Will a late Samsung Galaxy S II launch limit U.S. sales?

Samsung’s hottest new smartphone, the Galaxy S II (SGS2), is finally headed to the U.S. market. The handset was introduced last night at a press event, with similar models for three of the four largest carriers in the country: AT&T, Sprint and T-Mobile. Verizon chose to pass on this particular device, likely because it only offers 4G service on HSPA and WiMAX networks, not LTE, which is what Verizon offers.

The SGS2 has already earned the title of Samsung’s fastest selling smartphone with 5 million sales in its first 85 days of availability in Europe and Asia. I have little doubt that it will continue to sell well in the U.S., but perhaps not as well as it might have sold if it were launched earlier: The next one to three months are going to offer many solid smartphone choices.

I took a very informal poll on Twitter after the Samsung press event last night, and while my sample size is certainly small, there’s a common theme in every single response I received: The window of opportunity for a guaranteed SGS2 sale has closed. Why? People — admittedly, high-end smartphone loving geeks, based on the makeup of my Twitter followers — feel the SGS2 launch is too close to the next iPhone and a new Nexus flagship phone that is expected to highlight the Ice Cream Sandwich (ICS) version of Android.

Here’s a sampling of the responses:

While it may appear that I’ve culled out responses that only fit my thesis, I didn’t: Not a single responder said they would be buying the SGS2. Does that mean the Galaxy S II won’t sell? Of course not: Given the solid reviews of this phone, it’s a top-notch handset and will surely appeal to many. However, if the phone were launched sooner in the U.S., perhaps to correspond with the European launch, those 5 million sales in 85 days might have easily been 8 to 10 million sales over the same time period.

There’s always a newer, shinier object around the corner when it comes to technology, so even an earlier launched GS2 would have eventually shined less at some point. The problem with a later launch is that the time to wait for the next new piece of technology is close enough that consumers are rethinking their purchase decisions. Had the SGS2 arrived three months ago, I know I would have bought it on the first day of availability. Now there’s simply too many potentially comparable, or perhaps better, choices coming soon. And hardware isn’t the only influence here: After using the iOS 5 beta for several weeks, Apple has addressed some of the reasons I moved to Android in the first place.

Sprint is the first carrier to begin offering Samsung’s new handset, which becomes available on Sept. 16; neither AT&T nor T-Mobile have shared availability, and instead have said the handset will be here in the “coming weeks.” Not long after that time period, it’s a sure bet consumers will also have a new iPhone, possibly a flagship Nexus handset and even a few new Microsoft Windows Phone 7 devices with the impressive Mango software update to choose from.

While it’s difficult to stay ahead of the fast-paced, ever-changing smartphone technology curve — now a 6-9 month cycle — Samsung should have launched the SGS2 sooner, rather than later, in the U.S.

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What’s the best-case scenario for Nokia?

Nokia’s transition to Microsoft Windows Phone 7 software will cost Nokia far more market share and profits than it will ever gain by dumping the Symbian operating system. So says Tomi Ahonen, a former Nokia employee turned analyst/blogger in the mobile space. Ahonen outlines Nokia’s performance prior to the company’s February announcement of its partnership with Microsoft and sets expectations through 2013. His analysis follows Nokia’s news last week of tumbling market share, sales and revenues.

Until Stephen Elop left Microsoft for Nokia in September of 2010, however, Ahonen appeared convinced that Nokia’s Symbian strategy would eventually pay off, a scenario I disagreed with. The company’s hardware always impressed me, but in my opinion, it always lacked in user experience and software. That held true in my review of the Nokia N8 handset. Others would disagree, of course; more Symbian-powered smartphones have sold than any other platform, at least until last quarter, when Apple and Samsung both sold more smartphones than Nokia. And HTC is fast growing sales as well, thanks to its early adoption of Google Android. 

