Is Nokia In Trouble As Apple, Google, Samsung And Other Smart Phone Makers Take Over?

Nokia has warned the marketplace of problems

Nokia has warned the marketplace of problems. If you have been reading my column you will realize this is no surprise. This is exactly what I have been warning about over the last couple years. Let's look at what is next for Nokia and for the entire industry?

The wireless marketplace continues to grow and to change. It is now moving away from regular handsets and going toward smart phones. While Nokia has a strong brand in traditional handsets, the problem is they do not in smart phones. They have been trying, but they have not yet successfully updated their brand. If they can update they can be a contender. If they cannot, what is the future for Nokia?

The cell phone industry has been changing continually over the last 25 years. Motorola led in the beginning since the 1980's. Then lost their way when the network changed from analog to digital in the 1990's. A small company called Nokia built their brand on handsets using the digital network. They have built their brand successfully over the last decade and have been in the lead.

However now the wireless marketplace is changing again from handset to smart phone over the last few years. Smart phones like RIM and Palm ruled the small segment. It grew to 15% market share and there were a few hundred Apps, but it was a small segment.

Then a few years ago two things happened. Apple introduced the iPhone and the networks introduced their unlimited wireless data plans. That goosed the marketplace.

Suddenly everyone started to use these smart phones. Suddenly every wireless handset maker jumped in. Suddenly Apps grew from a few hundred to a few hundred thousand. Growth and success has been incredible in the last 3 - 4 years. Depending on the carrier smart phones has grown from around 15% to around 50% or more and the growth continues.

The bad economy also played a role causing the regular handset marketplace to languish. Smart phone sales on the other hand are exploding.

The problem with Nokia is their brand. Customers think of Nokia as a good company that makes good plain old handsets, not smart phones. There is still a market for these phones, but that is shrinking. The growing segment is smart phones and they are not a player in that space. Not yet anyway.

They have tried to update their brand, unsuccessfully. I have been saying for the last few years in articles and speeches that Nokia was in trouble unless they could become a player in the smart phone market. They are a minor player, but they just cannot capture the attention of the customer.

RIM has the same problem. They led the smart phone battle with their Blackberry, which was the greatest until the next generation of smart phone came.

Now who do you think of when you think of smart phones? Its not Nokia or Rim. Instead it is companies like Apple and Google. And they are not even handset makers. Then there are others who are trying to change their brand and are having some success like Samsung, LG and HTC. Even Motorola is rebuilding by partnering with Google on their Android. Then there are newcomers like Dell and Lenovo who may grow to be players in this space too. As well as others we will see enter the marketplace over the next few years.

The marketplace is changing again. Smart phones are the new story. Whether Nokia can recover depends on whether their can update their brand and effectively compete with newcomers that are capturing the imagination.

What will the marketplace look like in one year, five years and beyond? That is the question we all want the answer to.

by: Jeff Kagan

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