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Nokia didn't screw up


It's traditionally held that Nokia lost the market lead to Apple and Google. Before you nod in approval you need to define 'market lead'. Is it money? Volume of devices? Or mindshare? Under any of these metrics it's Nokia which still leads.

Let us look at money first. In a rare response to Apple's boasts, Nokia has cried foul.  Apple claims to be the biggest mobile manufacturer by calling anything with a battery, 'mobile'. This includes laptops, iPads and iPod Touches. Things we'd not normally think of as mobile phones or phone based devices. They shouldn't count non-cellular devices. They also count iTunes store revenue, which has some credibility. Of course if they had defined mobile as "things you can make a call on", you might include VoIP if you pushed the definition a bit, but then that opens up the possibility of people who make desktop computers. And if it was the biggest company that makes mobile phones, Samsung trumps the lot.

By volume of devices it's hard to tell what Apple's real market share is because they never separate iPhones and iPod touches. But let's say it's 20m iPhones ever. Nokia sells that in under a week.

So what about mindshare? That's fickle, and Apple needs to watch that halo carefully. The problem with a halo is that if it falls, it strangles you.
Apple had the mindshare when touch was the new cool thing, taking on the mantle of thin, but this year, open is cool and new so Android is the mobile monarch. But you remember that at the start of this I said that Nokia hadn't lost it to Apple or Google.

Nokia had mindshare taken from them: the most important meetings in the mobile phone world are operator ranging meetings. There the supremely powerful buyers decide what phones will be in their shops over the next year.

There is no art or emotion the process, it's all calculation. Companies like iSupply and Portelligent sell tear-down reports that show what it costs to build a phone. The buyers then use this to work out what they think they should pay. This is a fairly standard process between suppliers and buyers.

They then map this against the demographics of their customers and target customers. They want the phone with the highest possible specification at each price point for each kind of user. As many megapixels as possible, if it's over $100 it must be 3G, there must be support for particular favoured services. Anything special has to come free.

The buyers work through their list of "must haves", and "nice to haves" and calculate what they are prepared to pay. Fail on any of the 'must haves" and there is no deal.

In how many ways would the iPhone have failed if it had been wearing a Nokia badge? Asking for a revenue share would have ended the meeting, as would a $399 unsubsidised phone, as would a  $399 2G phone, as would the lack of operator branding, as would the lack of MMS, as would the need to re-architect voicemail for visual voicemail. It's not a criticism of Apple that the iPhone was like that, it was still a splendid experience. What it shows is that Apple had the ability to get operators to think differently. Something that up to now only 3 and INQ seem really capable of.

Nokia has learnt the lessons of following the operators spreadsheet and is much more adept with coping with it than any other handset manufacturer, knowing when to concede and when to push back. Apple has yet to learn that lesson.

Just as Denim is the new linen we'll see the market move on. It will be interesting to see if Apple can follow as well as it can lead.

Appeal: The tech industry owes Guy Kewney, pioneer IT journalist a lot. Alas he has cancer. If you would like to help make he and Mary Kewney's lives a bit easier then you'll want to know a virtual whip-round is up and running. Guy Kewney is not Guy Goma.

Cat Keynes publishes her thoughts on the mobile phone industry every Sunday at www.catkeynes.com. Follow me on Twitter here.

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