Nokia and HTC face body blows as Apple, Samsung Smartphone duopoly dominates

The mobile phone market has changed radically in the last few years with the advent of Apple’s iPhone. The introduction of the Apple smartphone was a major game change in the Technology Industry with the whole existing ecosystem undergoing a fundamental realignment. The once dominant Nokia with a 40% global marketshare of the mobile phone market has been continuously declining as can be seen in its share price. Despite numerous restructurings, management and strategy changes, nothing seems to work against the onslaught of Apple and Android. HTC, the first Taiwanese company to manage to break through the OEM mold of its fellow companies, is facing the music as well. HTC which had managed to quickly gain marketshare in the smartphone market is following behind Samsung and Apple. The company has been reducing its revenue and profit targets quite frequently as it fails to compete against the emerging duopoly of Samsung and Apple. Note others like Research in Motion are now facing survival questions as well while the iconic Motorola has been gobbled up by Google. HTC is not only facing problems in products but is also facing a patent war unleashed by Apple and Nokia. Note one of the reasons for Google to buy Motorola was to add to its arsenal of mobile patents as Apple and Nokia started court cases against Android vendors in most developed countries. Though Samsung is being able to put up a good fight, HTC is not managing as well because of its limited size.

The Indian telecom industry is the world’s fastest growing industry. Around 2010, local Indian phone companies got a lot of funding and support. With Mobile Handsets fast becoming a commodity with more mobile apps and services, Global Handset Hardware Companies were threatened, whether these small handset makers would penetrate global markets as well. Micromax was the most successful amongst the host of small. With low cost $100 Android phones it could lead major prices wars in the West as well.

About the Companies

Apple the biggest company in the world by value which has  changed the entire technology sector more than any company in history though launch of iconic  products like iPhone, iPod and iPad does not have a strong presence in India. This is due to Apple’s premium pricing which means that the vast number of Indians simply can’t afford Apple products. However in recent times Apple has been reducing its prices of older products. Most of Apple’s smartphones in India are brought from outside rather than being sold here.

Samsung mobile phones come in a range of dual sim, Qwerty, CDMA, smart, touch, multimedia phones & tablets. From the coolest conventional and brightest smart phones, to the most stylish touchscreens, bars, sliders and feature-rich devices with full QWERTY keyboards, Samsung has everything to offer.

HTC is the Taiwanese smartphone company which has seen the fastest growth after Apple has small presence in India like Apple. Its distribution structure is not that strong and it does not have the product lineup to cater to the low and middle segments which are dominated by Samsung and Nokia.

Nokia has played a pioneer role in the growth of cellular technology in India. Today, India holds the distinction of being the second largest market for the company globally. Nokia has established itself as the market and brand leader in the mobile devices market in India. The company has built a diverse product portfolio to meet the needs of different consumer segments – products that cater to first time subscribers to advanced business devices and high performance multimedia devices for imaging, music and gaming. Nokia has one of the largest distribution network with presence across 1,30,000 outlets. With the global launch of Ovi, the company’s Internet services brand name, Nokia is renewing itself to be at the forefront of the convergence of internet and mobility.

Nokia in the Recent Times

Nokia faced low cost Chinese competition. The earlier thought was that, Nokia was on the backfoot in China and India from ultra low cost white box Chinese vendors. However it turns out true for even other geographies like Africa and Latin America. Chipsets made by Chinese vendors are being used by local assemblers like Micromax, Spice in India to beat Nokia at its own game. Nokia failed miserably to face the Chinese onslaught as its global marketshare has shrunk to 28% which is the lowest in the last 12 years. Nokia’s share remain cheap historically and on an absolute basis trading more like a value play rather than a technology company. But given its vulnerable strategic position and continuous marketshare losses, investors hoping for a higher share price may remain disappointed.

Nokia’s trajectory went downhill from the peak. Though it still commands an impressive 36% marketshare of the world mobile market, that has been steadily coming down. More importantly its share in the lucrative high end smartphone market is falling faster. It is concentrating on the other segments of the mobile market to defend its units where it is also getting hammered by competition from Samsung, LG in the middle segment and local players at the lowest segment. Nokia forms a classic case study of a Technology Company which failed due to failure of its R&D though Marketing also played a role. It tried shuffling the management and creating a new “smartphone” division to bring new ideas into its staid mobile division. Despite plenty of resources, Nokia has been way behind the product curve in the smartphone market.

Nokia has been losing marketshare,brand appeal and pricing power as Google and Apple capture the hearts and minds of the smartphone consumer. Apple has radically changed the mobile industry with the introduction of the iconic iPhone. It is extending its lead by constantly introducing better iterations a like the iPhone 3GS and now the iPhone 4G. Google is also making major inroads through its Android Operating System. Its partners like HTC, Motorola are winning consumers by rapidly introducing great smartphones based on the Android Platform.