The document discusses the history and future of Nokia after being sold by Microsoft in 2016. It was sold to a Chinese/Finnish consortium. While Nokia still has some brand recognition, the smartphone market is saturated with declining growth and prices. Nokia will have to compete with many Chinese brands in emerging markets with lower margins. To succeed, it may need to focus on manufacturing innovations or new business models like services to increase profits.

1. The New Nokia
Ged Carroll
renaissancechambara.jp

2. The New Nokia
February 9, 2011 – Stephen Elop’s burning platform memo goes
public. Nokia’s smartphone steps off a cliff. Carrier relationships are
burned as they were committed to Maemo operating system to
replace Symbian. Windows is used instead, built-in Skype alienates
carrier relationships. A brief flirtation with Android showed up the
poor sales performance of its Windows handsets. Rounds of cuts
and market share losses forced Nokia to sell its handset business
to Microsoft.
May 19, 2016 – Nokia feature phones and smartphone business is
sold to a combined Chinese / Finnish business consortium. The
market is now very different. What chance do they have?

3. Why Microsoft got rid of ‘Nokia’
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Microsoft OS % of smartphone market
Microsoft OS % of smartphone market
Data: TomiAhonen Consulting (May 2016)

4. The latent value of the Nokia
brand

5. Nokia brand
Using Google as a proxy
• Decline in brand interest over
past 12 months within mobile
phone category 37%
• Nokia still has comparable
brand equity to the likes of
Motorola and BlackBerry
• It’s level of brand equity looks
competitive with value-oriented
Chinese brands
• It would be difficult to move
Nokia into the premium
Android sector without
significant brand investment
• Which would negate the primary
reason for purchase

6. Google searches as a proxy for residual
brand equity
0
20
40
60
80
100
120
May24
May31
June7
June14
June21
June28
July5
July12
July19
July26
Aug2
Aug9
Aug16
Aug23
Aug30
Sep6
Sep13
Sep20
Sep27
Oct4
Oct11
Oct18
Oct25
Nov1
Nov8
Nov15
Nov22
Nov29
Dec6
Dec13
Dec20
Dec27
Jan3
Jan10
Jan17
Jan23
Jan30
Jan31
Feb7
Feb14
Feb21
Feb28
Mar6
Mar13
Mar20
Mar27
Apr3
Apr10
Apr17
Apr24
May1
May8
May15
Relative interest over past 12 months (mobile phone category,Google Trends)
Nokia Huawei Honor Lenovo OnePlus Oppo Motorola BlackBerry HTC

7. Nokia still has similar brand equity to other
legacy brands
0
20
40
60
80
100
120
May24
May31
June7
June14
June21
June28
July5
July12
July19
July26
Aug2
Aug9
Aug16
Aug23
Aug30
Sep6
Sep13
Sep20
Sep27
Oct4
Oct11
Oct18
Oct25
Nov1
Nov8
Nov15
Nov22
Nov29
Dec6
Dec13
Dec20
Dec27
Jan3
Jan10
Jan17
Jan23
Jan30
Jan31
Feb7
Feb14
Feb21
Feb28
Mar6
Mar13
Mar20
Mar27
Apr3
Apr10
Apr17
Apr24
May1
May8
May15
Relative interest over past 12 months (mobile phone category,Google Trends)
Nokia Motorola BlackBerry

8. Brand equity is comparable to ‘value’
smartphone brands
0
20
40
60
80
100
120
May24
May31
June7
June14
June21
June28
July5
July12
July19
July26
Aug2
Aug9
Aug16
Aug23
Aug30
Sep6
Sep13
Sep20
Sep27
Oct4
Oct11
Oct18
Oct25
Nov1
Nov8
Nov15
Nov22
Nov29
Dec6
Dec13
Dec20
Dec27
Jan3
Jan10
Jan17
Jan23
Jan30
Jan31
Feb7
Feb14
Feb21
Feb28
Mar6
Mar13
Mar20
Mar27
Apr3
Apr10
Apr17
Apr24
May1
May8
May15
Relative interest over past 12 months (mobile phone category,Google Trends)
Nokia Honor OnePlus

