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Before the arrival of the Apple iPhone and its gorgeous, intuitively understood touch-screen, or the open-source, make-it-your-own Android platform, Nokia and Research In Motion were kings of the mobile industry.
BlackBerry maker RIMs push email made it the only solution that business users had eyes for, and Nokia, with the support of Europe and beyond, held 53 percent of the worlds smart device market in 2007the year the iPhone arrivedto No. 2 RIMs 11.4 percent and No. 3 Apples 6.5 percent, according to Canalys.
Since then, both consumers and business users have made it known that they want iPhones, iPads, and smartphones and tablets running Android, giving rise to a fast-growing bring-your-own-device, or BYOD, industry, as IT managers hustle to support these once-unsanctioned devices. While RIM and Nokia have shown themselves to be unable to compete at the levels they once did, in the face of Apple and Android-running devices, the biggest competition each faces todayboth in the high-end U.S. smartphone market and low-cost, high-growth developing marketsis the other.
Carriers want three platforms to support, and RIM and Nokia each need serious buy-in numbers to stay viablefourth place doesnt really exist.
Nokia and RIM have been competing closely worldwide since Nokia launched the first of its E Series QWERTY phone portfolio in 2005, Neil Mawston, executive director of wireless device strategies at research firm Strategy Analytics, told eWEEK. That battle has intensified in 2012, as RIM has been squeezed out of developed markets and forced to expand into midrange emerging markets like Indonesia and South Africa, territories where Nokia has traditionally dominated.
The Two Have Been Competing for Years
Each company, Mawston added, has been forced to compete in segments where the pressure from Apple and Android is least intense, and both can benefit thereprovided they dont get caught up in a race to the bottom on pricing.
In recent years, RIM and Nokia have failed to create truly exciting high-end smartphones that are a fraction as compelling to U.S. users as the iPhone. RIMs latest answer to this, under the charge of new CEO Thorsten Heins, is a multi-part strategy that includes Mobile Fusionan evolution of its BlackBerry Enterprise Server that enables enterprises to support Android and iOS devices, along with BlackBerry handsetsand BlackBerry 10, a new platform and device mix that RIM says will be hit, though its still far off.
The competitive environment has become increasingly challenging, Heins said during RIMs March 29 earnings call, adding that RIMs plans were not without risks and challenges, and there is no guarantee of success.
Nokias comeback strategy includes a new line of devices with an emphasis on quality and craftsmanship, tied to Microsofts new Windows Phone OS, which is very much still growing its ecosystem.
To help penetrate emerging markets, Nokia is launching devices, such as the Asha feature phone, in India. However, the biggest prize is still North America. In the United States, Nokia launched a Lumia 710 on the T-Mobile network and, weeks later, the higher-end Lumia 900, a Long-Term Evolution- (LTE-) enabled phone with a $99 price tag, on AT&T. The Lumia 900 was generally well-received, with analysts mostly agreeing that it accomplished what it need to: not take over the party, but get Nokia through the door.
After warning investors of a disappointing first quarter, during which it shipped 2 million Lumia units, Nokia announced April 19 that its net sales declined 29 percent year-over-year and it posted a net loss of approximately $2 billion U.S. dollars.
Over the last year, we have made progress against our new strategy, but we face challenges as we move forward, Nokia CEO Stephen Elop said during the earnings call.
Their Once-Parallel Courses Seem to Be Converging
RIM and Nokia are on parallel courses ¦ that look to be converging more and more, said analyst Charles King, with Pund-IT. RIM is the more mature company and has both a broader product set and deeper ties with its enterprise base. The ubiquitous presence of the Windows OS and applications in global businesses offers Nokia a battering ram it will use to try to gain entrance in and favor among those same customers.
Who wins the battle between RIM and Nokia, he added, may have more to do with the formers perceived weakness than the latters strength and ambition.
Senior analyst Ken Hyers, with Technology Business Research Inc. (TBRI), sees the battle in different terms.
I think Nokia has a real opportunity to win this fight, said Hyers. The battle is actually Microsoft versus RIM, with Nokia the main standard bearer for Microsoft. The new Windows Phone OS is designed to appeal to enterprise customers who are looking for a modern full-featured smartphone OS that supports and is easily integrated with enterprise applications.
Did RIM Miss the Boat on Windows Phone?
Hyers expects Windows Phone devices to become the de facto approved devices by IT managers, though he says Nokia will need to supply the best Windows phones at the best prices, putting a shoulder to the door to keep Samsung and HTC out.
In all of this, RIM is the loser, said Hyers. Its new OS, BlackBerry 10, wont be available until the end of the year, meaning that new devices running it wont be available until 2013. A large library of applications will lag even farther behind. In the meantime, Windows Phone and iPhone devices will continue to take share from RIM.
RIM also missed an opportunity in rolling out Mobile Fusion without support for the Windows Phone operating system, as RIM waits for the latter to build up a larger user base. The growing BYOD trend is driving enterprises to re-evaluate their mobile-device management (MDM) solutions, and in the next 12 months, according to TBRI research, 60 percent of enterprises plan to replace their existing MDM solutions or add more MDM support.
If RIM doesnt support Windows Phone, then enterprises have to look elsewhere, said Hyers.
RIM will likely slowly wither, he said. My bet is that they eventually get bought, for their superb email solution, and get integrated into someone elses platform.
Pund-ITs King says that if RIM is on a steady downward trajectory, as many believe, its millions of customers will have to go somewhere. Forrester analyst Sarah Rotman Epps has argued that if Nokia were smart, it would work to steal RIM usersalready accustomed to paying for data plansinstead of going after feature-phone converts.
Though the smart money, says King, is probably on those users eventually adopting increasingly business-friendly iPhone and Android devices and services, Nokia is betting the farm on offering options enterprise customers will find more familiar and comforting.
RIM, when asked why one should find its handsets more compelling than comparably priced Nokia devices, responded in a company statement:
“The mobile sector is very competitive with many new offerings. With a subscriber base over 77 million users strong and over 90 percent of the Fortune 500 using BlackBerry today, RIM is passionate about delivering a powerful, simplified and optimized user experience for BlackBerry smartphone and BlackBerry PlayBook users.The BlackBerry platform continues to offer unmatched value, reliability and security for our users today. We continue to grow and strengthen core offerings like BBM, which is now one of the largest social mobile networks in the world with over 55 million users. At the same time, we are committed to pushing the boundaries of mobile technology, demonstrated through the integration of NFC [near-field communication] last fall into the BlackBerry platform. Looking ahead, we are focused and excited about delivering our next-generation BlackBerry platform, BlackBerry 10, in the latter half of calendar 2012 to our customers. “
Nokia spokesperson Keith Novak, when asked the similar question, suggested Nokia isnt competing with RIM, so much as just trying to make good phones.
[Nokias] place in the rankings doesnt really play in to our thinkingrather, we work to make sure that we are delivering great products that people are excited about. As we do that, and more people experience what Nokia brings to the table, and share that experience with othersthats the sort of success for which we really strive.
As for Rotman Epps advice about refocusing on current RIM users, Novak said there was no need to choose.
While we do see the Windows Phone platform as a great opportunity for feature phone customers to step into the world of smartphones, we are also seeing that there are plenty of opportunities for the Lumia portfolio to attract current users of other smartphone platforms as well, he told eWEEK. So, it certainly isnt an either-or situation, but an and situation when it comes to bringing people into the Lumia fold.