Teenagers: Nokia Phones Are More For People Our Parent’s Age
This is not good for Nokia (NYSE: NOK), which is increasingly going head-to-head with companies, like Apple (NSDQ: AAPL), when it comes to having the coolest devices on the market. According to a survey by Habbo Hotel, an online virtual hangout for teens, Nokia’s popularity is fading fast among their demographic. The survey asked 112,000 teenagers in 30 countries, what their favorite cellphone brand was, and 21 percent of respondents chose Nokia, which is down from 29 percent last year.
Reuters reports that the one important caveat with the Habbo survey is that the numbers exclude some key emerging markets, including India and China, where Nokia is the market leader. However, two analysts Reuters interviewed found the results to be a sign that Nokia has some image-repairing to do.
Strategy Analytics’ Neil Mawston said in the last year, the competition has obviously intensified. “Younger users are important because they can be opinion-leaders and trend-leaders. Nokia will need to discover why its heartshare has been slipping, and take actions to ensure it does not translate into lost market share.” Likewise, Gartner analyst Carolina Milanesi said the drop reflects the fact that Nokia doesn’t have any cool phones at the moment. Its upcoming N97 flagship device, which tightly integrates social networking features, is due out this month, but no U.S. carrier has yet to pick it up. To be sure, the demand is there for a “cooler” device. One of Nokia’s first touchscreen phones, the 5800 XpressMusic device which is being termed “the poor man’s iPhone,” is selling at a clip of about 1 million a month. Milanesi said winning back the teenagers’ “is key at different levels: safeguarding replacement cycles opportunity as well as attracting possible consumers of content.”
Nokia is the market leader in places like China and India because it has concentrated on making such large numbers of low-tech, limited-feature phones that even counterfeiters cannot profitably copy them. That's not exactly the recipe for magically springing to life with smartphone dominance.
Poor Nokia. They could only ride that wave so long. Just have a listen to what Olli-Pekka whatshisname says. He doesn't get it. He's the Steve Ballmer of Finnish industry.
The future return on the teen market might be less strategic as mobile data changes expands from entertainment to applications. Nokia could have a balanced portfolio with brand loyalists worth more than the teen segment. Nokia users have to be evaluated across these six factors; 1)Replacement cycle; 2)Average Selling Price; 3)Gross Margin; 4)Research and Design Costs; 5)Carrier Relationships; 6)Alternate channel distribution; ; 7)Services cross-sell potential.
Phone Portfolier has it right – it's easy to sensationalise one aspect of any product's lifecycle by closing in on just one aspect of a brand's commercial portfolio.
Whilst it's true that Nokia are working hard to win hearts and minds of a younger market through the 5800, it's notable that their projected total sales of the N97 is significant – that's possibly because of what they're trying to achieve with the new N-series smartphone: a device that appeals to many different people for many different reasons – all achievable in the one device.
The latest Samsung offering may have a higher spec camera and video, but Nokia are aiming for much more. Why else would they be bundling launch of the N97 close on the heels of their new Ovi Store, for example?