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Samsung Galaxy Note. First Look
Today, large companies, especially corporate giants like Samsung, do not surprise users with extraordinary products... |
| First look. Sony ST21i Tapioca Microsoft Windows Phone 7: Reasons for Failure First Look at Samsung Galaxy S3 as a 2012 Flagship |
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Spillikins ¹157. 2011 Ranking According to IDCThe end of the previous week was quite eventful as I was collecting data for a large article on why Windows Phone 7 and other mobile OS from Microsoft, including WP8 will fail. It will be a separate material independent of Spillikins, but so far I can say that the PR department of Microsoft works well by turning failures of the company into the possibility of future success, which is not necessarily assured. It is the economics of future, when we are sold not the current version of the product, but future successful products. Enough is enough, so wait for the article itself to learn more. Contents:
How Samsung Spends Its Money or Corning GlassIn the last issue of Spillikins I mentioned the huge amounts Samsung is planning to invest in R&D in 2012. As a follow-up we got the news that in South Korea the company is planning to build a plant for manufacturing Corning Lotus Glass (Corning is the company responsible for Gorilla Glass). The new generation of Lotus glass will be used in TFT/OLED screens of mobile and desktop monitors. For example, Samsung has plans to use this type of glass in Galaxy smartphones. Among its advantages is low power consumption and better picture. An own plant will allow Samsung not only to use the technology faster, but to save expenses. Other companies will get this glass, but will have to pay more and we do not know much about the timeline. It is a good example how a technology company uses its advantage over rivals. Back to the table of contents >>> ComScore Analyzed the US MarketI am often enchanted by graphs. When you look at their beauty and understand the internal connections it is impossible not to be impressed by their logic. For example, look at the graph from comScore, which shows the OS popularity in the US mobile market.  December of 2011 gives the following results:
As you see Android and iOS are winning, while others are actively losing their market shares. The biggest loser is Blackberry, though Microsoft is also moving down despite new handsets and Mango. Symbian is not a serious player in the US anyway. It will be more interesting to look at three leaders in terms of millions of handsets sold. It can be a revelation for our European readers.
The success of Samsung in one of the leading markets helps us understand if it can replace Nokia as the global leader in 2012. Additional food for thought will be available in the annual IDC report for 2011 Back to the table of contents >>> IDC Data for 2011The discussion of IDC 2011 data led to numerous messages I received via e-mail, Twitter and Skype referring to the report and accompanied by the phrase - “Nokia is still a market leader”. It shows that many people support the company, but understand that its leading position will be lost pretty soon. As a result there is an emotional response to prove that at the moment everything is well. Let's look at the data and highlight the key points. 
Indeed Nokia is still number 1, but it lost so much during the period in question. Its market share shrank from 32.6% to 27%, while the shipment of handsets decreased by 8% Only LG fared worse (-25%). Courtesy of the last quarter performance and the introduction of iPhone 4s Apple managed to become No3 on the phone market (you got that right, phones and not only smartphones), which is a phenomenal result as if the company laughs at its struggling rivals. During the last couple of years second-tier manufacturers improved at the expense of Nokia. On selected markets these companies even managed to dethrone Nokia in 2011. Let's look at the 4th quarter results, which can be quite interesting. 
