A Window into a New Era

How long have rivals got to take advantage of the turmoil at Nokia and RIM?

I was recently asked by a highly perceptive industry executive about the “window of opportunity” open to Nokia and RIM’s rivals while these two industry heavyweights are in disarray. Shooting from the hip, my initial reaction was that competitors have until the end of the first quarter of 2012 to grab share.

Interestingly, when I challenged colleagues and even analysts from other firms on this assertion they, like me, when asked cold, responded by saying the same thing.

However, on more thorough reflection, I think the opportunity could exist for even longer. The first quarter of 2012 could be merely the first milestone in a longer journey — barring any unexpected events like Nokia’s alliance with Microsoft.

By the end of the first quarter of 2012 we should know more about Nokia’s plans for a portfolio of Windows Phone devices with a range of prices and a version of the operating system that it’s had some influence over. RIM will be showing the fruits of its move to QNX-powered smartphones. And the broader picture will be clearer following an avalanche of announcements at CES and Mobile World Congress.

Of course, we might know more about what Nokia and RIM plan to deliver by then, but only a handful of those products are likely to be available by the third quarter of 2012.

This leads me to conclude that the window of opportunity for a major disruption of mobile phone manufacturers will be open until that point — the third quarter of 2012.

However, to take advantage of this opportunity it’s going to need near-perfect execution from the likes of Samsung, HTC and other aspiring competitors.

Arguably Samsung has an easier path to success. It already has global scale and a broad range of devices that allow it to compete with Nokia and RIM at every point in the market. Samsung’s management team has undoubtedly set its sights on displacing Nokia as the world’s biggest phone-maker; it’s now within a quarter or two of becoming the largest manufacturer in the more-lucrative smartphone segment.

The market’s bound to see some cutthroat competition over the next few quarters. Embattled rivals have already started defensive cuts to prices and margins. Nokia’s dropped the price of many of its smartphones, and LG has slashed its sales forecast for the remainder of the year. In my view, Samsung will be able to weather this competition more easily than others, thanks in particular to its strength in the supply chain of key components.

HTC will find it harder to exploit any opening, but it could reap greater rewards. If the company can sustain its current momentum it could become a global contender. But to achieve this, HTC will have to meet a punishing schedule of new devices that push the boundaries of design and performance while being intensely price-competitive. This will be no mean feat for a company that already faces the challenge of scaling up its business to address the strong demand it’s seen over the past three years.

The fate of smaller manufacturers such as LG, Motorola and Sony Ericsson remains unclear, but the fierce competitive conditions certainly won’t make life any easier.

I think we’re headed toward one of the biggest shake-ups in the mobile devices market for some time. It could be on the same scale as the disruptions prompted by Japanese manufacturers’ fall from grace outside their home markets in the mid-1990s, the implosion of Siemens’ mobile division around 2005, or the launch of Apple’s iPhone in 2007.

I have no doubt we’ll look back on the next 18 months as the moment that reshaped the mobile devices market yet again and signalled the next era in this fascinating sector.