Nokia's Elop: Android is killing us in China, Europe

Nokia's Elop: Android is killing us in China, Europe

Summary: Nokia's biggest profit margin killing headaches appear to be Android, China and Europe and the company is getting hit by smartphone and feature phone pricing and volume.

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Nokia's biggest profit margin killing headaches appear to be Android, China and Europe and the company doesn't have any answers.

Speaking on a conference call, Nokia CEO Stephen Elop said that the company was getting whacked in China due to "mismanagement" and high inventory levels. Simply put, Nokia can't move phones in China. The story in Europe didn't revolve around mismanagement as much as competition from Android. In either case, Nokia is taking some major body blows and can't even provide an outlook for 2011.

Regarding China, Elop said:

As it relates to competitive challenges, it is the case that certain competitive forces, particularly Android, are really gaining momentum in certain regions. For example in China, there's an indication of some very substantial movement in the growth of market share for Android, particularly in some technology areas where Nokia today with our current portfolio doesn't compete.

A good example of this is the CDMA technology in China, where that technology has seen quite an increase in market share in China. And as you know, we don't currently have CDMA products, but clearly, that's something that we'd be considering in the future. So there's some dynamics like that that we have to deal with.

And in Europe, Android was also routing Nokia. Elop noted:

In Europe, that's not the case on the management perspective. It's very much about competitive pressures. We're seeing, for example, a large volume of Android devices really coming into the market. They're largely undifferentiated from one another, which is putting pricing pressure thereupon, which in turn affects the overall ranging decisions of the operators; so there's definitely pricing pressure going on.

Meanwhile, the problems in China revolve around smartphones primarily. However, Nokia is getting whacked on feature phones too. Elop said:

Overall, it is worth noting that the impact here is both smartphone and feature phone. So this is -- even though a lot of the news has been about Symbian and so forth, we face very specific competitive pressures on the feature phone side as well, and face some of the same portfolio challenges here.

Now that being said, on the feature phone side we are just in the last couple of days beginning to ship in our dual-SIM products into emerging markets, which we have great hopes for. So there's a lot of positive things happening there, but there's definitely a situation here where it's not only the Symbian range of devices but also feature phone devices that are under competitive pressure.

Given those problems, Nokia has a rough road ahead before it gets to Windows Phone 7 devices. The big question is where Nokia's market share will sit once the Android onslaught subsides.

Topics: China, Android, Google, Mobility, Nokia, Telcos

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29 comments
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  • OK

    So you know this and you selected Ballmer and WP7 as your savior... wtf were you thinking??
    Hasam1991
    • The asnwer: $

      @Hasam1991

      Talking seriously, there are lots of cheapo Android phones in Asia, and this is how Google gets 400 000 activations per day number. Galaxy S, HTC Evo, etc is only part of these activations.

      These Asian featurephones have resolutions like 400x240 or 320x240 and no access to Android Market, but they still make the volume on cheap segment, which is Nokia's main playground.
      DDERSSS
      • Resolutions and ...

        @denisrs

        app market access will change/improve over time. This is precisely why Android may be unstoppable, unless Google REALLY screws it up. Asia will be flooded with cheap Android phones, which will slowly get better. Local app markets will appear. Volumes will go sky high and the manufacturing costs will drop fast.

        Even Apple is not safe long term.
        Economister
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @denisrs Your guess is incorrect. Google only counts activations of devices with a license to use Google services. That does not include all the cheap Asian devices.<br><br>So the overall numbers of Android activations are larger than what Google reports. And yes, that means mostly higher end devices are in the reported count.
        kevindarling
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @denisrs How do you figure? Where is the data to back up these cheapo handset claims? In the USA the majority of handsets chosen are EVO, Galaxy, Droid X, Thunderbolt and the like!

        This just pisses you off because you need to justify backing the iPhone.
        slickjim
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @denisrs I can't remember the name of the site now but they seem to do a lot of anti-Android analysis work and they were the ones that started spreading this. Well don't fall for it. As others have pointed out Google only counts phones that are actually licensed to use Google services.

