or not Nokia can compete with the market giants. Here is a SWOT analysis of Nokia, which will reflect Nokia's current position and the things you need to look out for in the future.
Nokia still dominates the Windows smartphone market, and even though that market is still quite small, Nokia leads Samsung and HTC with its Lumia line of smartphones. This is a major strength, and if the Windows Phone market as a whole grows, then Nokia is likely to grow as well.
BlackBerry and Apple, on the other hand, use their own software and hardware. While Apple is still one of the leaders in the industry, BlackBerry will rely on its new operating system, BB10. People are aware of WP8, but BlackBerry 10 is a totally new OS, and BlackBerry's market share will only grow if people actually like it.
Another strength for Nokia is that it has a market for all types of customers. The high-end Lumia line is aimed towards people with higher budgets, while low-end Lumia phones, like the Lumia 620, are aimed towards people who are tight on money but still need a good smartphone. The Asha line is aimed towards people with even lower budgets, who need a good mobile phone with some quality features.
Apple lacks this variety. Its iPhones are expensive, which limits their potential customer base and excludes those with tigher budgets. Similarly, the BlackBerry 10 smartphones are also expensive, and are targeted towards a set audience.
While the Asha line might not need major improvements due to the price tag, the Lumia smartphones certainly have some flaws. Firstly, the Lumia 920's hardware is not as up-to-date compared to its price tag. It is definitely a brilliant smartphone but with its price tag, you should expect at least a quad-core processor.
Most new devices, such as the Galaxy S3 and the LG Nexus 4, are packed with quad-core processors while the Lumia 920 is only packed with a dual-core processor. Even though Nokia features a completely different OS and requirements for hardware, the latest hardware is required in order to compete against giants in the industry. BlackBerry 10 also features a dual-core processor, however, it is a phone designed for multitasking which is why it features 2GB of RAM compared to 1GB on the Lumia 920.
The relatively small app store on WP is seen as another weakness for Nokia's Lumia line. Nokia finds itself standing close to BlackBerry 10 in terms of the number of apps available and even though there are many quality apps available on both the app stores, Nokia and BlackBerry are far behind than Apple and Android. Apple's app store is almost 8 to 10 times bigger than the current app stores of BB10 and WP8 and users are clearly missing apps like Instagram and Spotify.
One of the opportunities for Nokia is to expand into the tablet market. The overall sales of tablets have increased significantly in recent years dominated, again, by Apple and Android. Stephen Elop, Nokia's CEO, recently revealed that he is looking to get into the tablets market with Microsoft's OS being the first preference.
However, Elop also stated that the company will consider alternatives as well even, although, a Windows 8 tablet would go perfectly with a Lumia smartphone. Apple has already been successful with its 5 different iPad models and Nokia can succeed as well. However, it could still fail if it follows BlackBerry's mistakes which led to the failure of the BB Playbook.
Another opportunity for Nokia could be to release a new line of smartphones with a totally new OS. It is highly unlikely that Nokia releases its own Operating System for a premium line of smartphones but who knows if it can create a new partnership with Google for premium Nokia-Android smartphones as Elop didn't rule out a possibility of a Nokia-Android tablet.
In an apples to apples comparison, Nokia currently faces competition from Samsung's Ativ smartphone series along with HTC's WP8 devices. In the smartphones industry, as a whole, Nokia faces competition from Apple, BlackBerry 10 and all the Android manufacturers including Samsung and Sony.
Even though Nokia targets different types of consumers with different budgets, a serious threat could be Apple's rumored upcoming "Budget iPhone." If Apple releases a cheap iPhone in the near future, Nokia's low-end smartphone share could fall down.
The BlackBerry 10 devices could also cause problems for Nokia's market share as both companies are struggling to get back into the smartphones industry with significant market share. The Lumia 920 competes with Apple's iPhone 5 and Samsung's Galaxy S3, however, Samsung Galaxy S4 is rumored to be right around the corner and Nokia needs to release another device in order to stay competitive.
Nokia was left far behind by Apple and Android and the question, back then, was whether or not Nokia would be able to catch up with the latest smartphones. With the latest Lumia 920, Nokia certainly played catch up with the industry giants, however, now the question is whether Nokia will be able to compete with Apple and Android after catching up to them. Nokia's Lumia sales have been booming but we'll have to wait and see if Nokia can release more competitive devices in order to compete with Apple, BlackBerry and Android's latest offerings.
yasirrfc has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!