9. Doesn’t stack up so well against Greater
China premium smartphone brands
0
20
40
60
80
100
120
May24
May31
June7
June14
June21
June28
July5
July12
July19
July26
Aug2
Aug9
Aug16
Aug23
Aug30
Sep6
Sep13
Sep20
Sep27
Oct4
Oct11
Oct18
Oct25
Nov1
Nov8
Nov15
Nov22
Nov29
Dec6
Dec13
Dec20
Dec27
Jan3
Jan10
Jan17
Jan23
Jan30
Jan31
Feb7
Feb14
Feb21
Feb28
Mar6
Mar13
Mar20
Mar27
Apr3
Apr10
Apr17
Apr24
May1
May8
May15
Relative interest over past 12 months (mobile phone category,Google Trends)
Nokia Huawei Lenovo Oppo HTC

10. Smartphone market data

11. The new Nokia will be forged a brutal
crucible
• Saturation and lengthening
replacement times in
developed markets
• Steep decline in growth of
smartphones
• Move towards customers who
can require lower price points
• On top of hyper-competition
driving razor thin margins and
little chance of differentiation in
the Android eco-system
• At first glance, the New Nokia
has little different to offer

12. Global smartphone ownership
0
10
20
30
40
50
60
70
80
90
100
Data from Pew ResearchSpring 2015 Global Attitudes survey Q71 & Q72
% of survey respondents who claim to own a smartphone

13. Global mobile device units – moving from
growth to mature market status
0
200
400
600
800
1000
1200
1400
1600
2010 2011 2012 2013 2014 2015 2016
Sales units (millions)
units (millions) tablets units (millions) smartphones
Data: GfK/CTA Digital World via Consumer Technology Association ‘Technology World Tour’ by Steve Koenig January 2016

14. Global mobile device units – declining
growth
-50
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016
Sales units (YoY % change)
units (YoY % change) tablets units (YoY % change) smartphones
Data: GfK/CTA Digital World via Consumer Technology Association ‘Technology World Tour’ by Steve Koenig January 2016

15. Global smartphone units by geography – lower
margins available in emerging markets
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016
Sales units (YoY % change)
Developed market (% units) Emerging markets (% units)
Data: GfK/CTA Digital World via Consumer Technology Association ‘Technology World Tour’ by Steve Koenig January 2016

16. Global mobile device ASP (USD) – steady
decline in progress
0
100
200
300
400
500
600
700
800
2010 2011 2012 2013 2014 2015 2016
Average selling price
Tablet USD Smartphone USD
Data: GfK/CTA Digital World via Consumer Technology Association ‘Technology World Tour’ by Steve Koenig January 2016

17. Global technology sales (revenue) geographic
split – markets where the Nokia name still has
brand equity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016
Revenue USD (% split)
Developed markets Developing markets
Data: GfK/CTA Digital World via Consumer Technology Association ‘Technology World Tour’ by Steve Koenig January 2016

18. The best days of smartphone growth are
over
-20
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Smartphone and tablet % growth
Smartphones Tablets

19. Smartphone market opportunity
The smartphone eco-system is showing declines in handset price, profit
margins and hyper-competition from Chinese brands. Market pressures have
already driven some component manufacturers to the wall. Looking at the PC
industry as an analogue, the next stage of innovation will be around process
innovation – increasing profits by making phones more cost effective to
manufacture. In the case of the PC it was globalisation, moving manufacturing
to the Far East. For smartphones there are three opportunities:
• Automate more of the manufacturing – slim phones are hand-assembled
• Cut the channel out to deliver more of the profits to the manufacturer
• Change the business model to the ‘Gillette model’ – sell ancillary services for
margin to the user, or sell audiences to companies through advertising

20. About me
Amazon author page: amzn.to/1SeO5Il
LinkedIn page: linkedin.com/in/gedcarroll
About: renaissancechambara.jp/about
Blog: renaissancechambara.jp
Email address found here: scr.im/renaissance
Twitter account: @r_c
Sina Weibo: renaissancechambara
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