IHS Global Insight Perspective | |
Significance | Nokia declined to comment on how sales would be affected by not having the E7 handset in stores over the festive year-end holiday period, when handset sales traditionally peak. |
Implications | The failure to launch on time is another blow to the handset giant’s plans to improve its performance in the smartphone market. |
Outlook | The end of 2010 will see Nokia still failing to market a leading high-end handset—making this a year the vendor would probably like to forget. |
Nokia has delayed the launch of its new E7 smartphone until early 2011, which means that the handset will not be in shops during the year-end festive shopping season. The Finnish handset vendor said it has taken the decision to ensure a "good user experience", without elaborating on the reason for the delay. The E7 is expected to spearhead the vendor's new range of Symbian handsets, and boasts a 4-inch touch screen and a slide-out QWERTY keyboard, selling at an estimated retail price of some 495 euro (US$664).
Meanwhile, the world's leading handset vendor plans to cut a further 800 jobs in its home Finnish market, Reuters reports. The news agency reports that the planned reductions will begin in January, following negotiations with employee representatives. Nokia says it will offer severance packages worth 5-15 months of regular salary, but hopes some of the employees affected will be relocated elsewhere in the company.
Outlook and Implications
- Further Pressure on Nokia's Smartphone Stable: In the third quarter of 2010, Nokia announced a range of new smartphones based on an upgraded version of its Symbian operating platform. These included the flagship E7, which it hopes will reverse its fortunes in the high-end handset market. The handset was supposed to be in the shops in the fourth quarter. Nokia press spokesman Doug Dawson declined to comment on how the handset giant's sales would be affected by not having the device in stores during a period in which handset sales traditionally peak. Nokia's recently launched N8 smartphone was also slightly delayed, and after launch the vendor admitted some of the phones had power problems.
The N8 and E7 are flagship models for the new version of the Symbian operating system (OS), which Nokia has recently taken back under full control after it was given to the open-source community to run only a few years ago (see World: 9 November 2010: Nokia Admits Defeat as Symbian is Brought Back In-House). The move was largely seen as an admission of defeat from Nokia, as Symbian has failed to gain any traction with other vendors; both Samsung and Sony Ericsson recently abandoned it in favour of Google's Android.
- End of an Annus Horribilis for Nokia: The failure to launch on time is another blow to Nokia's plans to improve its performance in the smartphone market, where it has lost significant market share to newcomers Apple and Research In Motion (RIM), and Google's Android handsets. The weak performance in the high-end sector was seen as a key reason for Nokia's decision to replace chief executive Olli-Pekka Kallasvuo with Stephen Elop from Microsoft in September following a series of disappointing quarters. Elop, a Canadian citizen, has made no secret of his desire to drive Nokia into the North American market, where the handset vendor has traditionally struggled.
The Finnish handset giant recently reported that its third-quarter revenues were up by 5% year-on-year (y/y) as it saw handset sales rise 2% y/y to 110.4 million units globally; however, it also announced 1,800 job cuts as its overall market share dwindled (see World: 22 October 2010: Nokia Reports Q3 Revenues Up 5%, Cuts 1,800 Jobs Globally). The end of 2010 will see Nokia still failing to market a leading high-end handset, making this a year the vendor would probably like to forget.