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Analysis: Nokia vs Android: Requiem?
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Analysis: Nokia vs Android: Requiem?
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By Tarmo Virki, European Technology Correspondent
HELSINKI (Reuters) - Mobile maker Nokia's Symbian operating system is on the ropes, its lead being stripped away blow by Android blow, but if its new boss throws in the software towel now, the relief...
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A shopper talking on a mobile phone passes an advert for the new Nokia N8 on Oxford Street in London in this September 30, 2010 file photo.
Credit: Reuters/Luke MacGregor
By Tarmo Virki, European Technology Correspondent
HELSINKI |
Thu Dec 9, 2010 11:06am EST
HELSINKI (Reuters) - Mobile maker Nokia's Symbian operating system is on the ropes, its lead being stripped away blow by Android blow, but if its new boss throws in the software towel now, the relief will be brief and the scars permanent.
Stephen Elop, appointed Nokia's chief executive three months ago, is due to present his plans to arrest the market leader's decline early next year, and there are siren voices that would have him turn his back on mobile software and focus on handsets.
The runaway success of rival Apple's iPhone and its online App Store took Nokia by surprise, and while the Finnish firm still makes eight phones for every iPhone sold, for many quarters Apple has generated a bigger profit from its phone business than Nokia.
Following Apple's footsteps, Google rolled out its open-source Android operating system, which has become the standard for smaller phone makers. On current trends it will surpass Nokia's old workhorse Symbian in 2011 as the world's most used mobile OS.
"The software battles have been fought and won by Google and Apple. Nokia can either join the winning camp, or wither in a status quo of software wars already lost," said Alexander Peterc, analyst at Exane BNP Paribas.
Elop's personal history -- a former Microsoft executive -- gave vigor to rumors that Nokia would decide to use Google or Microsoft software in its smartphones.
This week in San Francisco, Android chief Andrew Rubin fueled speculation further by ducking the question on possible talks with Nokia, while saying its new management was open to new ideas.
Nokia has undoubtedly had a rough time of it this year. Its shares have fallen 15 percent, while the Stoxx Europe 600 Technology index has gained 13 percent.
It's entirely possible that by embracing Android its shares could avoid the punches for a while and rise a little; the company's costs would fall and it would enjoy the effects of moving with the newcomer's momentum instead of fighting to preserve a shrinking corner.
For his part, Elop said in October that using external software was an unlikely step.
Not just unlikely, but unwise, say others.
"When Nokia picks Android, investors will sell their shares," says John Strand, CEO of Danish telecoms consultancy Strand Consult. "That would be the day Nokia turns itself into a Dell of the mobile world."
He has a point; Nokia shares trade at 11.3 times next year's earnings, well below Apple's 16 times, but ahead of computer maker Dell's 9.1 times. At Dell's valuation, Nokia shares should be at 6.19 euros, not the 7.62 euros they traded for on Thursday.
Dell's gross margin is 18 percent, while Nokia's is still 31 percent, with Apple standing at 38 percent.
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Comments (2)
FSC wrote:
There is more than hand full of Android makers in the world, still they can“t beat Nokia..SWEET..=)
LG, Motorola and SE is going to die next year, how sweet is that, next is RIM and all the little Android makers..=)
Ovi store has 3.5M downloads at this days, N8 and other Sympian^3 phones are selling like crazy… Tarmo troll better..=)
Dec 09, 2010 1:23pm EST -- Report as abuse
ulludapattha wrote:
Elop’s personal history — a former Microsoft executive –should tell him that Microsoft too had to dump its DOS operating system long ago. DOS worked fine just as Symbian as long as there was no real competition in the market. But, then came Apple with its revolutionary Mac OS with its graphic user interface. Microsoft was slow in revamping its operating system. MS developed the Windows system. It had to further dump its Windows 3.1 OS 15 years ago and bring in Windows 95 OS. Since then we have seen quite a few versions of Windows OS. The point is: technology in this area has developed at an exponential speed.
Nokia’s Symbian OS can be considered to be a reliable good old workhorse just as DOS was 20 years ago. Symbian worked fine when the mobile phone was just a mobile phone.Nothing else. Modern smartphones are not just mobile phones. That is why Nokia’s stubborn sticking on to Symbian OS is similar to a situation if Microsoft had stuck on to DOS or to Windows 3.1 OS even today.
Upcoming new MeeGo OS looks promising for Nokia. But the big question is: Will it come to the stage, when Android phones and Nokia rival Apple have skimmed away all the cream from the mobile smartphones business?
Competition will eventually drive prices down both for Apple and for all Android makers. How will Nokia be able to under those circumstances fatten its profit margins?
Will MeeGo suffer the same fate as Nokia’s Netbook 3G launched with great hopes just a year ago? It arrived on the scene far too late and was far too costly in a crowded market of netbooks. The smartphone market too is already getting uncomfortably crowded.
Speedy adaptation to the changed landscape is the key to success in this business. Can Nokia speed up its engine before it is too late?
Dec 09, 2010 2:15pm EST -- Report as abuse
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