Visualized: The Rise and Fall of Nokia and RIM at the Hands of Apple

Looking back at how Apple (Nasdaq: AAPL  ) has shaped the smartphone industry over the past five years since its original launch, perhaps no two companies have taken it as badly as Nokia (Nasdaq: NOK  ) and Research In Motion (Nasdaq: RIMM  ) .

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Not long ago, both companies were exalted as leaders in the smartphone industry, heralding in the connected future. Research In Motion was an early pioneer of wireless email, while Nokia was one of the premier mobile-device makers in the world.

Party like it's 2010
I went back and compiled approximately seven years of operating data on the three companies to stack them up against each other, and the results paint a gloomy picture for the Finnish and Canadian companies.

Sources: earnings press releases and SEC filings.

Sources: earnings press releases and SEC filings.

Interestingly, both companies peaked in terms of unit sales or shipments well after the iPhone was introduced, so it took some time before they would each begin to see unit sales begin to precipitously plunge.

Research In Motion reports its figures as shipments, which is not necessarily sales, so keep that in mind. Its shipments peaked at 14.9 million in the fourth quarter of 2010, while Nokia's overall smartphone sales topped out at 28.3 million in the exact same quarter. Up until that point, both companies were still enjoying rising unit sales.

There are a few possible key factors to why their parties ended in 2010. Apple introduced the iPhone 4, which was one of the product's more significant upgrades to date, featuring the redesigned case made out of glass and stainless steel. This was also the year that Google (Nasdaq: GOOG  ) Android really began to take off. While the first Android phone, the T-Mobile G1, dates back as early as 2008, it took a few years before Android adoption would begin skyrocketing. It's also worth noting that Nokia CEO Stephen Elop took the reins in 2010.

RIM's unit shipments have now fallen back to levels not seen since the first quarter of 2009; Nokia's are back where they were in the first quarter of 2007.

Dollars and sense
Looking at revenue figures is even more jolting, mostly because Apple fetches dramatically higher average selling prices, or ASPs, compared with its rivals. Note that Nokia only began breaking out smartphone revenue separately in 2009 and reports in euros, so it has limited data available and I've translated its figures based on current exchange rates instead of historical ones. Also, RIM's hardware revenue includes PlayBook sales, but the vast majority remains BlackBerry smartphones, while Apple's line represents iPhone sales alone.

Sources: earnings press releases and SEC filings.

Sources: earnings press releases and SEC filings.

Research In Motion also stopped reporting its specific ASPs but was last pegged at $315 in the fourth calendar quarter of 2010, unchanged from a year prior but lower than the ASPs around $380 in 2005 and 2006. Last quarter, Apple posted iPhone ASP of $647 and Nokia's smartphone ASP was $181.

Company Apple Research In Motion Nokia
Average Selling Prices $647 (Q1 2012) $315 (Q4 2010) $181 (Q1 2012)

Sources: earnings press releases and SEC filings.

Even though RIM's figure is outdated, you still get an idea of its approximate ballpark. Apple's iPhone business was able to surpass RIM's BlackBerry business in terms of revenue back in 2008, in its sixth quarter, even though it would take two more years to beat it in unit terms.

Countdown to oblivion
In recent years, both Nokia and RIM have seen management shakeups at the upper echelons of each company in the hopes of turning the tide. Nokia tapped ex-Microsoft (Nasdaq: MSFT  ) exec Elop to run the show and is now betting the farm on Windows Phone. RIM handed the keys over to COO Thorsten Heins, but the deck has always been stacked against him.

When he became CEO in January, I likened it to "a car barreling full speed toward a cliff, when the two drunk drivers sitting in each other's laps at the wheel decide to jettison themselves, leaving the guy that's riding shotgun to hastily scoot over and inherit the doom." Ex-co-CEOs and co-Chairmen Jim Balsillie and Mike Lazaridis didn't leave him with much of a fighting chance.

The iPhone's growth has been mind-boggling. The crazy thing is, Apple still has more room to run. Learn exactly what Apple's opportunity is, as well as the impediments to getting there, in our brand-new premium Apple research service. Of course, it wasn't just Apple alone that toppled these once-mighty empires. Cupertino certainly played no small role, but combined with Android's rise and the failure to innovate and adapt, a happy ending is now out of the question for both Nokia and Research In Motion.

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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Google, Apple, and Microsoft and creating bull call spread positions in Microsoft and Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (33)

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  • Report this Comment On July 03, 2012, at 10:13 AM, Betel wrote:

    The reason "as what i think" is Nokia's and RIM's attitude not to change with time..They are coming with good hardware but at the same time Apple gave the nice user interface and people saw something fresh. If you have said Nokia's and RIM's fan that Apple will take over them they would have laughed but we are seeing reality now..