Ahonen is still justifying his original belief in the Symbian strategy, saying that the platform had already improved enough to help grow sales:

Then came the new Symbian S^3 on several phones, led by the new flagship phone N8 which set a Nokia record for fastest sales in a quarter. All declining trends were turned into growth – this tells us the market loved Nokia’s new smartphones on the new Symbian S^3 operating system and this is absolute proof that Nokia was on a come-back. Whatever you may have thought of Symbian prior to Q4 of 2010, became obsolete. Nokia had indeed on its hands, a true hit series of phones and a hit operating system  with the N8 setting internal Nokia records for new phone sales. Look at the facts. [Emphasis added by Ahonen]

I won’t argue with the numbers that Ahonen lays out, but I will point out that he’s missing one key number: overall market growth for smartphone sales. “A high tide will lift all boats” is a common phrase that applies, and even leaky boats will rise with the tide. Smartphone adoption is increasing around the world, and even the less competitive market players can see gains. Nokia’s smartphone sales in the final quarter of 2010 rose 7 percent, partially for this reason. But the overall market grew faster: IDC suggests that year-over-year growth in smartphone sales for all vendors was up 87.2 percent; Nokia accounted for the least growth out of the top five handset makers.

But Nokia’s Symbian past has little to with its Microsoft Windows Phone 7 future, and Ahonen’s model — meant to be simple — suggests that in a best-case scenario, for every WP7 phone Nokia sells, it will be offset by the loss of a Symbian sale. Essentially, the platform transition will be an even sales swap and by the end of 2013, Nokia will have a far lower market share than it has now:

So taking the very best case of 2012, using the best ramp-up ever, and then using the best case of growth in mass market scale, we get Nokia’s Microsoft Windows Phone 7 based smartphones – the very very best case scenario – to hit 20.3 million smartphones not at the end of 2011, not at the end of 2012, but the end of 2013. By that time, Nokia’s smartphone market share will be at . . . 8%.

The 20.3 million smartphone sales ten quarters from now seems low to me for two reasons. One is the growing smartphone market I made reference to earlier, which will help all smartphone platforms to some degree. The other is the timing, because the smartphone market is changing so quickly. If you don’t think so, look at Research In Motion, which is working through a transition of its own; the company is changing fast and as a result faces declining sales. It just reduced its workforce by 10 percent. When you’re in a fast-growing market and have to eliminate jobs, that means you’re either not competitive, not profitable or both.

In the end, Ahonen blames Elop’s decision, saying,

Before Stephen Elop killed Symbian, Nokia’s smartphone market share was 29%. Nokia towered over its rivals and was growing smartphone sales with highly desirable new smartphones. Today just five months after his ridiculously-timed announcement of Microsoft, Nokia’s smartphone market share is down to 15% and collapsing.

I agree with Ahonen that Nokia’s market share is collapsing; we’ve already seen evidence of that. And by publicly stating that Symbian was a dead end, Elop may have added more stress to an already fragile public perception. But I think it was the right call. Had Symbian continued along a path where it underwhelmed, Nokia would run the risk of having that negative vibe transfer to new Microsoft-powered phones. In fact, I wonder if Microsoft made this part of the overall deal, simply to avoid such a scenario?

Regardless of my different reasoning from Ahonen’s, I think we can both agree: No matter how sad it is to see the mighty fall, Nokia’s best days are behind it.

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Windows 7 on a phone: the 2-hour post-PC device

Fujitsu is launching a unique dual-mode smartphone tomorrow in Japan that doubles as a handheld Windows 7 computer. Known as the Fujitsu F-07C, the device works as a Symbian phone for standard phone use but can switch to Windows 7 with the touch of a button, notes SlashGear. Pricing won’t be announced until the device goes on sale through NTT DoCoMo, but since the phone has some high-end hardware, it’s likely to cost far more than even the most expensive pure smartphones available today.

If that doesn’t convince folks to buy it, perhaps the “up to two hours” of runtime in Windows mode will. I’m being facetious, of course, mainly because this is as niche as a mobile device gets, and I think Fujitsu would be better off spending the R&D dollars for this product on something with stronger mass-market appeal. While the phone will surely find a small market, I can’t help but think this is the worst possible combination of product brands when it comes to a mobile device.

