Mobile Phone market: A Hypercompetitive market The global mobile phone market has increased drastically, especially following

Smartphone growth trend. Although estimations vary from one company to another, they all agree on the fact that the total estimated value of mobile market is growing. Mobile phone market can be defined as hypercompetitive environment, which can be described as a marketplace with an escalating level of competition. Hypercompetitive environments are often characterised by rapid changes in technology, regulations, relative ease of entry and exit and unexpected changes in customer demands. These rapid changes make it difficult for companies to keep their competitive advantages for a longer period of time. When technologies improve at such fast pace, competences are destroyed and open the market for rivals to enter, based on the new technology. If the companies do not adapt to new changes and do not work on scenario building, they tend to lose the market share and competitive advantage, sometime called strategic drift. Hypercompetitive environment is intense and rapid competitive moves, in which competitors must come up with advanced and new ideas .This state of competition is characterised by an increased competitive environment in terms of price, quality and features. The frequency of rapid changes in the marketplace is causing a state of constant imbalance and change. The markets stability is threatened by short product life cycles, constant changing technology, new entering firms, rapidly changing customer requirements and needs and development of new markets. According to research firm IDC, the global mobile phone market rapidly increased in the first quarter of this year at the rate of 19.8 percent year-after-year, mostly due to the spectacular growth of smartphone shipments, especially in emerging markets like Asia, Middle East, Africa and Latin America, helped lift the overall market to a record first-quarter high. According to the firms Worldwide Mobile Phone Tracker, vendors shipped 371.8 million units in Q1 2011 compared to 310.5 million units in the first quarter of 2010.( Robin Wauters: 2011)

Nokia smartphone shipments over the last two and half years Source: Rafe Blandford: January 28th 2010 http://www.allaboutsymbian.com/news/item/11049_Nokia_Q4_2009_results_converge.php Weakening of Nokia's leadership in the mobile phone market (Market Effects of Strategic Drift) Nokia has been leading the blooming mobile phone industry not only in terms of sales and market share, but also in terms of technical and marketing innovation. Nokia has lost its market share in less than 4 years, has raised a concern for the company. With the fast technology evolution in the industry, the terminology used to distinguish smart phones from the rest of the market is constantly challenged. Hardware features such as advanced computing ability, connectivity, screen size or input method are increasingly added to `simple' phones as well. A Smartphone can be defined as a mobile communications device that uses an identifiable operating system and has more advanced abilities like web browser, application and Qwerty keyboard.

Nokia has lost its market share drastically in recent years. According to the New York Times, in year 2007 Nokia market share was 40% &,which came down to 37 % in year 2008 and came down to 31 % in year 2009. (Kevin J. O'Brien:2007)

Source: http://theeword.blogspot.com/2011/02/smartphone-market-share-q4-2010.html Nokia has lost 523 million in the 2nd quarter of 2011. Its overall revenue has come down by 7% from 10 billion euro to 9.3. if we look at the figure below, we can see that Nokia is now behind I-phone in its overall sales figure and has slipped to the third place in terms of sale of mobile phones

Rank . . Brand . . . . . . . Millions sold . . . . . . Market Share Q2 . . . . (Market share Q1)

1 . . . . . Apple . . . . . . . 20.3 million . . . . . . . 19% . . . . . . . . . . . . . (18%) 2 . . . . . Samsung . . . . 17.8 million . . . . . . . 16% . . . . . . . . . . . . . (13%) 3 . . . . . Nokia . . . . . . . 16.7 million . . . . . . . 15% . . . . . . . . . . . . . (24%) 4 . . . . . RIM . . . . . . . 13.3 million . . . . . . . 12% . . . . . . . . . . . . . (14%) 5 . . . . . HTC . . . . . . . 12.2 million . . . . . . . 11% . . . . . . . . . . . . . (10%) 6 . . . . . LG . . . . . . . . . 5.4 million . . . . . . . . 5% . . . . . . . . . . . . . ( 5%) 7 . . . . . SonyEricsson . 5.3 million . . . . . . . . 5% . . . . . . . . . . . . . ( 5%)

