Nokia remained the world’s No. 1 maker of mobile phones, including traditional cellphones and smartphones, but its share of the phone market is rapidly shrinking. For the full year of 2011, its global market share was 23.8 percent, down from 28.9 percent in 2010. Meanwhile, Samsung, the No. 2 phone maker, increased its market share to 17.7 percent, up from 17.6 percent the previous year, and Apple’s global market share in 2011 climbed to 5 percent, up from 2.9 percent in 2010. It remains to be seen whether Nokia’s new Lumia smartphones running Microsoft’s Windows Phone 7 operating system will reverse the Finnish phone maker’s decline.

NYT report.

Analysts are expecting Nokia to rapidly reassert its relevance in the smartphone market, which it had largely to itself before the 2007 introduction of Apple’s first iPhone. Over the next 12 months, Nokia will expand its smartphone market share more than sixfold, to 12.2 percent, overtaking Research in Motion, the makers of the BlackBerry, according to I.D.C.

By 2015, Windows and Nokia will be the world’s second-largest smartphone operating system, I.D.C. estimates, with 21 percent, trailing Google’s Android, with 47 percent, but ahead of Apple, with 19 percent.

“What people are underestimating is how much operators in Europe and elsewhere are beginning to support and push Windows phones,” Mr. Jeronimo said in an interview.

Report.

Nokia Siemens Networks, the equipment joint venture of Nokia and Siemens, said Wednesday that it planned to cut almost a quarter of its work force as it sought to bolster profit in a stagnating market for network gear.

The company said it planned to eliminate 17,000 jobs by the end of 2013 in a wide-ranging austerity program to enable Nokia Siemens to refocus on mobile broadband equipment, the fastest-growing segment of the market. The reductions will slash the company’s work force by 23 percent from its current level of 74,000.

Report.

This could be the beginning of a good brawl, so let me first thank Steve for starting the debate right, with some facts wrong and slightly in rant territory. Without these elements one would not get a lively debate. I specialize in rants, but hopefully my evidence is better.

What development?

I am not going to take on the confusions inherent in Steve’s title. But it seems that there are (at least) two contending conceptions of development (broad) out there.

In the first, the “activist/scholar” knows what development is and engages in various 4D actions. I have, for the most part, kept away from saying I am doing x or y 4D, because that posits that I know what development is, and that my x or y actions will yield the development that is pictured in my head. Activists who thought community radio would yield development for the First Nations in the northern parts of Canada found that the first community broadcasting station played country and western music, more or less non-stop. Wasn’t what was in their heads, but it made the actual developees, the people of the First Nations, happy.

The second conception of development (one that I subscribe to) is minimalistic. It is about the creation of opportunities (more accurately, the removal of barriers) for people to do things for themselves. I recall being asked whether we approved of people using mobiles for relationship maintenance, as documented by Teleuse@BOP research. My answer was in two parts: the question was misguided, focusing on quantity of calls (because one call is not equal to another); what people choose to do with their hard-earned money is their business, not mine. I would answer differently if subsidies were involved, but I am generally not a fan of subsidies (except when I get them for LIRNEasia!).

Whatever one may say about prices, etc., one has to accept that mobile operators have given billions of people their first form of electronic connectivity. From my conception of development this is a great thing: it expands their opportunity space. Could be for good or ill, I agree. What I try to do is to further expand the opportunity space by catalyzing new applications that I and my funders think are good. Emphasize catalyzing, versus providing. Whether the applications will be taken up or not; whether the connectivity will be used to facilitate murders instead; that we cannot control, but using the tools of paternalistic libertarianism, we will try to make more difficult.

Bashee selection

It’s fun to have someone to bash. I know; I have the same weakness. For me it’s governments who have created the conditions under which operators function, as tax collectors, or oligopolists, or whatever. It’s operators for Steve. To each his own, but to have real effect, one must pick the right bashee.

First let us look at evidence on prices. The best indicators we know are the basket comparisons done by Nokia (but might be easier to use Nokia as a search term on LIRNEasia.net since the Nokia search is wonky). In 2007, of the 77 emerging economies, only four were under USD 5 per standard basket a month: Bangladesh, India, Pakistan and Sri Lanka. In 2008, the club had expanded to include, in addition, Honduras, Uzbekistan, Indonesia, MADAGASCAR, China, GUINEA, Mongolia and Malaysia (African countries in caps). By 2010, KENYA and EGYPT were in the under-five club. SUDAN and ETHIOPIA were under 10. So it is incorrect to claim that Kenya is the only exception to high prices in Africa. Prices have come down, even in Africa. If I was Steve, I’d be cautious about linking them to the prospects my death.

