As smartphones begin to saturate, with market winners concentrated in only a handful of brands, ignoring those quaint old feature phones might not be such a smart thing.
MADISON, Wis. — We all read Nokia's second-quarter financial report announced Thursday, July 18. The troubled Finnish company reported a 24 percent decline in sales, to €5.7 billion. But the company narrowed its second-quarter losses to €227 million, compared with a loss of €1.4 billion a year earlier.
I'm sure I'm not the only one who yawned at the news.
But something piqued my curiosity when I was reading The New York Times's version:
While Nokia remains one of the world's largest manufacturers of cellphones, the company now relies heavily on its cheaper, low-end models, which are primarily sold in developing economies.
These devices represented almost 88 percent of the 61.1 million handsets that Nokia sold in the second quarter.
Wow, Nokia still makes that many feature phones? Well, I sort of knew that. But it's still a staggering number.
Then, I remembered what I had reported earlier this week -- that NEC was quitting its smartphone operations while continuing with "conventional" phones.
Clearly, feature phones are on a downward spiral, with worldwide shipments expected to shrink to a mere third of the total mobile phone market by 2017, according to IDC.
So, everyone's first instinct, including mine, is why anyone - Nokia, NEC, etc. -- even bothers to remain in that losing business.
Nokia's non-smartphone division, in fact, reported a 27 percent drop in the number of units sold, to 53.7 million, compared to the same period a year earlier.
Source: International Data Corp., "Worldwide Quarterly Mobile Phone Tracker"
But here's the thing. Call me contrarian, but why dismiss so quickly those basic and feature phones?
As smartphones begin to saturate developed countries (oops! there goes the margin), with market winners concentrated in only a handful of brands, ignoring those quaint old feature phones might not be such a smart thing.
I'm not predicting that Nokia's success in feature phones will save the company, but I do say this. While a lot of analysts fault Nokia's late entry to the smartphone market for its sliding financial performance, the counter-story is more credible. I've always held that Nokia's losing command in the global feature phone market is the culprit in its downfall.
Can Nokia get back in the game in the feature phone market? Of this I'm not certain, especially at a time when there are so many indigenous handset vendors popping up elsewhere in the world.
Of course, in our high-tech world of instant obsolescence, we're all enamored with -- and actually crave -- the newest, fastest, thinnest, and most powerful smartphones, with a bigger screen.
The same goes for consumers.
But then, non-smartphones are often cheap, tough, and they tend to have longer battery life.
Other than the sheer vanity of trendiness, what's not to like? Am I alone hoping to see some "smart" company coming up with an elegant feature phone that's smaller and simpler, using less power and offering more talk time?