During the last few weeks, a number of analyst firms have released figures and forecasts for the smartphone market, and in general there are two common themes: Android is the main growth driver, and everything anybody does is benchmarked against Apple. Without doubt, there is good reason for this; both Android and Apple have transformed the smartphone industry in different ways, sparking rapid growth in a market sector that was already on-the-up.

What has largely been ignored is Nokia’s continued leadership of the smartphone market in volume terms and, accompanying this, Symbian OS’ position at the top of the platform charts. While this should provide something to take comfort in, there are plenty of negative omens for both the vendor and the Symbian Foundation. Although in most cases Nokia’s 40 percent-plus growth in shipments would be widely praised, in this sector it is being outperformed by its competitors. And Eric Schmidt’s recent claim that 200,000 Android devices are being activated per day show how this ‘new’ platform is enjoying major momentum, and making up ground on Symbian OS’ 300,000 activations per day.

Looking away from the world of flagship phones, where Nokia is undoubtedly weak, there is significant smartphone growth coming from the mass-market, as mid-tier customers embrace mobile Internet services that were previously the preserve of high-end customers with expensive handsets and pricey service contracts. While Android is in play here, Canalys noted the performance of mid-tier devices in its analysis of both Nokia (5230) and Research In Motion (BlackBerry 8520), which are driving volumes for the companies – while devices such as the iPhone 4 take the media limelight.

Canalys forecasts that smartphones will account for more than 60 percent of devices sold in some Western European markets and 48 percent of the total in North America by 2013, and this level of penetration will not be achieved with high-end devices alone. Looking into Asia, Nokia is already dominant in China, and Symbian OS has a robust position in Japan, thanks to devices for NTT Docomo from Fujitsu and Sharp.

Obviously targeting the mass market brings challenges of its own, not least constraints on device and service contract prices, which in turn limits profit margins for both device makers and operators. But Nokia has plenty of experience in managing its supply chain to maximise the potential profit from mass market devices, and has the volume to benefit from scale in its negotiations with partners throughout the handset ecosystem.  The threat of Android should not be underestimated, though: with competitors including Huawei and ZTE producing budget Android devices, before taking into account entry-level devices from HTC and others, competition in this market is only going to get tougher, with the obvious price erosion this will entail.

Symbian OS also has a problem here: Android is seen as the operating system of choice for low cost devices, while Symbian OS has also lost its shine at the high end.  The Symbian Foundation undoubtedly has a job on its hands to challenge perceptions, especially among the device manufacturer base beyond Nokia and the Japanese partners of DoCoMo, and for application developers who see stronger momentum elsewhere. It will be interesting to see what messages come from the 2010 Symbian Exchange and Exposition event, which is scheduled to take place early in November.

Away from the mass market, both Nokia and Symbian Foundation could also do with a high-profile success to remind the developer ecosystem of their relevance, and to remind customers that there are established alternatives to Android and Apple. Nokia’s long-anticipated N8 device has a lot of weight on its shoulders (Nokia itself has said that it will “have a user experience superior to that of any smartphone Nokia has created”), and the Symbian^3 platform needs to deliver a significantly improved user experience to trump its rivals – including Microsoft’s new-look Windows Phone 7. But Nokia’s stated strategy of supporting MeeGo for high-end devices hardly counts as an unqualified belief that Symbian OS can deliver at this end of the market, which, as Nokia accounts for the lion’s share of Symbian OS shipments, sends a clear message to other licensees.

 

Steve Costello

 
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members