Analysis: Sleeping phone giants stir from their slumber

Having all underperformed in 2012, BlackBerry, HTC and Nokia are desperate to regain momentum and mount a serious challenge to market leaders Apple and Samsung. Danny Palmer and Stuart Sumner assess their chances

It’s clear that Apple and Samsung are the two major players in the smartphone market, with the iPhone and Galaxy S III last year outselling all other smartphones on the market by some distance.

But what of former handset giants BlackBerry (formerly RIM), Nokia and HTC? All three have dropped out of the list of the world’s top five smartphone vendors, overtaken not just by Samsung and Apple, but now also by Sony, Huawei and ZTE.

Are BlackBerry, Nokia and HTC sleeping giants who could yet reawaken and recapture lost ground, or should we start preparing the obituaries?

It’s arguably BlackBerry that currently looks the strongest of the three, given the largely positive reaction from the market and investors to the recent launch of its new BlackBerry 10 OS (BB10) and latest smartphones. The new BlackBerry Z10 resembles the iPhone and Galaxy S III with its large touchscreen and an emphasis on social interaction, but also boasts a host of business-focused applications that are bound to appeal to BlackBerry’s tradition enterprise user base.

The launches helped to push shares in BlackBerry to a 13-month high in January, and its competitors are beginning to see it as a threat again. Samsung recently launched an advert promoting its Galaxy Note II as “the next big thing for business”, in direct response to the BlackBerry 10 launch.

Some market watchers, however, remain unconvinced that BlackBerry can stage a major comeback.

“RIM continues to face the twin demons of consumer-driven buying power and a chronic inability to appeal to mature market consumers,” said Jan Dawson, chief telecoms analyst at Ovum.

“There is nothing in what we’ve seen so far of BB10 that suggests it will conquer the second of these demons, and the first is utterly out of RIM’s control. We don’t expect a speedy exit from the market; with no debt, 80 million subscribers and profitability in the black in at least some recent quarters, the company can continue in this vein for years. But its glory days are past, and it is only a matter of time before it reaches a natural end,” she added.

Adam Leach, practice leader, devices and platforms at Ovum, agreed.

“RIM used to have a 30 per cent market share of smartphone shipments, and I don’t expect them to return to that. They’ll maintain a niche position compared to the mass-market popularity of Android.”

Analysis: Sleeping phone giants stir from their slumber

Having all underperformed in 2012, BlackBerry, HTC and Nokia are desperate to regain momentum and mount a serious challenge to market leaders Apple and Samsung. Danny Palmer and Stuart Sumner assess their chances

Android is certainly popular, although you wouldn’t know it from HTC’s sales figures. Even its CEO, Peter Chou, wasn’t exactly bristling with confidence when he said at the beginning of this year: “The worst for HTC has probably passed. 2013 will not be too bad.”

He didn’t go into detail as to how exactly 2013 will be better for HTC, other than suggesting that HTC’s “unique products” will appeal to consumers. The Taiwanese firm will need to be clearer about its offerings than that if it expects any kind of positive response from the markets.

“HTC have a hard time ahead, they’ve been outpositioned and outsold by Samsung ,” said Leach. “They need to define what’s different about an HTC phone, and why you should use it.”

This exemplifies one of the key problems for HTC – it doesn’t appear to have the marketing budget to keep up with its rivals and therefore lacks brand awareness among consumers. Unless the firm is prepared to shake up its communications strategy, 2013 will be another tricky year.

Nokia, on the other hand, could be in a position to turn things around, despite having not been in the top five smartphone vendors since October last year. Overall, sales were down across 2012, but the Finnish company saw sales of smartphones such as the Windows 8-based Nokia Lumia reach 4.4 million in the final quarter.

But Leach feels that Nokia won’t be troubling the top players even if its Lumia range proves successful.

“I don’t see Nokia returning to their previous level of influence, it’s very much now dependent on Microsoft. They can enjoy a position within the Windows Phone ecosystem, but the challenge is that it’s a nascent platform.”

Leach believes all three firms suffer from a lack of diversity in their product ranges. Apple, Samsung and especially Sony deliver a range of device types, including phones, tablets, televisions and MP3 players. This is good for brand awareness, and prevents profits being entirely dependent on one market.

If Nokia, RIM and HTC opt to stay true to their handset roots, then they are each destined to remain niche players at best.

@DannyJPalmer & @StuartSumner