When one looks at the tax data, one sees a partial answer as why price are high. Governments that have trouble collecting taxes on their own are increasingly using mobile operators as tax collectors. But even with that (a condition that exists in South Asia, but at lower levels), adequate levels of competition can trigger a shift to the Budget Telecom Network model. This is what started happening in E Africa with the entry of Bharti Airtel. Guess who slowed down the process: governments. So the evidence supports my choice of bashee, rather than Steve’s.

The governments that created the conditions for the BTN model did not do it intentionally. They were out for the money that came from new licenses, some to government some to personal accounts. But the end result was a good thing, except now we have operators bleeding red ink and an imperative need to create clear conditions for market exit by those who cannot continue to play in the hard markets.

BTW, I do not believe that low prices are the alpha and the omega. Some upward movement from the levels found in S Asia may be justified. Currently, only 2.4 percent of household expenditure goes to telecom and Internet in Sri Lanka though of course the percentage would be higher in the lower deciles.

Operators are not do-gooders. If they were, they could implement the BTN model on their own. Their managers have the same kinds of incentives we have, as documented by Kahneman, Thaler, et al.: they fear downside risk more. So they are cautious, until the status quo becomes untenable.

They would like to maintain end-to-end control. But increasingly, it’s slipping out of their grasp. Skype is being advertised by Sri Lankan operators these days. The smartphone basically rips out a large area from the operators’ control. These are good things, but they were not done either by governments or by do-gooders. They were the results of the actions of other capitalists out to make a buck and other managers trying to keep their jobs.

So we are talking really about wireless platforms provided by competing operators, not integrated mobile networks as such or mobile handsets of the present (what are they anyway?). So when Steve talks of the big lesson of “the future is going to be a surprise and tying the notion of development to a particular mode of technology is as bad an idea now as it was in 1999,” he is bashing a straw horse. The networks are changing, the devices are changing, who controls them is changing, none of it with a central plan. Steve may know people who are tying their plans to some particular static technology, but I do not. He must have made a special effort.

Mobile industry subsidies

Observer bias is at play here. In the larger scheme of things, the subsidies offered by the GSMA and their members are peanuts. If you place those numbers in the context of what these companies invest and their turnover, you’ll be looking at several zeros after the decimal. They don’t really matter much. It is only those who live in the world of pilot projects who think these are significant.

LIRNEasia was founded on the premise that lowering leased line prices (which we have successfully catalyzed throughout S Asia, and part of SE Asia) was more important than 10,000 subsidized telecenters. So I cannot but agree with Steve that reducing prices is the key. But not only of voice and SMS, but of data as well. Why get hung up on specific services (the straw horse again?)? The BTN model is not for voice, or SMS. It can work with data as well.

Nokia’s chief executive, Stephen A. Elop, presented the Lumia 800, a 420 euro ($584) touch-screen device, and the Lumia 710, a 270 euro handset at a company product introduction. Both devices are being sold in six European countries and will be sold later this year in parts of Asia. Other smartphones are planned for the United States, but not until early next year.

Analysts said the Nokia smartphones, the result of an eight-month collaboration with Microsoft, could also help Microsoft extend its dominant computer software business into the cellphone and mobile device market. The software has received positive reviews, but few handset makers are using it.

Full report.

At a conference in London on Wednesday, Nokia intends to present at least two new phones, one aimed at high-end users and one for the midrange mass market, people with knowledge of the presentation said.

Time is not an ally for Nokia in the fast-moving smartphone segment of the mobile market, which now accounts for more than half of all cellphone sales in North America and Western Europe. For Nokia, the decision to abandon its own Symbian operating system in favor of Windows Phone came at a price. Operators quickly reduced their stocks of all Symbian devices, both smartphones and basic phones, hurting Nokia’s bread-and-butter business.

Nokia’s share of the overall global cellphone market fell to 24.5 percent in September from 30.7 percent in December, according to International Data. On Thursday, when the company reported a €68 million loss for the third quarter, which was smaller than some investors had expected, Mr. Elop spoke of the “many important steps ahead in our journey of transformation.”

Report.

Hans Vestberg, the chief executive of Ericsson, said in an interview that the results indicated that the transition to mobile Internet and smartphones was bucking the general economic downturn.

“Increased global smart phone penetration, new devices and the introduction of tiered pricing is driving continued mobile data traffic growth,” Mr. Vestberg said. The number of users of mobile Internet services, which deliver speeds comparable to fixed-line networks over wireless grids, rose to 900 million this month from 500 million in January, he said.

Ericsson predicts that the number of mobile broadband subscribers will rise to five billion by 2016. Ericsson’s quarterly gains were powered by developing markets, led by Latin America, China and northeast Asia, the Middle East and sub-Saharan Africa. Sales in Scandinavia and central Asia rose 49 percent.

Full report.

Every year Nokia conducts the telecom equivalent of the Economist’s “Big Mac” study; it compares the total costs of using an identical basket of services over a mobile phone in multiple emerging economies. It used to cover 77 countries, but now they’ve pared it down to 50 major emerging economies.

