Phone, Camera, Action!

The popularity of Nokia Corp.'s (NYSE: NOK) 7650 imaging phone has made the Finnish colossus and Symbian Ltd. the clear leaders in the EMEA "device market" in terms of units shipped and the operating systems deployed, according to Canalys.com Ltd. (see Nokia Takes Lead in EMEA).

In fact, Nokia ships more than the rest of the market put together, though the more traditional handheld vendors might claim this is not a like-for-like comparison in terms of product functionality. But this is Canalys's research, not theirs.

The research company's latest quarterly update of the market for "feature phones, smart phones, handhelds, [and] wireless handhelds," shows Nokia's market share in Europe, the Middle East, and Africa to be 56 percent. Its nearest vendor rival is Palm Inc. (Nasdaq: PALM) with 15 percent, which has widened the gap between itself and third-place Hewlett-Packard Co. (NYSE: HPQ) from about 26,000 units a year ago to about 65,000 units in the third quarter of 2002. Palm should have a strong fourth quarter as the sales channels demand the company's new low-end model, the Zire (see Palm Intros $99 Handheld).

The research also shows a remarkable jump of more than 100 percent in the number of units shipped in the region to more than 1,180,000, making it the best-ever quarter on record, according to Canalys.

Table 1: EMEA Total Mobile Device M'ket: Vendor M'ket Shares
Vendor Q3 2002 shipments % share Q3 2001 shipments % share Growth Q3'02/Q3'01
Total 1,183,130 100% 578,600 100% 104%
Nokia 665,940 56% 157,840 27% 322%
Palm 172,440 15% 129,515 22% 33%
Toshiba 48,630 4% - 0% NA
Sony 38,300 3% 4,735 1% 709%
Others 150,090 13% 183,505 32% -18%
Copyright canalys.com ltd. 2002
Mobile device market: feature phones, smart phones, handhelds, wireless handhelds
HP includes Compaq-branded devices

Although growth has returned to the established handheld market, without the 7650 the figures would be somewhat different. It is included in this research because "it competes with the handheld market in that someone might opt for one of the handsets instead of a PDA [because of its extended functionality]. It's the first in a new category of device [that fits into the mobile device market]," Canalys analyst Andy Buss tells Unstrung. This was the first quarter in which Nokia's imaging phone shipped in volume, and with so many outlets for Nokia devices, "just putting two or three of this model into each shop would have delivered a big number."

Heavy promotion of picture messaging services and significant subsidies by powerful European operators such as HP and Orange SA (London/Paris: OGE), with Vodafone Group plc (NYSE: VOD) operators about to launch too, is driving demand for the 7650 and should produce sustained volume requirements in the coming quarters.

Buss makes an interesting case against operators extending the subsidies to their pre-paid customers. "New services like photo-messaging should be used as a lever to move people from prepay to post-pay contracts," he notes in the press release. "Pre-pay customers' main concern is to control their mobile spend as much as possible. If operators are going to raise their average revenue per user, whether from voice or data, then they need to facilitate that transition."

A new entry to the top five is Toshiba Corp., which is "doing really well with its E310 model, that is well packaged and attractive to the consumer market, even though it is based on last year's technology," says the Canalys man.

The company that makes way for Toshiba is Handspring Inc., which in the second quarter had shipped 30,500 units for a 6 percent market share. Now it's anonymous in the "Others" category. "Handspring has been hit by increased competition, especially from Sony Corp., which has some very consumer-focused products that are doing well, and Fujitsu Siemens Computers," says Buss.

The overall market growth is being driven by a greater diversity of products, especially at the low end of the market, says Buss, although high-end models such as the HP iPaq are still selling well, especially those with integrated Bluetooth capabilities that can communicate with other devices.

While Symbian is the clear leader in the OS market share table, with Samsung Corp. set to add to its tally (see Samsung Licenses Symbian OS), Microsoft Corp.'s (Nasdaq: MSFT) Windows CE is breathing down Palm's neck.

Table 2: EMEA total mobile device m'ket: Operating system m'ket shares Q3 2002, Q3 2001
Operating system Q3 2002 shipments % share Q3 2001 shipments % share Growth Q3'02/Q3'01
Total 1,183,130 100% 578,600 100% 104%
Symbian 669,490 57% 190,100 33% 252%
Palm OS 234,730 20% 184,695 32% 27%
Windows CE 231,770 20% 119,890 21% 93%
Others 47,140 4% 83,915 15% -44%
Copyright canalys.com ltd. 2002
Mobile device market: feature phones, smart phones, handhelds, wireless handhelds

With an increasing number of vendors (HP, Toshiba, Fujitsu, Siemens) using the CE derivatives Pocket PC and Smartphone 2002 in their products, Palm's number two spot could be threatened in 2003. "CE is very important for Microsoft," says Buss, "and there are a number of new vendors set to drive Windows-based product sales further," one of which is Dell Computer Corp. (Nasdaq: DELL).

The fourth quarter is traditionally the biggest for sales, so Buss expects to see higher numbers across the board in the final three months of the year. In 2003 he expects further growth but does not expect to see more devices with integrated GPRS. Instead he believes more devices will bundle Bluetooth, with GPRS mobile phones becoming the personal device with which a number of handheld products can communicate.

— Ray Le Maistre, European Editor, Unstrung
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