BATTLE OF THE BRANDS
NewsByte by Nicki Hayes, March 14, 2002
Nokia's deal to license its Series 60 interface for smartphones to Samsung represents another fight
won in its ongoing battle for market share with Microsoft. But who will win the war?
Microsoft's battle to win the smartphone market suffered a significant blow this week as Samsung
signed a deal with Nokia to license its Series 60 user interface for smartphones. Previous to this deal
Samsung had been the only significant brand to sign up for Microsoft's smartphone platform.
Following a year that has seen the market shrink for the first time ever, and during a week that has seen
Samsung named as the fourth largest cell phone manufactuer, this deal could not have come at a better
time for Nokia.
Since its inception, the growth of the global cell phone market had been meteoric. Indeed, the market's
ability to expand seemed analogous to that of Mr Creosote's stomach in The Meaning of Life, and with
operators willing to subsidize the binge in order to win their share of the associated market, it seemed
like the meal might go on forever.
Then, last year saw the industry's first ever decline, with sales dipping below 400 million units.
Reasons for the decline vary from basic laws of nature (stomach's just can't expand forever), basic
laws of economics (subsidies can not be made by an industry that has no income), basic laws of the
jungle (as markets become saturated, second hand markets and black markets grow taking business
away from established outlets and forcing overstocked distributors to dump last year's stock), basic
laws of chaos (I'm sure a butterfly in South America must have flapped its wings at just the wrong time
at some point last year) and more basic laws of economics (as economies slow down, so does consumer
spending, etc).
While all these laws converged, the industry itself failed to take significant measures to minimise their
effect, by, for example, introducing new features that could convince consumers to upgrade their
handsets, or taking effective measures to persuade end-users that they really did need that little bit of
extra speed 3G enabled handsets would give them when accessing those mobile internet services,
which really were going to be delivered next quarter …honest.
Even so, the aftermath of such chaos could have been worse, certainly for Nokia anyway. They
did the best of the bunch, according to the Gartner Dataquest report that was released this week,
claiming 36.9 per cent share in the final quarter, up from 33.4 percent of the previous quarter, and
taking their annual share up to 35 per cent - almost a five per cent increase on the previous year.
In second place came Challenger Motorola from the United States with a full-year market share of 14.8
percent, versus 14.6 percent in 2000. Then came a scramble for the finishing line between Siemens,
Ericsson and Samsung, with Siemens ousting Ericsson from their position as number three, and
Samsung also nipping in there to take fourth position, having grown their market share from five per
cent in 2000 to 7.9 per cent in 2001, thanks largely to the successful marketing of its high-end clam-
shell phone A300, according to the report (not South American butterfly shaped then?).
But, in today's climate, maintaining the lead in a shrinking market is not enough. Nokia, aware of this,
has activated various sub plots - one of which - its campaign to lead the move towards open IP
architecture - we reported on last month. This campaign stands to counteract Microsoft's attempts to
flood the market with its own mobile OS offering, by facilitating the end-to-end integration of wireless
Java platforms. Such a move maximizes the potential for Nokia to add a significant share of the
software market to its already substantial share of the hardware and service markets and, snatching the
Samsung deal out of the jaws of Microsoft, truly signifies that Nokia has achieved its aim, finally
establishing its credentials as a software licensing company.
But is such a victory enough? Has Nokia won the war, or just the battle? Well, it will be interesting to
see the new handsets Nokia expects to unveil this week at the CeBit electronics trade show in Hanover,
Germany, but, if we are to believe Gartner analyst Ben Wood, "Nokia has to announce pretty
sensational products if it wants to hang on to its market share."
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About the author:
Nicki Hayes is The Wireless Developer Network's (www.wirelessdevnet.com) European correspondent and the part-time judge part-time jester of its new online debate -
Holding Court. Nicki also takes on freelance writing and corporate communication projects relating to business to business internet and wireless issues and has
contributed editorial to a number of publications including Unstrung.com, Wireless Business & Technology, Guardian Online, Financial Times, Banking &
Financial Training, eAI Journal and Secure Computing.
About the WirelessDevNet (www.wirelessdevnet.com):
The Wireless Developer Network is an on-line community for information technology
professionals interested in mobile computing and communications. Our mission is to assist
developers, strategists, and managers in bridging the gap between today's desktop and
enterprise applications and tomorrow's mobile users communicating via wireless networks.
We are interested in supporting the deployment of these evolving technologies through
high-quality technical information, news, industry coverage, and commentary. This
information is provided within a true on-line community that supports developer/vendor
dialogue through message boards and user-submitted tips, articles, links, and software
downloads.
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