        The cheapo argument is really just a big sham over all. All these so called cheapo phones don't usually have Android 2.1 or 2.2 or get updated so there wouldn't be something like 80 - 90% phones on 2.1 or 2.2 but thats exactly what the OS distribution chart shows for devs. Also ask any dev. They'll tell you most of the phones they see accessing their apps are Evo's, Incredibles, Droids etc. Its not all the little cheap phones. As much as some want to believe cheap phones are what give Android its bulk you'll find most people are buying high end phones when they DROP.....BEFORE the discounts.
        storm14k
    • Message has been deleted.

      Over and Out
    • RE: Nokia's Elop: Android is killing us in China, Europe

      @Hasam1991 Yes teaming up with the world's largest OS developer. What was the alternative - becoming another "me too" Android hardware provider with no control? Meego?
      jgm@...
      • So are you suggesting they ....

        @jgm@...

        have control with MS and WP7?

        Besides, being out of options and being forced to "marry" MS can hardly be called a good option.
        Economister
      • When you get right down to it, Elop had just two choices...

        @jgm... <br><br>Excepting the matter of a few hundred millions in licensing fees, Mr. Elop's choice was simple.:<br><br>1. Bring to bear Nokia's considerable acumen in technical innovation and carrier relations to produce desirable, differentiated handsets running the most popular mobile OS.<br><br>...or...<br><br>2. Bring to bear Nokia's considerable acumen in technical innovation and carrier relations to produce desirable, differentiated handsets running a mobile OS practically nobody wants.<br><br>Like I said, it was simple...and he blew it.<br><br>Why? Because he bent over backward, catering to his European supporters...mobile network operators plus their friends (read: EuroZone politicians) and investors. The carriers were already fearful of Apple's growing power in their industry and Android's remarkable rise gave them even more reason for concern that both they (the carriers) and Europe in general would cede control to American interests.
        Justa Notherguy
  • RE: Nokia's Elop: Android is killing us in China, Europe

    I've been a nokia user all my life (basic phone only devices), but the new android devices may bring a change. Samsung galaxy mini may be my next phone. You've made your bed, now sleep in it!
    d.marcu
  • &quot;great hopes&quot; = &quot;positive things happening&quot;

    What is this guy smoking? All he seems to have right now is a wish and a prayer. Why would anyone buy a dead end dual SIM phone unless it is almost free?
    Economister
    • RE: Nokia's Elop: Android is killing us in China, Europe

      @Economister : what do you mean dead-end? Nokia's feature phones(s40/s30) are not going away anywhere. And thier build quality is the, Toyota like, benchmark for phones in that segment.
      marees
      • They are Symbian phones are they not?

        @marees

        And who cares about "Toyota like" quality for a disposable item?
        Economister
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @marees
        Toyotas are trash, remember the recalls? I'd never touch one.
        Droid101
  • Hey, Wild Bill, wait for me!

    <ul><i>The big question is where Nokia?s market share will sit once the Android onslaught subsides.</i></ul><p>
    What reason is there to believe that the "Android onslaught" will <i>ever</i> subside? Does Elop expect his competitors to stop and wait for him to catch up?
    Robert Hahn
    • I guess you could interpret that to mean....

      @Robert Hahn

      that the onslaught will end once Android has captured virtually the entire market, with Apple taking the rest. I guess we can try to calculate what Nokia's market share would be at that point. ;-)
      Economister
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @Economister I would say 93% would be reasonable.
        slickjim
      • RE: Nokia's Elop: Android is killing us in China, Europe

        @Peter perry

        Probably closer to 80%. Apple still makes a very nice device.
        hoaxoner
    • RE: Nokia's Elop: Android is killing us in China, Europe

      @Robert Hahn It isn't going to subside and before too long it will have the tablet space too!

      Google wanted to be Microsoft and within the Mobile / Tablet Space, they just might succeed!
      slickjim