According to our Wireless Smartphone Strategies (WSS) service, global smartphone industry revenues rose +38% annually during Q3 2012. Apple led the pack in the premium category of smartphones, while Samsung is forging a solid lead in the remaining segments, while narrowing the gap with Apple in premium tier. This published report, available to clients, provides quarterly global smartphone shipment, ASP, and wholesale revenue metrics for nine major vendors from Q1 2011 to Q3 2012. Global smartphone vendor marketshare by price-tier, and global revenue-share tracking by price-tier, for all nine vendors is also included.

Nokia announced the imminent arrival of two new Lumia smartphones at it's New York event today. The Lumia 920 and Lumia 820 devices integrate many of the things that Nokia and Microsoft having been working on during the last 18 months, including Windows Phone 8 operating system, wireless charging, PureView imaging technology and software to deliver some cool camera effects.

In brief, the key hardware specs of the Lumia 920 are:

- DISPLAY: A 4.5-inch display with a capacitive "Super Sensitive Touch" touchscreen interface that can be operated with/without gloves (utilising Synaptic's ClearPad Series 3 technology). The display delivers "PureMotion HD+", which Nokia claims is the best smartphone display technology around, combining greater than 720HD resolution with a very fast refresh rate. It also includes sunlight readability sensors and smart polarisers that change the colours and tones of the display to make it readable in direct sunlight.

- CAMERA: An 8.7MP CMOS sensor with Carl Zeiss optics, combined with Nokia's PureView imaging technology that first appeared in the 41MP Nokia 808 device a few months ago. The Lumia 920 takes excellent photos and HD video even in poor lighting conditions thanks to two key innovations: firstly an aperture of f/2.0 which allows an enormous amount of light to be captured and allows the use of a large silicon sensor in a thin form factor; and secondly floating lens technology that provides image stabilisation and allows the shutter to stay open longer without creating blurred images. Nokia claims that the Lumia 920 captures 5 to 10 times the amount of light that other cameraphones capture. The key to the image stabilisation feature is tiny springs that are mounted on the whole camera module, not just on the lens.

- BATTERY: The Lumia 920 is powered by a massive (for Nokia) 2000 mAh Li-Ion battery, but the main innovation here is the integration of wireless charging using the Wireless Power Consortium's "Qi" standard. This is a big boost for Qi and the WPC as Nokia brings other partners to the market too, including Virgin Atlantic and the Coffee Bean and Tea Leaf, who will have charging stations in their business lounges and coffee tables respectively. This will hopefully propel Qi forward to create a single standard, increasing compatibility and reducing fragmentation in the wireless charging landscape.

- PROCESSOR: Qualcomm's 1.5GHz Dual-core Snapdragon S4 processor, MSM8960, is at the heart of the Lumia 920. It's a low-power, high-performance processor built on the leading-edge 28nm process node, delivering a stutter-free user experience and long(er) battery life. The modem in the MSM8960 supports 5 LTE bands and 4 HSPDA bands. Qualcomm's stranglehold on the Windows ecosystem is now in its third year of exclusivity.

- MEMORY: 32GB NAND Flash. Nothing sensational here and no memory card slot despite WP8 now supporting removable memory. Also, only one memory capacity option, unlike some of Nokia's competitors who offer higher memory capacity options for an extra $100, over 90% of which is pure profit. Has Nokia missed a trick here?

The Lumia 820 has some subtle differences:

- DISPLAY: 4.3 inch AMOLED display with 480x800 resolution, compared with the Lumia 920's 4.5-inch IPS-TFT with 720x1280 resolution.

- CAMERA: Same resolution 8MP main camera, but an aperture of f/2.2, compared with 8MP f/2.0 on the Lumia 920.

- BATTERY: A smaller 1650mAh battery. Still with wireless charging, this time in an exchangeable shell!

- PROCESSOR: Same.

- MEMORY: 8GB embedded NAND FLASH plus a microSDHC card slot supporting up to 32GB external memory, compared with the Lumia 920's 32GB and no slot.