8 . . . . .Motorola . . . . . . 4.4 million . . . . . . . . 4% . . . . . . . . . . . . . ( 4%) 9 . . . . . Huawei . . . . . . .4.0 million . . . . . . . . 4% . . . . . . . . . . . . . ( 2%)

10 . . . . ZTE . . . . . . . . 2.7 million . . . . . . . . 3% . . . . . . . . . . . . . ( 2%)

Others TOTAL 108.0 Million

5.9

million

5%

Source: http://communities-dominate.blogs.com/brands/2011/08/smartphone-market-sharesat-q2-and-report-card-for-half-year-performance.html by Tomi T. Ahonen August 11, 2011, Smartphone Market Shares at Q2 and Report Card for Half-Year Performance There are several reasons for Nokia losing its market share which is a lesson in itself. Outdated Browser: Surfing the web on the mobile phones has become an integral part of our life styles. We would like to stay connected and in touch with everyone on social networks like facebook and tweeter. Comparing with other operating systems, Symbian is really slow and not so interactive. No Android Operating System Nokia did not adopt the android platform, which is the requirement of the market and this gave a huge open space to its rivals to challenge Nokias market share. Not adopting android might have been the worst decision taken by the management of Nokia. Comparing with Mac or Vista, Symbian feels like windows XP, it can work but it is not as good as others. Launching too many Products at one time: Launching too many products at the same time, without seeing the market requirements. Nokia offers more makes and

models of phones than any other company. But while customer choice is important, perhaps Nokia has honed this feature to a fault. Customers are confused about the features and the number of phones in the market. Poor product designs None of the recent new phones launched by Nokia have product designs which even match those of top business phones or smart phones like Apple I-phone and Samsung. However some new phones have certainly been improved and have some attractive features.

No new features added Nokia has nothing different to offer in terms of features. Other mobile phones are infarct has some better features comparing with Nokia. Whether it is 3G, social media or other applications, Nokia is a step behind in adding innovative features and applications to its collection.

Complete reliance on brand equity Brand equity really makes up the price for a product. However Nokia supposedly relied on its brand equity for a longer time thereby affecting it in the long run.

Rapidly changing technological environment Nokia was always known for its simplicity. But the telecom environment has completely changed and now people do not want simple phones. They want the smarter ones or the ones packed with features in a smart manner.

Increasing Buying power The buying power of individuals has been increasing. Nokia may still dominate in the rural segment but it is losing fast in the urban market. It is survival time for Nokia and it really needs to tighten its belt to come up again in the face of tough competition.

Lack of Applications: Applications have become the lifeline of a smart phone. Today it is impossible to think of a phone which does not have good games and application, which can just about do anything. The OVI store is good but really ancient. Most of the applications are slow and have a horrible interface. Symbian probably off the market now, it is difficult to see more developers wanting to develop for Symbian,

when better options like iOS and Android are around. Nokia's Ovi store is slowly improving, but the experience is not up to the mark like Apple's, even Google's Android Market is better.

References: Wauters,R. April 28th2011,Worldwide Mobile Phone Market Grew 20% In Q1 2011, Fueled By Smartphone Boom, retrieved from http://techcrunch.com/2011/04/28/worldwide-mobilephone-market-grew-20-in-q1-fueled-by-smartphone-boom/ Tomi T. Ahonen August 11, 2011, Smartphone Market Shares at Q2 and Report Card for Half-Year Performance, retrieved from http://communitiesdominate.blogs.com/brands/2011/08/smartphone-market-shares-at-q2-and-report-card-forhalf-year-performance.html

Blandford R.:January 28th 2010, Nokia Q4 2009 results, smartphone world market share up 5%,retrived from http://www.allaboutsymbian.com/news/item/11049_Nokia_Q4_2009_results_converge.php

Kevin J. O'Brien: Thursday, October 18, 2007, Nokia profit soars as market share nears 40%, retrived from http://www.nytimes.com/2007/10/18/business/worldbusiness/18iht-nokia.4.7948524.html