If only the voice and SMS services are counted (plus 1/36th of the cost of the cheapest Nokia phone in that market), Bangladesh is the winner. A Bangladeshi user will pay only USD 1.91/month as against the average of USD 11.47. Brazil continues to be the most expensive, with a user having to pay 23 times what a BD user pays: USD 43.69.

When the Internet premium is added (a modest additional amount of Internet use from the mobile handset), Sri Lanka pulls ahead, at USD 2.91 (as against USD 3.31 for Bangladesh). The worst performance in this comparison comes from Morocco, where a user would pay 57 times what is paid in Sri Lanka: USD 52.14.

The Internet premium is not in the mounted slide. We will get that posted in a few days.

Microsoft’s operating system software dominates the PC industry. But mobile devices like smartphones are expected to surpass desktop and laptop computers this year as the main way to gain access to the Internet. Microsoft has only 2 percent of the global market for phone software.

At least at the outset, the alliance may “Microsoft will have the rationale to really double down with its investment in the smartphone platform and ecosystem,” said Al Hilwa, an analyst at IDC.

One measure, in addition to market share, of how far Microsoft trails in building that ecosystem is the number of software applications developers have created for the Microsoft Windows Phone 7 operating system. The Microsoft applications store, though growing rapidly in recent months, has about 8,000 applications, Mr. Hilwa said. By contrast, more than 350,000 applications have been developed for Apple’s iPhone.

]]> http://lirneasia.net/2011/02/nokia-goes-with-windows-on-smartphones/feed/ 0 http://lirneasia.net/2011/02/smartphone-news-nokia-adopting-windows-and-abandoning-symbian/ http://lirneasia.net/2011/02/smartphone-news-nokia-adopting-windows-and-abandoning-symbian/#comments Fri, 04 Feb 2011 10:30:29 +0000 Rohan Samarajiva http://lirneasia.net/?p=10284 The NYT reports a possible alliance that appears to be a reaction to the rise of Android.

Shares of Nokia, the mobile phone market leader, climbed for a fourth day on Thursday amid speculation that the company may be poised to announce a software alliance with Microsoft designed to revive its struggling U.S. smartphone business.

Nokia’s shares have risen more than 4 percent since Monday when an analyst, Adnaan Ahmad of Berenberg Bank in Hamburg, urged the Nokia chief executive — and former Microsoft executive — Stephen Elop, to form an alliance that would put Microsoft’s Phone operating system on Nokia’s advanced smartphones.

Such a move would be a break for Nokia, which historically has avoided ceding key parts of its business, like software, to outsiders.

]]> http://lirneasia.net/2011/02/smartphone-news-nokia-adopting-windows-and-abandoning-symbian/feed/ 0 http://lirneasia.net/2010/11/nokia-moves-out-ovi-to-nigeria/ http://lirneasia.net/2010/11/nokia-moves-out-ovi-to-nigeria/#comments Tue, 02 Nov 2010 08:39:49 +0000 Rohan Samarajiva http://lirneasia.net/?p=9520 Improving the efficiency and inclusiveness of agricultural value chains is central to LIRNEasia’s current research. NYT reports on Nokia’s efforts in this area. Unfortunately for little countries, they are focusing only on big markets.

On Saturday at dawn, hundreds of farmers near Jhansi, an agricultural center in central India, received a succinct but potent text message on their cellphones: the current average wholesale price for 100 kilograms of tomatoes was 600 rupees ($13.26).

In a country where just 7 percent of the population has access to the Internet, such real-time market data is so valuable that the farmers are willing to pay $1.35 a month for the information.

What is unusual about the service is the company selling it: Nokia, the Finnish cellphone maker, which unlike its rivals — Samsung, LG, Apple, Research In Motion and Sony Ericsson — is focusing on some of the world’s poorest consumers.

]]> http://lirneasia.net/2010/11/nokia-moves-out-ovi-to-nigeria/feed/ 0 http://lirneasia.net/2010/06/nokia-launching-dual-sim-phones/ http://lirneasia.net/2010/06/nokia-launching-dual-sim-phones/#comments Thu, 03 Jun 2010 09:21:15 +0000 Abu Saeed Khan http://lirneasia.net/?p=8032 Nokia’a latest move will make MNP further irrelevant while it’s a great news for consumers at the BOP.  The Finnish mobile behemoth will release four new cheap phones ranging between €30 and €45 and the cheapest one supports dual connection. The operators would better start pampering the BOP.  Nokia introduced also its first bicycle charger, targeting especially consumers with limited access to electricity, and it will go on sale for roughly 15 euros price, depending on market, later this year, said the company’s press release.

