Droid's Solid Start, Nokia's Blues

Analyst polling and estimates put the Motorola Droid weekend "box office" at about 100,000 units a "good start." According to Bloomberg:

Verizon Wireless, the carrier for the device, had 200,000 Droid phones on hand, and most stores sold at least half of their stock, Mark McKechnie at Broadpoint AmTech Inc. said yesterday. Including other models, Motorola will sell 1 million phones based on Google Inc.’s Android software in the fourth quarter and 10 million in 2010, he said.

Motorola and Verizon are competing against a new version of Apple’s iPhone, offered in the U.S. through AT&T Inc. Apple sold more than 1 million of the latest model in its weekend debut in June. Motorola’s share of the global phone market dropped to an estimated 4.7 percent last quarter from about 5.5 percent in the second quarter, the company said last month.

Earlier today I wrote about Samsung's new mobile OS and its rumored adoption of Android (and its own OS) at the expense of Windows Mobile -- and Symbian. And speaking of Nokia, today it began shipping the much anticipated N900 "mobile computer," which is also a phone.

Om Malik gave a mixed but upbeat review of the device and in a blog post today GigaOM tentatively suggested that this Maemo 5 handset  "may be a first step in reversing its fortunes." I'm here to say that assessment is incorrect and that the device -- in the US at least -- is very unlikely to succeed.

First it doesn't offer a strong enough user experience from what I can tell. And priced at €500 (almost US$750) there's absolutely no chance it will succeed as a mainstream device without a major carrier subsidy. The de facto price ceiling for smartphones (with operator subsidy) is $200. That figure will be used to judge the N900 when it makes it to the US. That means it must have a pretty aggressive subsidy to be competitive. Even with such a subsidy it will have difficulty competing. 

The Nokia brand has limited value (after years of neglect) in the US and there are very few apps that Nokia's Ovi store offers:

Picture 87

Source: news reports and company documents

It doesn't matter that there are no apps; it's a handheld PC, a "mobile computer" right? Netbooks cost less than this device and thus people with that mindset ("I want a mobile computer") will likely buy a netbook before they buy an N900. As a smartphone it will lose to the iPhone and Android in terms of brand, UX and consumer appeal.

Accordingly, this is not the device that will turn Nokia's fortunes around in the US or probably at "home" in Europe. Indeed, at a conference in Europe last week I heard a number of people discuss how they had left Nokia for the iPhone and how Nokia was "falling behind." That was the phrase they used. These comments are isolated and anecdotal but I consider them to be significant because they were from people who had generally be loyal to Nokia until now. 

I've argued in the past that Nokia's "way back" in the US market lies in cheap but reasonably high functioning smartphones to develop mass appeal, as a springboard for other product launches. However even that may be foreclosed to Nokia with the likes of the Droid Eris at $99 and a $99 iPhone, not to mention sub $200 BlackBerry devices). Because its operating systems are not as strong as competitors' it will have difficulty competing at the high end. A radical step would be to try and acquire a Palm and simply throw Symbian and Maemo away.

Nokia retains global handset and smartphone leadership but its share continues to erode.