Will Nokia Lose Their Number One Place? Leaders In Wireless Handset Market Changing

We are watching wireless history repeat itself

. Just like in the 1990's where suddenly the leader in handsets changed, we are watching the same thing happen today. In addition the entire line-up of companies changed during the last 10 years and we may be watching the same thing starting to occur once again.

The wireless industry has been growing and evolving. Every few years it seems like it becomes and entirely new space. In the 1990's Motorola was number one and everyone else struggled to catch up. Then the networks switched from analog to digital and Motorola wasn't ready. They quickly lost their footing and a small company called Nokia took the lead with their digital devices. They have been growing and held onto that lead ever since.

Several changes since then have occurred and Nokia kept the number one spot. However, the wireless industry is transitioning once again and even though Nokia is still number one for now, it is struggling to keep up and continue to matter with customers in this new world of smart phones.

Ever since the networks converted to digital the carriers like AT&T, Verizon, Sprint and T-Mobile have tried to get customers to use digital Apps. There were a few hundred and they were on smart phones. Smart phones were a small, but growing segment of the market. Yet Apps, which were a good idea just never caught on in a meaningful way.

Device makers like RIM with their Blackberry and Palm let customers use Apps, but there just was not that much demand.

Then suddenly Apple entered the wireless space with their iPhone a few years ago and changed everything. Suddenly millions of Apple customers were buzzing around and interested in everything this new iPhone could do.

Suddenly the App market jumped from a few hundred to around 150,000 in just the last three and a half years. Suddenly every smart phone maker jumped in with their versions of devices that do more than traditional wireless phones. Suddenly the economy tanked and the only people still buying phones were the smart phone customers.

All of a sudden the cell phone business was flipped on its head.

Suddenly Apps are important and growing very quickly. Suddenly the demand for smart phones keeps going up. Suddenly traditional leaders like Nokia are struggling to matter as the marketplace changes once again.

Don't get me wrong, Nokia is still number one with roughly 40% of the market, and that is huge, but with the current direction of the industry and their standing in it, the question is for how long?

The same thing that happened to Motorola last decade could be getting ready to happen to Nokia now. Back then the marketplace went from analog handsets to digital handsets and now from handsets to smart phones.

In this new world who will lead? We have seen non-wireless companies enter and do well so far. They are changing the wireless playing field. Companies like Apple and Google are already competing. Companies like Dell and Lenovo are entering. Others will follow.

The leaders of the industry are changing again.

Today they are Nokia, Samsung, LG, and suddenly Research in Motion is now number four, with Sony Ericsson in number five position. Motorola isn't even in the top five anymore even though they have done well recently with their Droid smart phones partnering with Google. HTC is there also to round out the top seven.

This is different from just a few months ago. Suddenly smart phones are everything and in that world RIM is a player. Palm can be too and when they merge with HP they may just try and show it. Also I expect Google to work up to the top of the list pretty quickly. Add to that the many others entering the space.

What will the list look like one year from today? I believe it will look completely different in companies and the order.

The question is what about the current leaders?

What about Nokia, Samsung and LG. There is real pressure on these cell phone makers. Samsung and LG have actually grown with a healthy curve over recent years because they are solidly in the smart phone business and their brand says so.

Perhaps they face a threat as the marketplace continues is transformation. Perhaps if other non-cell phone companies are as successful as Apple they will push their way into the lead above these more traditional companies.

These are the questions we are wrestling with as the industry changes, again.

Will these current leaders evolve into leaders in the smart phone space? Will they update their brand so customers will connect with them in that area? Or will they start to fade from the dominant position they currently have as traditional cell phones are beginning to fade being replaced by smart phones.

It could go either way and will be interesting to watch unfold over the next year or so.

Stay tuned because the industry is in the middle of another major transformation and we don't yet know the winners. One thing we do know is the list of top handset makers may look much different one year from now and the devices and technologies certainly will.

by: Jeff Kagan

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