The past few weeks have seen quite a few important developments in the mobile sector. Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) released two new Lumias during the course of the month, the 925 and the 928, as it looked to build carrier presence for its premium Lumia line and increase Windows Phone adoption in the key U.S. market. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) released a low-end QWERTY smartphone, the Q5, which will replace the older Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) Curve models in emerging markets and also took the important step of making BBM available to rival platforms such as iOS and Android as well.


bbry

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)

With the newly released Lumia 928 and 925, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will finally have a wider U.S. presence for its flagship Windows Phones. The Finnish handset maker made two important announcements this month, launching the Lumia 928 on Verizon and announcing that the 925 will be launched globally in the coming months. In the U.S., the 925 will be sold exclusively on T-Mobile. With AT&T already selling the 920, this means that the high-end Lumia will now be available on each of the U.S. carriers that had initially offered support for the Lumia. Sprint remains the only carrier in the top four to have not yet offered the Lumia, but it has announced that it will be launching a Windows Phone 8 smartphone soon. It is however not clear if Sprint will launch a Lumia or one of the rivals’ WP8 smartphone.

Due to the limited presence of the Lumia at the top carriers, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s U.S. performance in the past few months has been lackluster. Last quarter, Nokia managed to sell only about 400,000 handset units in North America, a decline of 33% over the same period last year. The U.S. smartphone market is extremely crucial for handset makers since success here generally translates into positive consumer sentiment in the other markets as well. It is therefore important that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) figures out the U.S. market, where it has historically lagged rivals. A wider high-end presence at the carriers gives Nokia its best opportunity to drive traction for the fledgling Windows Phone platform in the U.S., where it will increasingly face competition from BlackBerry’s recently launched BB10 smartphones as well. (see Nokia Banks On New Lumias To Increase U.S. Windows Phone Adoption)

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)

Having released its new BB10 platform with high-end handsets earlier this year, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is now targeting the emerging markets with low-end smartphones. At the BlackBerry Keynote address held in mid-May, the handset maker took the wraps off the Q5 – its long awaited QWERTY replacement for the earlier generation low-end Curve handsets that were a rage in the emerging markets.

While Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will look to improve margins and return to full-year profitability with the help of high-end smartphones, the low-end models will be used primarily to stem the subscriber loss it has been suffering for push email and BBM services in the recent quarters. With the handset division in the doldrums, BlackBerry’s services have grown in importance to contribute the most value to its stock – almost 30% by our estimates. The success of the low-end BB10 models is therefore very important if the company has to stay relevant in a highly competitive mobile market where differentiating with services and content will become increasingly important in the coming years.

Keeping the importance of its service division in mind, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has also decided to make BBM available to rival platforms such as iOS and Android. The cross-platform functionality removes the exclusivity that had for years served Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) well in attracting new subscribers and is probably an admission of the fact that the messaging service is no longer a big differentiating factor given the huge popularity of third-party apps such as WhatsApp and WeChat. Both WhatsApp and WeChat now boast of a subscriber base that is more than twice as big as that of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s, and the gap may only widen further if Blackberry continues to lose subscribers every quarter. It is therefore a good sign that the company is focusing on its services a lot more with the new BB10 platform, which has been built with cross-platform mobile device management (MDM) support for enterprises as well. (see BlackBerry Eyes Subscriber Growth With Q5 And Cross-Platform BBM Support)

 

Understand How a Company’s Products Impact its Stock Price at Trefis