The Smartphone Wars: Expectation and Surprise
<p>If style is truly the contrast of expectation and surprise, it&#8217;s been a very stylin&#8217; couple of weeks in the smartphone world while I&#8217;ve been on vacation.</p>
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<p>Expectation: Nokia&#8217;s sales in China <a href="http://www.businessinsider.com/nokia-china-2011-7">dropped 41% year-over-year in the last quarter</a>.  This is worse than it looks because China and the the Pacific Rim were Nokia&#8217;s big hope for volume sales; the brand has <a href="http://www.theregister.co.uk/2011/07/22/nokia_earnings_analysis/">disappeared from Europe</a> and never had much presence in the U.S.</p>
<p>Nokia&#8217;s strategy, insofar as it&#8217;s actually had one since the tie-up with Microsoft, has been to hang in there on volume sales of dumbphones until it could deliver world-beating WP7 handsets.  The major risk here, other than the wild unlikelihood of WP7 ever becoming anything consumers actually want, was that the Chinese electronics industry would undercut them on price-performance.  I predicted this would happen, it is happening, and Nokia&#8217;s disastrous July earnings call is the result.  </p>
<p>Stick a fork in Nokia, they&#8217;re done.  Specifically, their recovery strategy is busted. I&#8217;m now projecting that the tattered remnants of this once-proud company will be on the acquisition block within 18 months.</p>
<p>Surprise: A new study says that worldwide, <a href="http://www.tgdaily.com/mobility-brief/57396-surprising-report-reveals-androids-30-tablet-share">Android has 30% of the tablet market</a> (with more detailed figures <a href="http://www.xbitlabs.com/news/mobile/display/20110721234836_Tablets_Powered_by_Google_Android_Grab_30_of_the_Market_in_Q2_2011_Analysts.html">here</a>).  It appears that Android tablets have been doing far better than I knew in price-sensitive overseas markets.</p>
<p>I&#8217;ve taken a lot of flak for noting that Android seems to be executing a classic <a href="http://en.wikipedia.org/wiki/Disruptive_technology">technology disruption</a> on iOS, especially in view of Apple&#8217;s record quarter. But this is pretty strong evidence that even where Android has looked weakest in the past it is fast undercutting Apple&#8217;s &#8220;premium&#8221; positioning.</p>
<p>I&#8217;m not surprised this is happening, but I&#8217;m surprised it&#8217;s happening this fast. Android tablets have on the whole been disappointing to me so far, most of them timidly-designed me-too products that are <em>way</em> too overpriced to compete effectively against Apple&#8217;s brand strength.  </p>
<p>But&#8230;if they can cop 30% global market share with the indifferent products they have now, they should rapidly be able to double that when the vendor tier gets its act together. Apple, watch out!  Because there isn&#8217;t going to be much warning before the critical price-performance threshold gets passed.  There never is; it tends to come as a shock to both disruptee and disruptor.</p>