The Lumia 920 is the culmination and integration of technology that has appeared in multiple Nokia devices recently. It takes the best of the Lumia 900's large display size, with the aesthetically pleasing curved display on the Lumia 800 and the incredible camera technology on the Symbian-based 808 PureView and mixes them up with some cutting-edge new image stabilisation camera technology, 4G LTE support, NFC, wireless charging and of course Windows Phone 8 .... Not bad Nokia!

Read the first impressions from our User Experience Practice of the Lumia 920's appeal to smartphone users here - Will Consumers Switch OS to get a Nokia Lumia Windows Phone 8?

- Stuart Robinson

Yesterday Microsoft held an event in Los Angeles where they announced the Surface, a self-branded tablet device that will be available in both ARM and x86 versions. The device features an impressive build quality in an attractive form factor as well as some interesting features. We believe the Surface will resonate well with the enterprise community and help Windows 8 OS garner interest, developer attention and market share.

Microsoft has learned well at the PR altar of Apple and executed perfectly at this ?secret? launch. Microsoft has not just imitated Apple but has potentially even outdone Apple in terms of attention to detail on the covers, keyboard, perimeter venting, digital ink and that?s all before you even talk about the device applications and features.

Given the anemic progress of Android vendors (Samsung aside) in tablets and the terrible historical track record of Microsoft?s Oems in tablets, introducing a competitive product which showcased the ability of Window to compete in the category really was in the critical path.

First impressions are of a device which has seen millions of man hours (ok maybe not quite that much) dedicated to not just designing a product but placing a market in the tablet market which has not but surely will cannibalize the PC market at some point.

Microsoft is smart to have showcased both the RT and Windows 8 Pro versions and to provide a roadmap and a challenge to its existing OEMs to match that!

An event that lived up to the hype and expectations, what a surprise. Well done Microsoft. The Surface announcement do not materially impact our forecasts for tablets by OS as this was already factored into our thinking.

Clients to our Tablet and Touch Screen Strategies service can read more about our take on the Surface tablets here

Yesterday’s Nokia announcement at CES of an AT&T-bound Lumia 900 Windows Phone with LTE represents a significant win for the device vendor, whose marketshare in the smartphone-hungry North American market, as illustrated here, has been on a steady decline for at least the past 4 years.

Together with the earlier-announced T-Mobile version of the Lumia 710, Nokia will now have at least two smartphones selling in the US that are not based on Symbian, a platform that had only niche appeal to US consumers and operators.

According to the Strategy Analytics Handset Country Share Tracker (HCST) service, T-Mobile was Nokia’s most important operator client for smartphones in the US in 2011, as the vendor’s business-centric Eseries devices are long gone from AT&T’s portfolio. So what is likely to happen with the arrival of the two new Lumia models?

At AT&T:

• Time-to-market will be a critical factor for the Lumia 900. Rival HTC has also just announced its first LTE Windows Phone, the Titan II, which could steal some of Nokia’s thunder with an early arrival. Highlighting unique-to-Nokia capabilities like Drive navigation will be critical in attracting Windows Phone buyers.
• The Lumia 900 alone will not instantly catapult Nokia into first, second, or even third place at the operator, and the vendor will be faced from heavy competition from Samsung and HTC, both of whom will be fighting for the #2 spot behind Apple.
• RIM, with its below-average superphone portfolio, could be hurt the most here. If, indeed, there is only room for 3 competing platforms, then AT&T’s OS-diverse portfolio could squeeze the BlackBerry maker’s volumes in 2012.

At T-Mobile:

• Following the recent arrival of the Sprint iPhone, T-Mobile has become the only major US operator without a strong third platform.
• The low-priced (US$50 with contract) Lumia 710 will have a lot of appeal to cost-sensitive feature phone upgraders.
• Nokia will not compete with pricy HSPA+ 4G superphones, but rather will take volume from more low-end devices from Samsung and LG, as well as T-Mobile’s own myTouch brand, as consumers look for a simpler alternative to Android.