The share of Samsung in the 4th quarter was 22.8%, while Nokia still had 26.6%, while raw numbers gave Nokia an advantage of only 15.9 million handsets. A year ago the gap was 43 million. As far as the Nokia slump continues across the board, while Samsung also thrives everywhere, we can clearly predict that in the first part of 2012 phones sales of Samsung will surpass the same data for Nokia. In the last quarter Samsung broke its own record and shipped almost 100 million phones and its growth is unstoppable. The company from Korea will grow slowly, but steadily. They do not need wild fluctuations. Consumers have to take it in and associate quality products with your brand. According to statistics this strategy is working. The rest is clear and you do not any special effort to understand who won and who lost. Back to the table of contents >>> Nokia Is Cutting Prices WP7Last week Nokia cut the prices for Nokia 710 and 800 for the second time. It is very rare to drop prices for phones that have been released less than two months ago. And it is plain extraordinary when the price is going down this dramatically. Let's have a look at the price dynamics:
To call this a catastrophe would be an understatement the last best hope for Nokia is gone. It means that the company has exhausted all means and resorted to the last one – price dumping. The Nokia brand alone no longer stands for good sales, in 2012 more and more people turn away from it. The falling prices prove that all the PR hype Nokia was trying to make about record high sales of Nokia 800 was nothing but a fairy tale that never came true. However, the failure of Nokia also means Windows Phone 7 fails and this OS is doomed to be a mere also-runner at least until its next version. Anyway, only Microsoft fans took WP7 for a serious player. Before Nokia with their phones and generous give outs and massive ad campaigns WP7 sales were a pathetic sight. Nokia boosted WP7 sales for a while but they started to fade away quickly. Old Windows Mobile 5.x/6.x had higher sales than all current WP7 phones to date. The table below represents price cuts on a number of new releases in February (Android and WP7 phones)can help you understand the condition of Windows phone 7 (Svyaznoy data):
The first thing we notice is that prices for Android phones and Samsungs fell insignificantly (around 10%). The reason for this is that Samsung had a better price policy and they release their phones always at competitive prices from the start so they don't need to resort to price dumping. If Samsung ever slashes the price for its product it is definitely a response for a rival model but they rarely resort to this. HTC is cutting prices for the same reason as Nokia: the demand is lower than the offer. Price cutting has become a regular tool of market competition. WP7 sales are important for HTC – they are not expecting a boom but even tiny sales make a difference for HTC. It is curious how HTC and Nokia competition is driving WP7 phones into lower price ranges. Today Nokia 710 costs a little less than Nokia C7 (an unpopular Symbian^3 phone that was depreciating very fast a year ago when it was released). The price equality of a year old Symbian^3 smartphone with a Windows Phone 7 device that has just been released illustrates the popularity of WP7 on the market. It looks really bad for WP7 but then things never looked up for it anyway. But what retailers, wholesalers and manufacturers really want to know is whether price dumping can keep WP7 sales going until October (September in Europe) when Windows Phone 8 is released. I suppose the Russian retail can give them an answer: the first day the prices were slashed there was a surge in demand which disappeared just as quickly. And the surge was caused not by spurred public interest but was merely a number of buyers driven from other stores in search for better prices. But as is Windows Phone 7 does not seem to be able to gain love of the mass market. The only way there is left is dumping and for Microsoft it has become a tradition: in the US you can get a WP7 smartphone for free for a big enough purchase. At the start the first Windows Mobile smartphones were quite popular but when this OS was dying there was some massive dumping of stock: Motorola Mpx 200 cost only $200, then the price went down to just $99 which was a real bargain and made spectacular sales. Something similar happened in Russia when retailers were getting rid of HTC Mozart: 40,000 handsets were sols in one month at 12,990 RUB (about half of those 40,000 were sold for 13.990 RUB). It's funny but the price for the very same HTC Mozart remained at about 10,000-11,000 RUB on the gray market and the two market had no effect on each other. In the US Nokia 900 starting from April will cost you only $99 with a two year plan – this is nothing for a phone of that class. T-Mobile Nokia 710 that was released earlier was $49.95 with a two year plan – today it is free if you take the plan. The reason is obvious: people don't queue to buy a Windows Phone 7 smartphone. Microsoft are fully aware of how badly WP7 failed but they see it as a beta, a test shot. Their aspirations look into the future and concern WP8. Unfortunately, the history of Microsoft shows that they are utterly unable to create an interesting mobile solution and I don't see any reasons for this situation to change in the near future. It is not about the price, it is about the fact that what they are working on today is already falling behind released versions of Android. This is a big story to cover and I am planning to write a big article on Microsoft: an explanation what Microsoft did wrong and why it happened. Further reading: The Spectacular Failure of WinCE and Windows Mobile – this wasn't written by me but I agree with the author completely. He comprehensively studies the reason why Microsoft's mobile OS have been failing all these years. For some reason people forget the big Microsoft mobile fails and I think they should be reminded of that. P.S. Have a nice week. There is lots of news coming from the world of mobile phones. And though some of it is disappointing it is better to know the bitter truth. Do you want to talk about this? Please, go to our Forum and let your opinion be known to the author and everybody else. Back to the table of contents >>> Related links
Eldar Murtazin ([email protected]) Published — 08 February 2012 Have something to add?! Write us... [email protected]
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