    And now the same thing i can see with apple... They are just behaving adamant and not changing their ecosystem is a way Android and windows coming up...It true that apple has market share with its device but if you start looking at data, we can see android is really growing very fast and wast choices of device...and now we can say with good hardware also. And apple they just coming up with what market already having from last 2-3 years and saying that they innovate it. In 2009, i used to see IPhone in every second person's hand in metro or subway... now the situation is really really different...i am seeing more and more Android.

  • Report this Comment On July 03, 2012, at 5:38 PM, hbofbyu wrote:

    People time and again fail to understand that Apple's success is just as much image and branding as anything else. Does Coca-Cola really taste better than RC cola? No. If you do blind taste tests it fairs no better. If you do taste tests with the label showing people's perception changes and they choose Coke everytime. It's the same thing with Apple.

    Here's an example: itunes sucks any way you measure it. But it has been a huge success regardless. It's image baby. Buy Apple!

  • Report this Comment On July 03, 2012, at 11:08 PM, WHOVPLLC wrote:

    It is very, very difficult for other companies to effectively compete against Apple because: 1. Apple provides an exclusive, Apple ONLY operating environment controlling every part of the device experience: Hardware, Operating System, Culture, the Apple Kool-Aide effect -- sometimes called the Steve Jobs "cult" effect.

    When one works with Jobs and the Woz, it is always My WAY or the Highway. The Highway is of course the WIN-Tel PC open archetecture of Windows and the PC.

    Which is best? It depends: Choice One, Willingly Join the "Cult of Apple and be completely controlled, or Join the Open Systems WINTel or Unix environment. Apple's OS is in essense Unix based, with unique Apple Features.

    Me, I use both Macs, iPhones and WINTel & Unix.

    The Unix e-mail system is Pine. Clunky, frustating, but it works.

    WHOVenturePartners, LLC

  • Report this Comment On July 04, 2012, at 9:46 AM, kahunacfa wrote:

    Whenever a company, any company, stops reporting numbers such as Same-Store-Sales(SSS) for Retain and Food service companies, it is time, or WAY Past Time to "Hit-the Silk" and bail, almost no matter what. Sell immediately, wait three to four quarters to see what happens.

    Examples: Research-in-Motion, Nokia, Starbucks(SBUX), prior to Howard returning to take back the controlls and close poor performing locations. Starbucks, for example finally fell to my MUST buy price of eight dollars per share. Bought thousands at that price in IRAs.

    The ONLY smart-phone, and Tablet company to own at the moment is Apple. Worried, however, Apple's usual GREAT Service is slipping badly.

    Called them on the telephone to order lots of Apple Stuff for a Business, Rauel (sp?) ansered, started a ask a few key questions; He hung-up.

    I will still likely buy the Stuff, directly from an Apple Retail store. Raul can go "Pound Sand". Perhaps Cook will pound the CSR a little when he receives my copy of the recorded conversation via Federal Express, Return Receipt requested.

    Kahuna, CFA

    Venture Capital

    Founding General

    Partner 2012 -2019

    Kailua-Kona 96745.

  • Report this Comment On July 04, 2012, at 4:23 PM, Estrogen wrote:

    I think 2010 was about the time At&t lost it's exclusivity deal with Iphone.

    I'm all apple in my family of 5, but looking for reasons to go change as I'm not too fond of arrogant corporate culture.

    Went to change my iphone in for a lumina and the sales team at at&t store couldn't get my 300 plus contacts transfered. Deal killer.

    Apple: it just works! Probably upgrade when Iphone 5 comes out.

  • Report this Comment On July 04, 2012, at 5:01 PM, cyrwr1 wrote:

    Nokia will be back. It didn't want to be placed in an everybody's phone market.

    Iphone is something new and the people are infatuated with Apple.

    The cost of a Nok phone is more expensive and once they come out with something new, its market share will climb back.

  • Report this Comment On July 04, 2012, at 11:53 PM, trek790 wrote:

    WHOVPLLC,

    That post is totally nonsensical. Why?

    A. Woz has not been directly involved with Apple for years.

    B. It's the "reality distortion field", not "halo effect".

    C. It's Wintel.

    D. I strongly doubt that you use Unix. You may dabble with Linux.

    Frankly, I'd be scared to have you as a partner in anything.

  • Report this Comment On July 04, 2012, at 11:55 PM, trek790 wrote:

    cyrw1, the iPhone is over five years old now.

    Nokia is not going to come back.

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