Symbian was fine in its day and still has a massive global following, but even Nokia, its biggest supporter, has dumped it for Microsoft’s Windows Phone 7 platform. Speaking of Microsoft, using Windows, a desktop operating system, on a 4-inch, 1024×600 mobile device screen will be an exercise in frustration for all but the most patient. Optimized for mobile use, Windows Phone 7 is enjoyable; Windows, not so much without a mouse and full keyboard. And I suppose that Intel, which has been claiming it will power smartphones this year, can add this as a feather in its cap.

There’s a problem though: Intel’s 1.2 GHz Atom Z600 chip is under-clocked to run at 600 MHz in the F-07C, and that won’t bring stellar performance to the phone’s Windows personality. Fujitsu could probably boost the chip to run at full speed, but the handset would then use more power and that quoted “up to two hours” of Windows runtime might be closer to one. Even worse, once you run down your battery using Windows, you’re stuck without a mobile phone.

Don’t get me wrong; the concept of a full computer in your pocket has sounded cool for years. In a world of smartphones and post-PC devices, however, this approach by Fujitsu takes a traditional computer view, and some would argue that today’s smartphones essentially are pocketable computers. It also exemplifies that some companies still don’t understand the mobile space and sadly appear destined to become mobile losers.

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Prepping for Mango, Microsoft improves mobile app tools

Microsoft is today equipping third-party developers with more tools in advance of the next update for Windows Phone 7 smartphones. The company more than doubled the number of countries where handset owners can purchase apps and also added regions for in-app advertising support. Developers will also have more distribution options to allow users to test their applications before a final software release. Based on developer feedback, Microsoft is helping programmers with a streamlined app submission process, enhanced reports and new app categories.

Although Windows Phone 7 devices aren’t yet selling well (an estimated 2.5 million units in Q1 of this year) compared to handsets running iOS, Android, or even Samsung’s Bada phones, it’s clear that Microsoft understands a strong ecosystem can help drive sales forward. Unlike first-generation handset launches such as the Palm Pre and the initial Android handset, the G1, Windows Phone 7 smartphones have had a reasonable number of third-party titles available. And supplementing them with Xbox Live games and integration points adds to the attraction. But Microsoft has to keep evolving the Windows Marketplace to steal focus from other app stores such as Apple’s, with its 425,000 titles and 15 billion downloads.

Developers and consumers then, should be happy to hear today’s news from Microsoft. Instead of paid apps available in just 16 countries, a total of 35 are now supported. Developers in these seven new markets can now submit apps: Chile, Colombia, Czech Republic, Hungary, Israel, South Africa and South Korea. Microsoft is adding more app price options below $5 and is now adjusting price tiers on a country-by-country basis to better account for fluctuating currencies. And developers can offer beta versions of their apps to 100 testers for up to 90 days, which could improve overall software quality.

From a consumer standpoint, it could get a little easier to find apps; a common problem among all of the app stores. Microsoft is adding three new top-level app categories — education, kids & family and government & politics — as well as several new sub categories. Special app offers could increase also thanks to hidden app support tool developers can use. By providing a direct, deep link to a hidden app in the Windows Marketplace, for example, programmers may invent clever contests or app giveaways. All of these strategies are likely discussion candidates at our Mobilize event in September, with one panel specifically focused on building a developer community.

Note that all of these changes to the Windows Phone 7 App Hub and Marketplace are in preparation for Mango, the next major software update for Microsoft-powered smartphones. The company will begin accepting application submissions for Mango next month. Microsoft hasn’t yet announced an official launch date for Mango, but today’s news in combination with Mango app submissions starting in August give credence to rumors and leaks of a Mango launch within the next month or two. Once that happens, and new Mango phones arrive from Nokia and others, we’ll then begin to get a real feel for the future of Microsoft’s mobile play.

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