The current Nokia chief executive recently termed Android smartphones as his major competitive target, not regarding a latest survey showing that Apple has surpassed the Finnish company to become world’s largest cell phone producer by sales.
During the first quarter of the year, Apple generated $11.9bn of wholesale revenues from its iPhone, Nokia’s $9.4bn of handset sales does not measure up to it this is according to estimates by Strategy Analytics, a research company.
The data highlights the challenge facing Nokia after it signed a final agreement with Microsoft this week to join forces in the smartphone market. Apple has guaranteed goldmine from its ipad 2 sales but iphone is up for competition.
Conversely, the chief executive, Stephen Elop, noted that, while the Microsoft pact would help improve Nokia’s response to the iPhone, the major focus was on the broader range of rivals, such as Samsung, HTC and Motorola, which use Google’s Android operating system.
“We’ve been very clear that our number one competitive consideration is Android,” said Stephen Elop,
Gartner, a research company indicates there could be market anticipation of increase in Android phones from last years 23 % of the smartphone to 39 % this year and nearly half-in 2012,
In contrast, Nokia’s share is forest to be below 20% in 2011 as it has made a risky transaction with Microsoft. Both companies hope that by teaming up and coming up with an hybrid of Nokia’s most criticized Symbian operating System and Microsoft windows phone they would effectively compete with Android and apple better than they have done on separate ventures.
After the announcement of this deal in February, some reviewers argued that Microsoft would gain most by winning access to a big new distribution channel for Windows Phone 7, while Nokia pays royalties for the software.
Nevertheless, Mr. Elop was adamant that the deal also included attractive financial rewards for Nokia, with Microsoft due to make payments worth “billions of dollars” to its new partner for adopting Windows Phone 7.
“We are making a commitment to do our best work for the Windows Phone 7 ecosystem whereas other cell phone makers are doing their best work for Android,” Mr Elop said. “The very fact we are making that decision is very valuable to Microsoft.”
The expected revenues from the deal will see Nokia achieve its target to save €1bn ($1.4bn) a year from 2013 by reducing its own software development costs. Consultations are due to start with unions next week on the planned restructuring, with labour leaders predicting thousands of people would loose jobs.
Mr. Elop Nokia’s Executive Director highlighted intellectual property rights as a key asset in Nokia’s turnaround efforts and vowed to use the group’s extensive patent portfolio more “strategically”.
He declined to make any if Nokia might get into a dispute with Google similar to its legal battle with Apple over alleged patent violations. However, he noted that Microsoft had already filed a lawsuit related to software used by Motorola in its Android phones.
According to analysts, Nokia and Microsoft could seek to raise costs for Android manufacturers by extracting license fees for their patented technology.
Investors’ regained hopes and spirits on Thursday with Nokia’s smaller-than-expected drop in first-quarter profits. Tough competitive environment and supply chain of disruptions from Japanese earthquake thus weakening profits margins of the second quarter of the year.
Nokia’s Executive Director, Mr. Elop said Nokia had sought alternative component supplies in countries such as Taiwan, China and South Korea but maintained the company would not abandon Japan.
Competition in smartphone and computer tablets market is fierce between Google’s Android, Apples ipad 2 and Microsoft’s Windows phone 7 and will continue unabated for the foreseeable future. .
