Visualizing Nokia's and BlackBerry's Turnarounds
Over the past few years in the cutthroat smartphone market, Nokia and BlackBerry were completely blindsided. Once innovative market leaders, both were caught off guard by Apple and Google. iOS and Android have emerged as an unstoppable duopoly, powering 92.3% of all smartphones sold in the first quarter. That's up from the "just" 54.4% combined market share they enjoyed only two years ago.
The fight's not over yet though, as Nokia and BlackBerry have both been embarking upon their respective turnarounds. Each company has entrusted a new CEO with a turnaround. Each company has also bet its future on a new operating system platform; Nokia partnered with Microsoft Windows Phone, and BlackBerry is hoping BlackBerry 10 can last a decade.
Nokia goes first
Nokia's Lumia brand includes all of its Windows Phones. The Finnish company began its transition well before BlackBerry, releasing the first Lumia in Q4 2011. Meanwhile, it has abandoned Symbian, whose market share has now fallen to a meager 0.6%.
At this point, the company's smart device business is almost entirely reliant on Windows Phone, for better or for worse. Lumia units now comprise 92% of total smart device shipments. Nokia calls its lower-end Asha lineup smartphones, but doesn't include them in its smart devices category.
BlackBerry goes second
It wouldn't be until early this year that BlackBerry would launch BlackBerry 10 after numerous delays. The Canadian company just reported its full first quarter of BB10 device sales, which include the Z10 and Q10. After selling approximately 1 million BB10 devices in the fiscal fourth quarter, it sold 2.7 million BB10 units this quarter.
BB10 units were 40% of total smartphone volume, and BlackBerry's turnaround timeframe lags Nokia's in that respect. Unlike Nokia, BlackBerry isn't abandoning its previous platform. BlackBerry 7 devices still sell well in emerging markets (the same markets that Nokia is targeting with Asha), and the company confirmed today that it would release a new BlackBerry 7 phone later this year.
BlackBerry's transition to its new BB10 platform won't be as swift as Nokia's all-in move to Windows Phone.
If you had to pick
Of the two, Nokia has a better chance of pulling off a successful turnaround. Not only did the company begin sooner, but also, Windows Phone has just overtaken BlackBerry in global market share to become the No. 3 platform for the first time ever. This is largely a function of rising Lumia volumes, which account for 80% of all Windows Phones sold. It's also worth remembering that smart devices are just one of Nokia's segments. The HERE mapping segment is relatively small at less than 4% of revenue, and the network equipment business is mostly stable.
Windows Phone is also a more refined mobile operating system. The third major release, Windows Phone 8.1, is due out later this year. In contrast, BlackBerry 10 is essentially an entirely new platform for BlackBerry, built on QNX, and with few ties to BlackBerry 7. Microsoft also isn't hurting for cash, so continued development of Windows Phone is assured. BlackBerry still has over $3 billion in cash, and remains operating cash flow positive, but a few more bad quarters like the one just reported could make short work of that.
When it comes to a prospective turnaround, Nokia has a first-mover advantage over BlackBerry.
The article Visualizing Nokia's and BlackBerry's Turnarounds originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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