Nokia smartphones are slowly losing its market domination in many countries, especially on its traditional market, Europe. To make matters worse, it seems that any effort done by Nokia to address this problem will do nothing but reducing the company’s already declining profit. Experts believe that Nokia’s trouble is due to aggressive price reduction policy from competitors, component shortages and soaring popularity of Android and Apple phones.
Nokia is an international brand, but its market domination in the Europe is internally considered as essential in its business operation. Each year, a third of Nokia’s sales come from the European market.
Some experts predicted that by 2012, Android will eventually dethrone Symbian as the number one smartphone platform in Western Europe. The success of Android phone vendors, such as Samsung, HTC and Sony Ericsson play an important part in establishing stronger awareness on Android platform.
It is becoming common among mobile application developers to think that Nokia smartphone platform as time-consuming and disruptive. Google is clearly capable in introducing Android as a superb mobile OS, Apple on the other hand, not only offer iOS as a dependable platform, it also able to provide hardware exclusivity. Sadly, Nokia is only able to showcase Symbian as a modest platform, which hardly able to attract similar enthusiasm directed toward Android and iOS.
Unfortunately, Nokia’s problem is not only limited to its high-end smartphone segment. With its excellent distribution network, the company has reigned on the huge low-end handset market (phones with basic features, such as monochrome display, text messaging and voice call). In phone industry, low-end segment is notorious for its thin operating margin, which wasn’t a big problem for Nokia as it can sell a significant amount of affordable handsets. However, a myriad of Chinese phone manufacturers begin to flood the market with handsets at similar price range, but yet able to offer one or two more features than Nokia’s phones. In less developed countries, Nokia has tried to reach rural areas with more active strategies, such as mobile stores that travel from village to village, but these measures are proven to be less effective in dealing with the charm of cheap Chinese handsets.
The average selling price for Nokia phones has declined for nearly 50 percent to about $60, which means that less high-end handsets are sold and more low-end ones are sold.
To make matters worse, local carriers in Asia are offering bundled package that include Chinese handsets for less than $20. Some experts predict that the first sub-$100 Android phones will be available in 2011, which further complicate Nokia’s future, as its phones in this price range only run Symbian 40, a far less capable platform.