Nokia to extend S60 usage, new smartphone defintion

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Olli-Pekka Kallasvuo (CEO) and Rick Simonson (CFO), discussed Nokia's smartphone strategy during today's Q4 earnings call. Nokia intend to further expand S60 on Symbian OS to new categories and market segments as well as continuing to push it on to lower cost devices. As a result they are expanding the S60 investment when compared to Series 40. Furthermore they believe the combination of Nokia's five services (Ovi) with a larger portfolio of such devices will see a change in the definition of smartphone. Read on for more details.

Olli-Pekka Kallasvuo, Nokia's CEO, during the main part of the call said that "some of our smartphones delivered different global volumes than we expected, we are confident that our portfolio is headed in the right direction". He went on to highlight the Nokia 5800 and recently announced Nokia N97 before noting that, "smartphones are not only for the high end". He explained that Nokia is able to "leverage our scale, trusted brand, global reach and consumer understanding, as we bring Internet services to a number of attractive price points. And that is what you will see from Nokia in 2009."

During the question and answer section of the call Kallasvuo expanded on this topic. "We are expanding the Symbian S60 investment in terms of it relative position to Series 40. Meaning we are expanding smartphones to categories and form factors that have not yet been covered." Later in the call Kallasvuo expanded on this noting that "expansion is not just in price points but also in different categories and consumer segments. Though of course we can do S60 at lower price points. The software cost is not prohibitive; it is a tremendous opportunity to increase efficiency and scale and gain share." While he would not be drawn on timings he did note that the "investment and research and development" for this strategy was already being made and would play out in 2009.

The subject was also discussed by Rick Simonson, Nokia's CFO, who noted there would be a focus on expanding the definition of smartphones - more S60 versus Series 40. The Nokia 5800, as the tip of the iceberg, is indicative of this. Furthermore he said that by "combing our five services with a larger portfolio of devices... we think that, by the end of 2009, you can look at the smartphone in a new and enhanced way." OPK underlined this and reiterated earlier comments that "devices from a hardware point of view is not enough anymore" and that it was "clear the strategy of adding services on top of the hardware will change the definition of the smartphone".

As an aside Kallasvuo was also asked about the performance of Comes with Music, he said that, "it has gotten a good start, but we need to expand the hardware portfolio and market availability. The plan is, in the near future, to do thirteen more countries and seven or more new devices".


It is clear that Nokia continues to see S60 on Symbian OS as a very important technology for its future strategy. 2009 will see S60 expand into new segments and continue the trend of driving smartphone down the cost tiers. A key advantage of this approach is the ability to bring rich functionality to these lower cost devices. Ultimately such devices have the potential to sell in high numbers, as they have a larger addressable market, and may therefore be a critical dimension in the overall open mobile platform ecosystem.

While the 're-defintion' or enhancement of the smartphone as a device with feature rich services at the core will come as no surprise to many, it does underline the importance Nokia attaches to services. They see them as an important differentiator and a way of adding significant value to smartphones.

Nokia currently has the widest reach in the smartphone space (and intends to expand this), which is reflected in its market share. Nokia faces competition from Apple, Android, RIM and Windows Mobile in different parts of this space. Windows Mobile and RIM provide a very strong enterprise challenge and both are looking to further expand their efforts in the high end consumer space. Apple, with its iPhone, is providing fierce competition in the high end consumer space. Android, while still in its infancy, may challenge across a broad consumer front. Each platform and each company has its own strengths and weakness; certainly, despite the economic gloom, 2009 promises to be an interesting year for smartphones (open mobile platforms).