What this means for Nokia
The release could be bad news for Nokia Corporation (ADR) (NYSE:NOK), which has focused much of its attention on developing world sales of traditional models. Most people in these developing nations have a standard cellphone, often made by Nokia, but few are able to afford a smartphone. Now that Sprint released an inexpensive device, many Nokia users could make the switch.
Nokia Corporation (ADR) (NYSE:NOK) stakeholders would have likely taken Sprint Nextel Corporation (NYSE:S)’s news hard, as any scrap of market share the company was hanging on to was invested in developing nations. Nokia likely knows the stats: according to an Upstream 2013 Emerging Markets Mobile Attitudes report, people in developing worlds have said they would buy a smartphone if it cost less than $100. The percentage of those who would buy: Nigerians (38%), Indians (15%), and Brazilians (9%). That means a lot of people will be trading in their Nokia Corporation (ADR) (NYSE:NOK), potentially for a Sprint ZTE Vital if it is the only affordable smartphone on the market. It should be noted that many of those surveyed don’t yet understand what a smartphone has to offer, and the percentage of buyers could be much higher.
Nokia is becoming a dinosaur, and it needs to do something to regain its former prestige. The firm falls into the same category as washed up stars like International Business Machines Corp. (NYSE:IBM), Research In Motion Ltd (NASDAQ:BBRY), and Kirstie Alley. Revenue has dropped by about 25% since 2009, and profits are… well, there are none. The company posted loss last year of more than $2.6 billion. Anything this company releases should be wrapped in caution tape. Keep out!
Where the future could be headed
According to Dan Appelquist, open web advocate for Telefonica Digital, the smartphone market is about to be anchored in the developing world. “The big opportunity is in how we put smartphones into the hands of the next billion,” he told Tech Radar. “And we do not believe that the situation we currently see with smartphones in developed markets will necessarily be replicated…”
If sales of VTE Vital catch on, Sprint Nextel Corporation (NYSE:S) could be running ahead of others in the smartphone industry, but that is unlikely to happen due to the company’s inability to keep sales costs down. It’s difficult to tell just how profitable the developing world market is, but now that a smartphone under $100 is on shelves, that question could be answered very quickly. However, I don’t think Sprint Nextel Corporation (NYSE:S) has the answer, but they’ve already shocked us once.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL).
The article Could Sprint Really Lead Smartphones Into the Developing World? originally appeared on Fool.com.
Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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