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5 Reasons Nokia's N8 Won't Beat the iPhone 4

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Nokia's (NYSE: NOK  ) new N8 smartphone has impressive specifications and is perhaps the best smartphone the Finnish mobile phone maker has launched yet. Its powerful camera features, Symbian 3 OS, and huge storage capacity (up to 48GB via a MicroSD card slot) are certain to attract early adopters. But can it be a threat to Apple's (Nasdaq: AAPL  ) iPhone 4?

Analysts don't think so. Though the N8 is "a clear improvement" over previous Nokia offerings, Gartner analyst Carolina Milanesi believes that the N8 won't wipe the floor with the competition.

According to independent technology analyst Per Lindberg, the N8 is "certainly a step in the right direction (as) it's much more multimedia" than previous Nokia smartphones, but "whether it will move Nokia's market share upwards is more debatable."

Ovum's Tony Cripps also thinks the N8 is far from being industry changing: "I don't think Nokia would position the N8 as a revolutionary device."

There are five reasons the N8 won't be able to beat the iPhone 4 or the latest smartphones from rivals such as Motorola, HTC, or Samsung.

Description: http:/img.ibtimes.com/www/site/us/images/1px.gif1. Weak processor. Nokia claims the N8 has a "lightning-fast processor" and is capable of rendering graphics and playing videos and games "smoother and faster" than previous Nokia smartphones.

Technically, Nokia is right, because its last smartphone, the N97, ran on a 434MHz processor, while the N8 runs at 680MHz. However, to call the N8's processor "lightning-fast" is a misnomer. The iPhone 4, HTC's Evo 4G, Motorola's Droid 2, and Samsung's Galaxy S all run on a more powerful 1GHz processor. Comparing the N8 processor to these models is like comparing an Oldsmobile to a Lamborghini.

2. Low memory. For a top-end smartphone, the N8 has a low memory capacity. The device has only 256MB of SDRAM, while its high-end rivals boast twice as much. If you run too many applications at once, the N8 will quickly succumb to the pressure.

3. Symbian OS. Although Symbian OS is N8's strength, it is also its biggest weakness.

According to Gartner, even though Symbian OS will have controlled 40.1% of the smartphone market in 2010, it will witness a sharp drop to 30.2% by 2014. The only OS expected to gain ground over the period is Google's (Nasdaq: GOOG  ) Android platform, whose market share will surge from 17.7% in 2010 to 29.6% in 2014. But even Research In Motion, Apple, and Microsoft are expected to lose less OS share than Nokia will.

According to CCS Insight analyst Ben Wood, Nokia's new smartphones were "critical" in the fight to grab market share, but the Symbian software, despite refinements aimed at making it easier for developers to write apps for the phones, was "not positioned to challenge the iPhone."

"Nobody doubts Nokia's credentials. It has the market share but has lost the mindshare," Wood said. "Nokia, along with all the other mobile manufacturers, has been wrongfooted by Apple and Google, and it will be a tough road to recovery."

There's nothing to set Symbian apart from its competition, and that's contributing to its sharp decline. Symbian devices are also unable to update beyond the core system software with which they shipped. Updates are an essential part of how smartphones work -- not only to offer bug fixes, but also to introduce new features and develop brand equity and loyal users. Android, BlackBerry OS, and Apple's iOS all offer upgrade paths beyond core system updates. For instance, users of the two-year-old 3G iPhone can upgrade their device from iOS 2.0 to iOS 4.1. Likewise, anyone who got a Motorola Droid last year can switch from Android 2.0 to Android 2.2. But Nokia has historically not supported a commercial upgrade path for older Symbian-based devices.

4. Internal battery. Like the iPhone, the N8's battery is sealed inside the unit. Nokia has recommended that N8 users not try replacing the battery. "It can easily be replaced at a Nokia service center," the company said in a blog post.

5. Price. The N8 will cost $549 in the United States. Meanwhile, you can get a 32GB iPhone 4 for $299 by signing a two-year contract with AT&T. Other top-end smartphones -- including the BlackBerry Torch 9800, Droid 2, Evo 4G, and Samsung Galaxy S -- are available at subsidized prices between $149 and $249 when you sign with a provider.

Not surprisingly, some observers believe that Nokia's insistence on selling its devices unsubsidized and without operator input represents an arrogance on the company's part that has become its pitfall.

Conclusion  
The N8 is no iPhone killer. It may also have a hard time competing with other leading smartphones. But analysts suggest that the N8 represents a good start from a company that's always struggled in the high-margin smartphone segment and could herald the start of a good fight toward smartphone leadership.

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International Business Times, The Global Business News Leader

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 26, 2010, at 11:37 AM, JokerJoey wrote:

    Currently, Nokia commands about 26% of the market in China. Based on the early numbers coming from China Telecom, that will look like a great target number for them in a year or two after the iPhone 4 finishes wiping the floor with them. Apple is currently at 7% or so. I predict the numbers to flip within a year. I also predict Apple easily trading at $300 before October 1, 2010. We shall see....

