Microsoft’s feature phone arm has been acquired, breathing new life into thew manufacturer. Alex Yau explores where it goes from here
Last week signalled the potential return of Nokia from the grave just two years after Microsoft announced it would axe the infamous brand.
Nokia is back, after Finnish private venture HMD Global and FIH Mobile, a subsidiary of Chinese manufacturing giant Foxconn, announced the purchase of Microsoft’s feature phone arm for £240 million.
It, of course, once led the global smartphone market and, at its peak, dominated with 49.4 per cent of the market (according to Gartner). This dwindled to 43.7 per cent, 41.1 per cent and 34.2 per cent in subsequent years. And shortly before being purchased by Microsoft for £4.6 billion in the second half of 2013, it had just three per cent of the worldwide market.
So what triggered its decline? It simply failed to latch onto the smartphone revolution that Apple and rival Android manufacturers caught onto from 2007. Its Symbian operating system was sluggish, outdated and could not support the idea of applications on mobile.
Symbian devices held 48 per cent share in 2009 in comparison to iOS (19 per cent) and just a three per cent share for Android. Fast forward to 2015 and Symbian handsets only held a one per cent share, compared to iOS’s 39 per cent and Android’s 49 per cent.
Microsoft put the final nail in the coffin after it announced it would be ditching the Nokia name from all Lumia devices in 2014. However, that decision doesn’t seem to have benefited the tech giant.
Recent job cuts seem to suggest Microsoft doesn’t see much of a future in mobile. This week it announced plans to cut 1,850 jobs from its smartphone business at a cost of $950 million.
Some of the dealers and analysts speaking to Mobile News about the recent purchase expressed fond memories of the brand and looked forward to its rebirth. Is Nokia’s reputation enough to help it compete in a saturated market that’s more competitive than ever? Probably not.
More established players like Samsung, Apple, Sony, HTC, LG, Lenovo and Huawei are all competing in a stale market, having released major hero handsets over the last few months. Even newer players such as relatively unknown OPPO have managed to muscle their way in.
Although the smartphone market does look like a tough one for Nokia to crack, what about feature phones? It appears to be a market which, despite Nokia being able to grab a decent share, it can’t rely on for too long.
According to CCS Insight, of the 2.04 billion mobile phones to be sold in 2016, smartphones are forecast to account for 1.48 billion mobile shipments. Smartphone shipments, however, will take up 1.96 billion of the 2.20 billion mobile shipments expected in 2020.
The UK market may not be Nokia’s best strategy. It still has a huge presence in emerging markets, such as China and India, so the brand could help it gain market share there. Will that be enough? Despite initial optimism, recent forecasts suggest that a newly-revived Nokia has an uncertain future.