Nokia has been struggling to regain market share for years, and now it has yet another enemy to face: “good enough” Android phones. A team of analysts at Nomura put together a report taking a closer look at these low-end Android phones and what they’re doing to the smartphone market as a whole. In their view, things aren’t looking so good for Nokia.
Where ‘Good Enough’ Android Phones Are Going
They define smartphones that are “good enough” as those that use components which were used in higher-end models two or three years ago. Such components include dual core processors.
Talk of inflation has been swirling for some time amid all the stimulus that's been pouring into the market and the soaring debt levels in the U.S. The Federal Reserve has said that any inflation that does occur will be temporary, but one hedge fund macro trader says there are plenty of reasons not to Read More
These devices work pretty well and work with most Android apps, making the user experience “good enough” for most users to move from feature phones to these low-end smartphones if the price is low enough.
The analysts said they believe that the prices of Android phones that are just good enough for users are going to fall down into the $60 to $70 range next year. As a result, they believe this will pull the price premium relative to feature phones down from 3.2 times last year to 1.8 times by next year. They also predict that companies which sell more smartphones than feature phones will benefit as the shift to smartphones increases.
Nokia’s Dependence On Feature phones
Because Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has depended so much on its Asha feature phone line in recent years, Nomura analysts believe that this spells trouble for the company. They don’t seem to think that Nokia’s Windows 8 phones will be much of a help, although the numbers show that the Lumia line is selling quite well in comparison to the Asha line.
Nomura analysts believe the decline in feature phone sales will surpass 20 percent year over year “for the foreseeable future,” and they blame those “good enough” Android phones for the decline. In their estimates, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has a 26 percent unit share and a 23 percent revenue share in the feature phone market.
They counted sales of Nokia’s Asha line phones, which are priced between $70 and $110, which puts them close to the expected price of “good enough” Android phones next year.
Feature Phones Vs. Smartphones
One thing the analysts don’t mention is where the line between smartphone and feature phone is. This is a very grey area that should really be taken into account when comparing feature phone sales to smartphone sales. While the Asha line has been considered to be a feature phone for some time, this doesn’t mean that it can’t cross over into the smartphone category at some point.