Are BlackBerry and Nokia truly dead?

The writing on the wall keeps getting bigger. Till last year, the doom and gloom predictions for Nokia and RIM were restricted to the tech publications. For Nokia, it all started after the launch of Nokia N8 featuring Nokia's upgraded Symbian 3 experience, which was touted as a response to iOS and Android. And for RIM, the launch of BB OS 6.0 on the Torch heralded the beginning of the end. The hardware of  both devices was excellent - critics found the operating system and user interface to fall behind iOS and Android.

And now, what was restricted to critic's remarks has spilled over into consumer sentiment in a big way. For the fist time, iPhone sales (at 20 million) have overtaken Nokia's smartphone sales in Q2 2011. Yes, the iPhone outsold Nokia's entire smartphone range in this period. This is not such surprising news considering that Nokia has been scaling down their smartphone portfolio and has had few major smartphone launches after the N8. But it's still a sobering reflection of how much Nokia has fallen behind in the smartphone race, in two short years. Apple and Samsung have displaced Nokia to the position of third largest smartphone maker. 

RIM is not in a much better position. In the US market, the company has faced an eroding market share. Separate studies by Nielsen and ComScore show that BlackBerry is down to fourth position among handsets and third position as an operating system. 

On the flip side, both RIM and Nokia enjoy good success rates in the developing markets. RIM has recently reported adding a million subscribers in EMEA (Europe, Middle East and Africa) in just 3 weeks. And the company still attracts new users, especially budget conscious students, thanks to its BBM service.

Nokia still has a strong share of the feature phone market and commands a strong share in countries like India.

But this may not be enough. This post by Horace Dideu at Asymco indicates that the low-end non-smartphone market is not growing at a strong pace. Further more, it is under pressure from the so-called 'White Box' manufacturers like ZTE and Huawei. And very little innovation is taking place in this sector. It cannot be a sustainable basis for Nokia's future. Enter the tie-up with Microsoft to vie for a position in the smartphone segment. Notwithstanding all the criticism of Nokia's moves, I honestly do not think they had any other choice available to revive their fortunes.

The reason for the fall in Nokia and RIMs fortunes can be summed up very simply. Mobile phones are moving away from voice/ text devices to mobile computing devices. It is not a co-incidence that that both iOS and Android are from companies that understand the computing/ browsing space and transferred their expertise from the PC domain to mobiles. RIM and Nokia have traditionally been phone companies who extended the capability of phones through innovation. When Apple launched the iPhone, they envisioned transferring the capabilities of a PC to a phone, using apps as the gateway. And Google has been working at re-creating the web browsing experience on  mobiles, using apps and widgets. Both companies approached the task from the other end, compared to the phone manufacturing giants, and created disruptive innovation in the phone market.

So is the writing on the wall for RIM and Nokia? 

I would say that Nokia's tie up with Microsoft is a good bet for the long term. The problem is due to the fact that the announcement to exclusively make Windows Phones was premature and has been largely misinterpreted. Nokia has promised to support Symbian till 2016, but people are acting like it's already dead! And till date, not a single Nokia phone running Microsoft OS has been released in the market. This explains the short term losses.

The research firm IDC has predicted that by 2016, Microsoft's Windows Phone will have 20% market share. While this will be way behind Android's 40%, it will catapult Microsoft to the position of the world's second largest smartphone OS. If the partnership with Nokia endures till then, they will reap the benefit along with Microsoft. But they may not return to their original position of dominance.


Source : CNet

For RIM, the picture is not so rosy right now. The problem is that unlike Nokia which has at least taken a stand, RIM has not indicated where they will go in the future. QNX or OS8? Will they redesign their handsets? Will they provide a better touchscreen experience? Will they keep up with the blistering pace of innovation set by Android or will they create a consistent user experience that at matches up to iOS? Can they create a better flagship than the Torch? Questions abound and the company is yet to answer them. Meanwhile to the corporate/ enterprise audience that makes up the bulk of RIMs user base, the iPhone and the iPad is looking like an increasingly attractive option.

So would I advise people to not buy a Nokia or a BlackBerry? Frankly, a large number of people don't want to buy a top end smartphone at obscene prices. A large number of people are comfortable with a certain user interface and don't want to shift. And most people are still comfortable with using their phones for push email, messaging and some Facebooking and mobile uploads.  Both Nokia and RIM offer this adequately, do it well, and the lowered price of handsets from both companies make them an attractive budget option. The much reviled N8 was still a fantastically built phone with a superb camera and at its revised price of Rs.22,000, it's a decent buy. So I would say if you want a budget phone, a BB or Nokia is still a good option. But it's also an ominous sign that non-geeky people are also dipping a toe in the Android world with its budget offerings from HTC and Samsung. There is a buzz about Android that attracts people to it, and increasingly when people ask for reccos on phones, I hear a chorus "Don't buy a BlackBerry or a Nokia, they're dead." Both RIM and Nokia urgently need to do something to create a positive aura. And it's not easy right now to see what that could be.

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