Ultimately, the success of these two handsets depends largely on the level of promotional support given to them by the operators, especially in retail stores where a lot consumers make their decisions based on sales rep recommendations. Nokia has been working closely with both carriers on this dimension, winning critical drive slots and retail display real estate.

Finally, it is worth to note the significance of both the AT&T and the T-Mobile phone carrying the Lumia sub-brand, rather than their own re-branding. Globally recognizable, memorable sub-brands have been key parts of the strategy for the world’s leading smartphone vendors (e.g., Apple’s iPhone and Samsung’s Galaxy). In the operator-dominated US market shared brands are still a rarity, and we see this as a positive sign for Nokia’s long-term recovery.

Alex Spektor
Wireless Smartphone Strategies

Today?s announcement of a long term strategic partnership between Nokia and Microsoft creates a third credible ecosystem for smartphones as an alternative to the Apple and Google models.

This is indeed a win, win, win. It?s a big win for Microsoft, Mobile Operators and Nokia, possibly in that order.

Microsoft WP7 which has finally got a vendor partner with scale and with geographic presence in hundreds of countries where it has weak or limited brand presence. Microsoft more broadly finds an ally in its battle to monetize web assets and compete more vigorously with arch rival Google. Microsoft critically gains access to Nokia?s navigation, location and services assets which will help them with local search, advertising and customization.

The strategic alliance is a win for Nokia who surpassed our and most analyst expectations with the depth and level of commitment to make Microsoft WP7 its primary smartphone platform.

A standard OS licensing agreement where Microsoft was added as an OS choice to help out with the American problem would have been nothing more than a token effort. Analysts, media and investors may well have dismissed a standard license agreement  as a half hearted effort as as the minimum required step leaving huge questions over how or when could Nokia build a modern scaleable OS to replace the fundamentally outdated Symbian.

Nokia has taken a very bold, ambitious step which signals that a) the PC business model with its associated outsourcing of R&D from vendors to Microsoft has arrived; b) represents a gamble that the need to combat the profit and revenue erosion from Apple?s vertically integrated model and Google?s Android will convince operators to actually range WP7 devices across their price tiers not just in the premium end and c) that Nokia has chosen to fight back by winning the rights to not just license WP7 but to shape its future evolution and win a basis for exclusivity and differentiation with core mapping and location assets.

The Microsoft/Nokia alliance potentially offers vendors an alternative to the inevitable but terrifying commoditization and flight of profits to Google in the fragmented Android ecosystem.

Beyond Nokia, if the ecosystem is successful in ramping up applications and compelling user experiences to compete with Apple and Google, the broader community of WP licensees will win due to the rising tide effect. The addressable market size for windows mobile devices will be dramatically increased as Nokia/Microsoft become the ?operator friendly? choice. 

Operators who have seen their lunch eaten by Apple and Google win by having two powerful brands with massive marketing and go to market muscle help develop multiple new products to appeal to customers across multiple price tiers rather than having to rely on low cost but weak user experience product from new Android vendors.

Perhaps the biggest win for operators though is that Nokia can concentrate on catching up on handset design form factors where it has been weak for a decade or more.

A rejuvenated Nokia launching new form factors on a competent mobile OS with its huge marketing muscle and customer appeal will give operators greater flexibility on subsidy budgets.

So its all win, win, win IF Nokia can get back to the business of icon designs delivered on time to meet key selling seasons. Some key questions remain that we will be addressing for clients in the coming weeks:

Can Nokia execute? How will other Microsoft licensees react to the most favored nation status given to Nokia? How much will this announcement and subsequent products help Nokia establish a significant presence and share of profit in the critical North America market? Can Nokia time the decline in Symbian revenues, profits and volumes with the ramp of WP7 products which will be available ?in volume? in 2012.

Oh and what about losers? Symbian developers? Google? HTC and early windows mobile licensees?

David Kerr

• Microsoft Office Mobile Suite for Symbian.

• Microsoft Sliverlight for Symbian.

• The Nokia Booklet, a 3G netbook based on Windows 7.

Cumulative Shipments, First 8 Quarters

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6^th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974