]]> http://lirneasia.net/2010/06/nokia-launching-dual-sim-phones/feed/ 1 http://lirneasia.net/2010/02/how-mobile-handsets-are-doing/ http://lirneasia.net/2010/02/how-mobile-handsets-are-doing/#comments Tue, 16 Feb 2010 08:16:29 +0000 Rohan Samarajiva http://lirneasia.net/?p=6861 A story on the Barcelona GSM World conference had this interesting summary on the state of the handset market. With our focus on infrastructure we have not written much about handsets over the years, but it’s becoming difficult, especially in the context of the Mobile 2.0 narrative. As I said in a recent interview with the Expanding Horizons magazine: “Mobile networks will provide the key connectivity, especially as we see handsets becoming more advanced.”

Global shipments of handsets had been falling every quarter since the third quarter of 2008, when the global financial crisis erupted, according to market research firm Strategy Analytics.

But shipments surged by 10 percent in the last three months of 2009, “signaling an end to the industry’s year-long recession,” Strategy Analytics said in a January 29 report.

Smartphones alone grew even faster in the fourth quarter, jumping 30 percent.

Sony Ericsson and Samsung, the world’s second biggest mobile phone maker behind Nokia, have small slices of the smartphone segment, which is dominated by Nokia, iPhone-maker Apple and BlackBerry-maker Research in Motion (RIM).

Samsung unveiled its new touch-screen handset, the Samsung Wave, on Sunday, as part of its plans to triple its smartphone sales to 18 million units this year.

“This is a new era, the smartphone era,” JK Shin, the head of Samsung’s Electronics mobile business, said at a launch party for the Wave.

“Samsung is committed to making the smartphone era available for everyone. We are committed to making the smartphone era a true democracy for billions of people on all continents in all corners of the world,” Shin said.

]]> http://lirneasia.net/2010/02/how-mobile-handsets-are-doing/feed/ 0 http://lirneasia.net/2010/02/tbop3-findings-published-in-nokias-expanding-horizons-mag/ http://lirneasia.net/2010/02/tbop3-findings-published-in-nokias-expanding-horizons-mag/#comments Fri, 12 Feb 2010 06:49:28 +0000 Nirmali Sivapragasam http://lirneasia.net/?p=6844 Findings from LIRNEasia’s Teleuse@BOP3 study have been cited in the latest issue of Nokia’s Expanding Horizons magazine. The article discusses the vast potential mobile phones have for providing those on the lower-incomes or the bottom of the pyramid, access to the internet for the first time. Read the full article here. Excerpt below:

According to ICT policy think tank LIRNEasia, the evidence shows that mobiles, not computers, have the best potential to deliver services to rural areas in the Indo-Gangetic Plain, the world’s largest concentration of poor people. “This is the hardest case. What works here will work everywhere,” says Rohan Samarajiva, Chair and CEO, LIRNEasia. “Mobile networks will provide the key connectivity, especially as we see handsets becoming more advanced.”

]]> http://lirneasia.net/2010/02/tbop3-findings-published-in-nokias-expanding-horizons-mag/feed/ 1 http://lirneasia.net/2010/01/nokias-transformation-depends-on-success-in-emerging-markets/ http://lirneasia.net/2010/01/nokias-transformation-depends-on-success-in-emerging-markets/#comments Fri, 15 Jan 2010 06:38:15 +0000 Rohan Samarajiva http://lirneasia.net/?p=6708 What I like about the new economy is that no one is king of the hill for too long. IBM, the target of Apple’s famous 1984 ad, almost went under and reinvented itself as an open source champion for the comeback. Microsoft is no longer looking like a big bad bully. And Nokia who seemed to own the mobile space is scrambling. It is getting hammered not only in the network equipment space (where the alliance with Siemens did not do much good) but in the main game which is handsets. What is truly interesting is that the success of the comeback strategy depends on emerging markets and therefore on the BOP. No wonder we have lots of readers from Northern Europe on our website.

Last February Nokia’s management kicked off what is internally known as a “transformation project” to address all these concerns. “We needed to move faster. We needed to improve our execution. And we needed a tighter coupling of devices and services,” explains Mary McDowell, Nokia’s chief strategist. The firm has since introduced a simpler internal structure, cut its smart-phone portfolio by half, ditched weaker services and begun to increase Ovi’s appeal to developers by allowing them to integrate Nokia’s services into their own applications. While giving Symbian a makeover it is also pushing a new operating system, called Maemo, for the grandest, computer-like smart-phones.

All this will no doubt help Nokia come up with better, if not magic, products. The firm may even reach its goal of 300m users by the end of 2011 because its efforts are not aimed just at rich countries, but at fast-growing emerging economies where Nokia is still king of the hill, such as India. There, services such as Nokia Money, a mobile-payment system, and Life Tools, which supplies farmers with prices and other information, fulfil real needs, says John Delaney of IDC, another market-research firm.

Full story in the Economist.

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