  • Report this Comment On September 26, 2010, at 12:24 PM, DekiLaz wrote:

    1. When you run Vista and Windows 7 on 2 year old computer, 7 is much faster than Vista because it uses resources more efficient. Inefficient OS can be slow even on fastest CPU

    2. This also depends on how OS uses resources. Again Vista and 7 are good examples.

    3. Symbian is the best OS on the market but it needs new UI

    4. IPhone uses internal battery and nobody is complaining and with Power save mode N8 can work for days (not 12 hours like Galaxy)

    5. Price is a bit high but if AT&T picks up N8 it would cost around $100 with 2 year contract

  • Report this Comment On September 26, 2010, at 12:32 PM, apekkane wrote:

    You are so amazingly US centric! Most of the world's population live elsewhere are they are getting richer fast (in China and India) and and their first cellphones has always been Nokia, the synonym with mobile phone.

    Nokia has some 1.5B users and this way to most recognized brand in mobile sector... Apple has no chances to conquer those markets because even subvented 299$ is for too much for them for now. Nokia will copy (with proud) Apple's usability issue and is ready when India and China are ready to adopt smart phones. Furthermore, Apple does not have any map material IPRs and they have to buy their own (google e.g.) or to give location sensitive advertising revenue for Google.

    Nokia holds all strategic assets on itself. Own OS and Mapping (Navteq) + building up apps ecosystems (copying apple's model fast).

    Furthremore, Nokia can repeat Google's Android business model, if it ever appears to be profitable, because they have their own OS. They can collect mobile (and location sensitive) advertising revenue for itself and they don't have to give it up to Google. Currently Google is burning money with Android.

    US commentators just miss the big picture entirely. At the same time I agree that Nokia has been very slow in reacting to Apple's ingeniuous disruptive iphone...but the lead is diminishing rapidly.

  • Report this Comment On September 26, 2010, at 12:34 PM, ramaus wrote:

    1. The N8 graphics co-processor that you failed to mention changes the game. It is significant.

    2. Main memory may be a factor that most won't notice. Everyone will notice the N8's multitasking and better memory management.

    3. Symbian rules! How is that an advantage for Apple?

    4. If both have sealed batteries, how does that advantage Apple?

    5. Comparing N8's outright cost and Apple's subscription cost is like comparing Apples and N8's.

    - Not a very objective nor educational article. -

  • Report this Comment On September 26, 2010, at 12:57 PM, silivalley wrote:

    There is no "beating" or "winning". No device is the best, not even the iPhone 4. There is no "killer", there is only fierce competition and competing business models.

    This article revealed something that most online pundits ignored and that is Nokia's business model. Nokia cannot decide whether to be a phone company or a computing company. Nokia continues to flounder because it does not understand that technology has significantly expanded the means of communication beyond just "cell phone". RIMM also belatedly grasp that RIMM technology is no longer the only one viable as a business solution. The world is changing and only effective adapters can survive.

    Nokia itself, as well as wall street pundits, like to claim that Nokia still own the global market and that Nokia is still considered by many to be a "high end" brand. I hope these wall street pundits and Nokia official could fly into Hong Kong, Beijing, Shang Hai, Seoul, Singapore, Kuala Lumpur, HCM city and walk the streets and meet the middle-class in person. Nokia may still own the dumb phone market, no one can dispute that fact but Nokia is no longer mentioned by those in the know.

    Our business meetings were ofter delayed by 10 to 15 minutes as people swarmed over our iPad and iPhone 4s. In mandatory social dinners, we had relatives of clients and suppliers politely asking if they could buy our iPad and iPhone 4s right then and there. Two went as far as making a long-distance call to our iPhone 4s just to satisfy their curiosity. While in Asia, I always carry a local corporate Nokia phone to communicate with locals but no one wants the Nokia "smart" phone.

    Nokia still has the resources to adapt quickly and remake itself but it has to act soon. Its indecisiveness and lack of technical visions will be its downfall.

  • Report this Comment On September 26, 2010, at 1:09 PM, silivalley wrote:

    Symbian does not "rule", nor is it the "best". Just like iOS and Androids are not necessarily the best. How do you quantify "best" anyway?

    The key here is whether Nokia, regardless of what OS it chooses, can actually produce a family of devices that can matche iOS devices in ease of use and simple elegance. Can I synchronize my presentations, business notes and files and corporate podcasts to my phone or pad for presentation to clients? for meetings?

    Can Nokia let me synchronize my personal books, magazines, music and movies onto a phone or pad for long haul flights?

    Can Nokia let me take notes on my phone and pad and then synchronize those onto my office laptop and desktop?

    Can Nokia let me do all these without extra administrative and management steps? With iPhone and iPad, I just log into office WiFi and plug in. What does Nokia require?

    How many layers of UI must I navigate through to get to what I want using a Nokia phone as compared against an iPhone or an HTC Evo?

