On the same day Nokia gives a profit warning, Apple announces enormous demand for the new iPhone 4 with more than 600,000 orders already on the first day. Both companies are facing challenges. While Nokia needs to fight its way back to the top, Apple's problems are more of a luxury.
Nokia's problems are the result of tough competition, especially at the top end of the market, as well as a shift in its product mix towards low-margin devices and the depreciation of the euro. Apple's challenge is managing the launch of a new iPhone model. More and more consumers want the newest version the moment it's available. According to AT&T, demand was ten times higher than at the launch of the iPhone 3GS.
The massive interest has again caught Apple by surprise, even after it had delivery problems with the earlier 2G, 3G and 3GS models due to higher-than-expected demand. Of course, this also could be a clever marketing ploy, but order-handling servers crashing is probably not part of any marketing plan.
Apple's problems can be considered a luxury compared to the issues at Nokia, which is seeing its worldwide handset market lead crumble. Even after three years, the company has still not been able to come up with a clear answer to the rising brands such as Apple, BlackBerry and HTC. These brands are largely active in the high end where the market as of late is centred: smartphones and also personal computers that consumers can use for near anything, making calling and SMS a side issue.
Nokia is no longer hip and young people are abanonding the brand in droves. The biggest problem still awaits Nokia: winning back market share from Apple and the Android OS will not come easy. Most people who have bought an iPhone or Android handset are already devoted to their downloaded (free or paid) apps. Switching to another mobile operating system is no longer an option.
The situation is similar to choosing a computer for the home or office. Once you've chosen for Windows or Mac, the way back is complicated and expensive. The Telecompaper Consumer Panel shows that 65 percent of smartphone users already know which operating system they're using. Nokia will find it difficult to realise its ambitions with Symbian and the Ovi platform. In a world with already more than 40 different app platforms, publishers and developers need to focus on just a few platforms as the cost of developing for all is too high. The choice is then quickly made for the biggest: Apple and Android. As the process accelerates, the smaller platforms get smaller and even less attractive.
There remains one option for Nokia: If you can't beat them, join them. Switch to Android or even Windows Mobile 7 and stop wasting time and energy with a proprietary OS. Focus on producing handsets, taking advantage of all the company's economies of scale. And perhaps even more important, make phones that appeal to the big group of people buying smartphones now: young people.
