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Sat May 18 14:00:32 SAST 2013

BlackBerry, Nokia still rule

Toby Shapshak | 30 July, 2012 00:11
Toby Shapshak. Stuff editor. File photo.
Image by: Times LIVE

Imagine owning nearly 40% of your market and being regarded as an also-ran. Or being the maker of the most popular smartphone in the rapidly growing emerging markets and having your share price hammered.

These are the strange situations Nokia and BlackBerry, respectively, find themselves in. Globally, Nokia had an estimated 37% of the smartphone installed base last year, and in February researchers Gartner estimated its overall market share was 23%.

Its Symbian operating system is being used for 70% of internet page views in Africa.

Last week the authoritative Mobility 2012 survey by researchers World Wide Worx found that Nokia retains half of the cellphone market in South Africa among 16-year-olds and older customers living in cities and towns. BlackBerry grew its share to 18%, from 4% the year before.

But Nokia and BlackBerry-maker Research In Motion (RIM) are being hammered internationally, especially on Wall Street, where their market value has plummeted in the wake of their market share crash in the more developed markets of North America and Europe.

Feature-conscious consumers there have chosen other smartphones, especially the iPhone and Android devices, and phones made by Samsung. But cost-conscious consumers in emerging markets love the fixed-cost, unlimited data bundles and the never-ending instant messaging fix that is BlackBerry Messenger.

Nokia and BlackBerry are trapped between a rock and a hard place - or two sets of emotionally driven demographics: Wall Street bankers and fickle consumers.

From earnings released last week, Samsung and Apple are doing exceptionally well, with the former announcing record second-quarter profit growth of 48% in a year.

Apple - which can seemingly do no wrong, except in the months preceding the annual iPhone launch in September or October, when would-be buyers hold off for a new model - was hit by lower-than-expected, you guessed it, iPhone sales. This, despite a 21% increase in profit.

Samsung, which provides an estimated 29% of current iPhone components, and makes everything from processors to flash memory to touchscreen displays - has learned from Apple the importance of ruthlessly managing its supply chain.

Apple makes a vast profit from each iPhone by squeezing its suppliers - despite the occasional outcry about working conditions at its Foxconn assembly plant.

In an inexplicable parallel development, Apple and Samsung are locked in a patent dispute that stretches across the world in about 50 court cases as they sue and counter-sue over who stole whose ideas - all the while seemingly doing business together.

In the first quarter, the two smartphone behemoths sold half of these pricey, top-end phones but captured 90% of the profit.

In the second quarter, Samsung sold 50million phones to Apple's 26million, said researchers IDC - or 32% and 16% of the smartphone market, respectively.

How BlackBerry and Nokia must look on in envy, where once they ruled the roost.

But Africa is the fastest-growing cellular region, expected to reach 735million subscribers by the end of the year.

Seven of the top 10 fastest-growing economies over the next five years will be from Africa, predicts the IMF.

Nokia and BlackBerry are hoping to convert their brand equity into a lot of Africa sales. The jury is still out about whether this is possible but, with economic growth in the next decade projected to come mostly from emerging markets, it's a compelling argument.

Combine this with the growth of the smartphones market, expected to overtake that of feature phones as they come down in cost, and there is a generation of loyal BlackBerry and Nokia users who will be looking for an upgrade.

These are, as the Chinese proverb goes, interesting times.

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