    Nokia is clearly falling behind in providing real world solutions in the newly more connected world. THis is not the time to bask in past glory and pontificate about being the "best" and ignoring the truth in the streets. This is the time to recognize reality and start working hard to keep up and then catch up.

  • Report this Comment On September 26, 2010, at 1:49 PM, ramaus wrote:

    I repeat: Symbian Rules!

    According to Gartner, even though Symbian OS will have controlled 40.1% of the smartphone market in 2010, it will witness a sharp drop to 30.2% by 2014.

    And I predict the sky will fall in 2014 also. (my prediction)

  • Report this Comment On September 26, 2010, at 2:19 PM, foolanyman wrote:

    "its last smartphone, the N97, ran on a 434MHz processor"

    The N97 was released Q2/2009! So you mean Nokia hasn't released any smartphones after that...?

    No reason to read this kind of nonsense on www.fool.com! ...or yes it is a foolish story...

  • Report this Comment On September 26, 2010, at 10:45 PM, xmmj wrote:

    Reporter should be careful about judging a device's "speed" simply by the clock speed of the processor. There is so much more to perceived speed than that. (It is a bit like comparing a Jetta to a Semi truck saying the jetta is faster because the engine will rev to higher rpm's then the diesel truck. But which can haul more "data"??

    The number of cores, the

    GPU, and the rest of the micro and macro architecture have a lot more to do with overall speed than simply the clock speed. This simplistic view makes a little more sense with same family CPU, but even here there is room for other factors to press in. Everyone was astonished at how fast the iPad seems to be. Yet it processor is an ARM processor running at 1GHz like some others. So what did Apple do to it? What did they tweak to make the device so fast?

    We don't know, but the experience is what counts, not the clock cycles per second. Fixation on that alone will cause the reporter to loose credibility

  • Report this Comment On September 27, 2010, at 11:27 PM, emptorski wrote:

    The author does not seem to be qualified to review smart phones; he seems to be just parroting Apple Fanboy talking points. [Maybe he is just trying to get us to buy Apple stock.]

    1. Processor Speed: The author does not seem to realize processor speed is not a huge factor. For example, if I can walk faster than you can around the kitchen to get at ingredients to make 'Apple' pie, that says nothing about which of us is the faster cook.

    The iPhone has an overclocked processor. The clock speed con (overclocking the processor to no real benefit to the user) is an old one. The author fell for it, thinking higher numbers mean higher performance.

    Moreover, the author completely misses the graphics co-processor on the N8 that gives it a huge graphics performance boost.

    2. Low memory: The author does not seem to realize that more memory does not necessarily mean more performance. The N8 can run two dozen apps simultaneously. Apple's iOS is a memory hog compared to Symbian, which is fabled for its light footprint and efficient memory management. Translation: the N8 may have less memory than the iPhone does, but it does more with its memory than the iPhone does.

    3. There is indeed a lot that sets Symbian apart from the competition. Apart from point (2) I made, its multi-tasking can run circles around the iOS's pathetic "multi-tasking". It has had about a decade to mature, and has an open ecosystem that anyone can write apps for. Compare that to the iPhone, where your app needs to be "approved" by Apple to feature in their store.

    If the author thinks the iOS has a more beautiful UI than Symbian ^3 does, he is entitled to that opinion. It lies in the eye of the beholder - I look for utility more than "beauty". The "beautiful" iPhone does not let me zap my photoes to another device via bluetooth, or have a video chat with non-Apple devices, or convert your baby's cackle into a ring tone without having to connect to iTunes, or edit HD video without buying an 'app'. The N8? Yes, yes, yes, and yes.

    4. Battery. It lasts a week of normal usage! Have the iPhone top that! The author's point of citing the non-removable nature of the battery seemed petty, considering (as he himself conceded) that the iPhone's battery is fixed as well.

    5. Price. The author compares the with-contract price of the iPhone to the contract-free price of the N8. That is, to wit, a bit disingenuous. Without a contract, the iPhone 4 is more expensive than the N8 is.

    How does a dedicated-digital-camera quality camera, 720P HDMI Out with Dolby Digital Surround Sound, the ability to turn any screen into a touch screen, stereo sound recording with wind noise reduction, and free GPS with voice navigation count for so little to the author? Even one of these features, if present on the iPhone, would be touted as "revolutionary".

    The iPhone may have more apps, but most of them are staggeringly useless. Nokia phones have a lot of features out of the box.

    Nokia has just released the Qt SDK for Symbian, which makes it easy to create useful apps for the N8 which are backwards compatible with earlier Symbian phones (not just Nokia ones) but also with future Symbian and Meego (possibly even Android!) phones. This is Nokia's masterstroke, which the author completely missed.

    In conclusion, I am a big fan of Apple's stock, not of their phones. As long as there are people willing to drink the Apple Kool-Aid, Apple's stock is going to remain a wise investment!

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