How Nokia’s Lumia Smartphone Will Fare in Developed Markets
With the launch of two series of smartphones under the brands Lumia and Asha last month, Nokia (NYSE:NOK) is looking to make a comeback in the smartphone market that is dominated by Apple (NASDAQ:AAPL) and Google’s (NASDAQ:GOOG) Android-based phones. While the Finnish company still has a strong presence in the emerging markets, it’s the developed markets like the U.S., the U.K. and Germany where its business has seen a strong decline over the years. We estimate that developed markets make up for only 13% of Nokia’s stock value versus 36% for emerging markets. As Nokia prepares to release its two new models in the U.S. early next year, we will be keenly watching how the Microsoft’s (NASDAQ:MSFT) Windows powered phones stack up against heavyweights such as the iPhone 4S and Samsung’s Galaxy S II that are currently in high demand.
Our complete analysis for Nokia’s stock is here.
How Nokia’s Lumia will fare against iPhone, Android phones
Nokia has traditionally not been able to make a cut in the U.S. market for several reasons: it was late in the smartphone race, it delayed the release of its previous Symbian OS, and it wasn’t able to forge good relations with telecom companies in the U.S. Moreover, none of its products could face the onslaught of Apple’s iPhone that has dominated the smartphone space since launch in 2007 or the current breed of Android phones that are challenging even Apple with their growing market share.
Lumia 800 is Nokia’s first Windows based phone and is the most elite in the Lumia series. It offers interesting features for a smartphone such as single core 1.4Ghz processor, 16 GB internal storage, 8 MP camera, 512 MB RAM and a beautiful user interface. While these are all likeable features and with a good ecosystem, there are Android phones that offer comparable or more high-end features. As Engadget points out, “If you’re thrilled by dual-core processors, extremely high-res screens, large camera sensors, customizable widgets, expandable storage, USB mass storage and other such features, then you’ll be better off with Android or — to a slightly lesser extent — iOS.” [1]
Moreover, Windows’ market share is very small compared to iOS and Android that enjoy leading positions in the mobile OS market. [2] Given Nokia’s reluctance to make Android phones and its growing affinity toward Windows platform lays some doubts on its future performance, particularly in the developed markets of North America and Europe.
While we estimate Nokia’s market share in developed markets will decrease from 15% in 2012 to 12% by the end of our forecast period, Trefis members expect an increase from 17% to 18.5% during the same period. The member estimates imply an upside of 10% to the Trefis price estimate for Nokia’s stock.
We currently have a Trefis price estimate of $6.97 for Nokia’s stock, about 2% above the current market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Nokia Lumia 800 review, Engadget, Nov 3, 2011 [↩]
- iOS market share balloons in October, Android climbs to No. 2 mobile OS, Bgr.com, Nov 1, 2011 [↩]