Ronnie05's Blog

N 97: Will pricing prove to be a deterrent?

Posted in Applications and User Interfaces, Mobile Devices and Company Updates by Manas Ganguly on June 19, 2009

Smartphones

The 3rd week of June 2009 is momentous in terms of the ground breaking new launches that we would have redefining the smartphone space. Palm is alll set for a return with its highly touted Pre challenging the iPhone. There are guesses and second guesses on whether Pre would be the iPhone killer. iPhone gets the 3.0 makeover which essentially puts it in par on many other departments as far as smartphone capability is concerned. However, iPhone will all be about the Apps that they can bring to the table. Nokia N 97 on the other hand is Nokia’s flagship salvo to claim its own technology leadership space in the smartphone category. In as much as it will be against the iPhone, the battle between N 97 and iPhone will be one between Device and Markets. This article com compares the N 97 against the formidable iPhone on various departments.

N 97 versus iPhone
The fight between web-based and mobile-based players has officially started this week. On Monday, Apple announced its latest phone, the iPhone 3G S, which will go on sale next week. And on Saturday, Palm started selling the much-hyped Pre.
This comparison seems like one of hardware vs. applications. If this is a smartphone device market, the iPhone is four year late. If this is an app awareness market, Nokia is one year late. Analysts world over are watching these launches as a toss up between Device driven smartphone market or Apps driven smartphone market.
The Nokia N97 seems to have better hardware, where the iPhone 3G S and its App Store are second to none. The latest iPhone marketing campaign was smart enough to pinpoint the main competitive advantage into their next wave of customers: “there is an app for that.”
The average iPhone user seems to behave either as a teen or a teen at heart, and loves having fun with useless and exciting apps thrown away as rapidly as they are downloaded, like a Facebook app. More than 1 billion downloads later, less that 5 percent of those who downloaded an iPhone application are actively using it after 21 days and only 10% of apps retain the audience attention, according to a PinchMedia survey. Nokia’s target market demographics may be different, more for professionals and professional use.
The other differentiator for Apple is the “user experience”: Understanding it, being in control of it and finding joy in handling it. Something that Apple does perfectly, and Nokia’s Symbian-Interface does not do as well. Apple’s forte is their vast experience with user industry-leading GUIs.
Neither T-Mobile and AT&T, the two US operators that could have subsidized the Nokia N97, has picked it up (yet?). As a consequence, at more than $600 Amazon price, the N97 is unlikely to be a threat to the latest iPhone in the US
Each of these devices can be bought for far less than the Nokia N97. The 16GB iPhone 3G S will sell for $199. And the 32GB model, which has the same amount of built-in memory as the N97, will cost $299 when the phones go on sale next week. Apple has also cut the price of its 8GB iPhone 3G, introduced last year, to only $99. The Pre, which also has a slide-out QWERTY keypad and a touch screen like the N97, is $199 with a $100 mail-in rebate.But there is a catch; these low-priced smartphones come with strings. Consumers must sign a two-year contract to get the discounted prices. And in the case of the iPhone and the Palm these phones are exclusive to one carrier. Subscribers are also charged an early cancellation fee if they terminate their contract before it ends.Even with early termination fees, the iPhone and Pre are still less expensive than the N97. For example, a new AT&T subscriber buying the 32GB iPhone 3G S will pay $300 for the device. If this subscriber cancels his service before the two-year contract ends, he will pay at most $175. Adding the early termination fee to the cost of the phone, the iPhone subscriber will still only pay $475 for the device. This is about $225 less than what he’d pay for the Nokia N97.
Just look at Sony Ericsson’s Xperia X1, which went on sale last year in the U.S. with a price tag of $800. The phone has largely been a flop in the U.S.
Nokia must realize that it can’t really compete in the U.S. smartphone market without a carrier subsidy. And it’s difficult to understand why the company would not be able to strike deals with U.S. carriers. After all, it is the largest cell phone maker in the world.Perhaps Nokia doesn’t think the U.S. market is worth the trouble. Even though the U.S. offers the biggest growth opportunity in smartphones, which also happens to be fastest growing segment of the mobile market, analysts say that Nokia could still maintain a market share position in the 30 percent to 40 percent range by selling devices throughout the world. But the U.S. market represents an untapped opportunity that could prove very lucrative for Nokia. And the longer it takes Nokia to bring an affordable hit phone to the U.S., the harder it will be for the company to get its fair share of the pie.

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3 Responses

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  1. noel said, on June 20, 2009 at 4:15 pm

    Ok Nice! Check this out!

  2. […] } In an earlier post https://ronnie05.wordpress.com/2009/06/19/n-97-will-pricing-prove-to-be-a-deterrent/,  three months back, i had questioned the rationale of N97 pricing. N97 is history (and Nokia si […]

  3. […] "permalink" : "http%3A%2F%2Fronnie05.wordpress.com%2F2009%2F09%2F09%2Fklet%2F" } In an earlier post https://ronnie05.wordpress.com/2009/06/19/n-97-will-pricing-prove-to-be-a-deterrent/,  three months back, i had questioned the rationale of N97 pricing. N97 is history (and Nokia si […]


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