Less than a decade ago, nobody could touch Nokia in the mobile handset market, Nokia defined quality... and then they got complacent and instead of innovating, they stuck to old principles. Its like Nokia witnessed the age old fable of the tortoise and the hare firsthand.
Don't forget that only a fraction of people can afford these >= £500 devices and only a fraction of those buy them without financing.
No - fairly good Android devices are already available for US$150 unlocked (see Huawei Ideos). In the next year they'll fall below $100 and after that they'll be coming free with your breakfast cereal.
Elop is absolutely right with his analogy of a burning platform - there's a very real prospect that within 2 years Nokia could be entirely wiped out from the low end market - down to single digit market share and making very little profit on those. It's nothing short of an existential crisis for them.
Is this what you are predicting for the smartphone arena? Having the hardware at increasingly lower prices in order to make money on the app sales?
Surely, this is the only logical conclusion if Nokia move into an app store-like closed marketplace?
Now, we have tons of carrier-subsidized phones that come with a service contract. (You get a cheap phone, but you have to pay $80/month for the next couple years.) That seems to be where the money is in phones.
Pretty bad luck for a company that was raking in billions selling lots of different low-cost phones to developing nations (which you wouldn't even believe is possible if you went to the John Gruber School of Business). Unfortunately those billions insulated them from the shocks, much like Microsoft happily ignored the internet for years. But the perfect storm of Apple, Android and low-end commodity competitors hit them hard from multiple directions (nice hardware, open ecosystem, low prices were all previous Nokia advantages).
Elop mentions it though, so at least Nokia is aware of the problem: "Let's not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally - taking share from us in emerging markets."
Maybe. Until the smartphone market mostly cannibalizes the dumbphone market.
Then where are they?
They're being squeezed by smartphone tech making its way down towards mid-range 'featurephones' (i.e. a cheap Android handset easily beats a mid-range Symbian featurephone), while the low-end stuff is becoming a commodity churned out by Chinese OEMs.
Nokia is still making money, but pretty much all new profit is going to everyone else (especially Apple).
Apple's profit margin is an extreme aberration, and it isn't sustainable. Any comparison that relies upon profit numbers is...disturbed.
Definitely not. But I do think that there's been incredible growth in Nokia's core business, and they haven't seen any of the growth.
Apple has been able to do this in four markets now:
1) iPhone -- a carrier subsisized market.
2) iPad -- see (3)
3) iPod -- Large margins based on industry leading large volume.
4) Computers -- Expensive niche product with huge margins. I believe the are the single most profitable computer company (if you look just at their computer division).
Why is a comparison based on profit disturbed? In business that's pretty much the only thing that matters. Profit yesterday, today, and tomorrow.
So the goal of a phone maker should be to sell as many devices as possible regardless of whether they're profitable? That sounds a lot like, say, Motorola before they adopted Android - not exactly a picture of a healthy business.
No, it isn't sustainable. History will prove me out, and in 3 years I would bet that Apple has seen a significant margin haircut. Quote me on a 50% decline.
As a comparison, by the way, look at Sony (which was the Apple before Apple). Once a purveyor of high margin audio equipment, they saturated that market and started moving to high markup mobile audio equipment...and then TVs...and then lower markup mobile equipment, etc, and then everyone started fighting back.
Apple is exactly following the Sony curve.
EDIT: Arrowed down. This is one of those seminal moments that speak volumes about a community, and I think HN is done (just furthering an observation that has grown). Account and site abandoned.
Anyway, Apple has always had a disproportionate share of any market it seriously participated in — the big difference is that 10 years ago Apple was a very small part of a single market. Some fluctuations will probably happen over the next half a decade, but you can bet that Apple will remain absurdly profitable in a way that embarrasses most of its competitors. It's just something that Apple is good at.
I'm betting it's not. It's something Steve Jobs is good at.
The most contentious statement you made, to me, is "any comparison that relies upon profit numbers is...disturbed."
Why is profit a disturbing business metric?
Sony eventually got commodotized in the very technology they created. This won't happen with Apple. At worst they get undercut in their industry, but Apple has a rich ecosystem that has to stay with Apple to reap the benefits.
And just for the record, no downvotes from me.
I would say please don't let the door hit you in this ass on your way out, but you are a bog-standard troll and will be back again next week whining about Apple.
Dell laptops start at about $400. The MacBook starts at about $1000. If you only want to spend $400 on a laptop, Apple doesn’t want your money. If you want to spend $400 on an MP3 player, on the other hand, you can get a very nice iPod.
Wow seriously, overreaction much? I don't know how long after you edited your comment but you're +8 now. It seems a little petty to dismiss all of HN because your comment was downvoted. Big deal. You just have to put up with some downvoting and realize not everyone is always going to have the same opinion as yourself.
My guess is you'll be back tomorrow or the next day judging by your comment history.