Nokia makes close to 4 out of every 10 handsets sold on the planet and in Q3 2009 the Finnish firm made $1.1 in operating profit on the sale of 108.5 million units. Apple sold “only” 7.4 million iPhones, yet they made $1.6 billion in profit. This is the first time in the history of mobile telecommunications that someone has made more money than Nokia on mobile phones. These figures were provided by Alex Spektor, Analyst at Strategy Analytics. His colleague Neil Mawston, Director of Wireless Device Strategies, had this piece of advice to offer:
“Nokia’s profit margin for its handset division has been shrinking during the 2009 global economic downturn. Strategy Analytics believes that the United States, where Nokia now trails Apple in marketshare, is the key to Nokia’s recovery in 2010. A successful fight on Apple’s high-profit home turf can simultaneously help to revitalize Nokia’s margins and to put a check on Apple’s surging growth.”
I’m not really surprised, and you should not be either. Just about every other market operates the same way. Porsche is the world’s most profitable auto maker, but they don’t sell nearly the amount of cars that Ford does. Porsche also doesn’t make a model that sells for $12,000, yet Ford has such a model, and plenty of them too. Ford’s highest end product, the Ford GT, is also pile of poop compared to anything the Germans have to offer. Different companies make different products for different people. Apple makes the best smartphone on the planet (my opinion, not universally shared, don’t complain, I don’t care) because the people working in the handset division concentrate on high end devices. Nokia is a huge company, but how many people do you think work on the 20 EUR devices that go to the emerging economies around the world, and the 100 EUR devices that go to people who are not that well off in West European countries, and how many people are left to work on the N97, N900, and other high end models?
Can Nokia make the best smartphone or are they in an environment where it simply isn’t possible?