Visualizing Nokia's and BlackBerry's Turnarounds

Over the past few years in the cutthroat smartphone market, Nokia (NYSE: NOK  ) and BlackBerry (NASDAQ: BBRY  ) were completely blindsided. Once innovative market leaders, both were caught off guard by Apple and Google. iOS and Android have emerged as an unstoppable duopoly, powering 92.3% of all smartphones sold in the first quarter. That's up from the "just" 54.4% combined market share they enjoyed only two years ago.

Source: IDC.

The fight's not over yet though, as Nokia and BlackBerry have both been embarking upon their respective turnarounds. Each company has entrusted a new CEO with a turnaround. Each company has also bet its future on a new operating system platform; Nokia partnered with Microsoft (NASDAQ: MSFT  ) Windows Phone, and BlackBerry is hoping BlackBerry 10 can last a decade.

Nokia goes first
Nokia's Lumia brand includes all of its Windows Phones. The Finnish company began its transition well before BlackBerry, releasing the first Lumia in Q4 2011. Meanwhile, it has abandoned Symbian, whose market share has now fallen to a meager 0.6%.

Source: Nokia. Fiscal quarters shown.

At this point, the company's smart device business is almost entirely reliant on Windows Phone, for better or for worse. Lumia units now comprise 92% of total smart device shipments. Nokia calls its lower-end Asha lineup smartphones, but doesn't include them in its smart devices category.

BlackBerry goes second
It wouldn't be until early this year that BlackBerry would launch BlackBerry 10 after numerous delays. The Canadian company just reported its full first quarter of BB10 device sales, which include the Z10 and Q10. After selling approximately 1 million BB10 devices in the fiscal fourth quarter, it sold 2.7 million BB10 units this quarter.

Source: BlackBerry. Fiscal quarters shown.

BB10 units were 40% of total smartphone volume, and BlackBerry's turnaround timeframe lags Nokia's in that respect. Unlike Nokia, BlackBerry isn't abandoning its previous platform. BlackBerry 7 devices still sell well in emerging markets (the same markets that Nokia is targeting with Asha), and the company confirmed today that it would release a new BlackBerry 7 phone later this year.

BlackBerry's transition to its new BB10 platform won't be as swift as Nokia's all-in move to Windows Phone.

If you had to pick
Of the two, Nokia has a better chance of pulling off a successful turnaround. Not only did the company begin sooner, but also, Windows Phone has just overtaken BlackBerry in global market share to become the No. 3 platform for the first time ever. This is largely a function of rising Lumia volumes, which account for 80% of all Windows Phones sold. It's also worth remembering that smart devices are just one of Nokia's segments. The HERE mapping segment is relatively small at less than 4% of revenue, and the network equipment business is mostly stable.

Windows Phone is also a more refined mobile operating system. The third major release, Windows Phone 8.1, is due out later this year. In contrast, BlackBerry 10 is essentially an entirely new platform for BlackBerry, built on QNX, and with few ties to BlackBerry 7. Microsoft also isn't hurting for cash, so continued development of Windows Phone is assured. BlackBerry still has over $3 billion in cash, and remains operating cash flow positive, but a few more bad quarters like the one just reported could make short work of that.

When it comes to a prospective turnaround, Nokia has a first-mover advantage over BlackBerry.


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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 June 29, 2013, at 1:46 AM, sliderw wrote:

    Yet, overall, Nokia has third-mover advantage.

  • Report this Comment On June 29, 2013, at 6:08 AM, bugmenot wrote:

    I think talking about Duopoly disguises that Apple is joining everyone else as being in real trouble, with Android eating everyone's lunch.

    That is reflected in Apple's recent share price movements.

  • Report this Comment On June 29, 2013, at 3:31 PM, omarsiddiqi wrote:

    Nokia and microsoft have a legitimate chance of taking the number 2 spot, if not the the number 1 spot, in the not too distant future.

    I'm currently using the lumia 928 from verizon and it is an extremely good experience. Better than Android. I'm also developing an app for windows phone and the development experience is also very pleasant. Its thought through very well.

  • Report this Comment On June 29, 2013, at 3:34 PM, Easttexas9 wrote:

    Just a thought. Since you're so enamored with the Windows phone system in might be good to remember that Nokia doesn't have an exclusive agreement with Microsoft.

  • Report this Comment On June 29, 2013, at 4:18 PM, WhatdoIknow1 wrote:

    East Texas

    It doesn't matter if they have exclusivity or not. Microsoft's not going to cut their own throat by cutting the one manufacturer that sells 85% of the Windows phones.

    Omar is right by the way, it is a very clean experience. I have a 520 and my wife has a 920

    Long Nokia

  • Report this Comment On June 29, 2013, at 6:58 PM, HelpIsHere wrote:

    Yet another silly comparison. Who has seen an MS phone in the wild? The problem for Nokia is the fact that they are aligned with MS. Everything MS makes is garbage. No thanks, I'll stay with the much preferred BB 10 OS any day.

  • Report this Comment On June 30, 2013, at 3:31 AM, ctyank99 wrote:

    Nokia is a much better company.

  • Report this Comment On June 30, 2013, at 3:33 AM, ctyank99 wrote:

    I believe Nokia's stock is a great buy right now. They have an awesome line of phones with the Lumia, with a phone priced for just about everyone! They have the power and money of Microsoft behind them and should do very well with the business folks, it’s such a great fit. They have re-orged and in transition and sales and stock price will climb as a result. Nokia will be a success!

    WalMart has the Lumia 521 online again!!!! They have other Lumia's listed on their website: http://www.walmart.com/search/search-ng.do?ic=16_0&Find=...

  • Report this Comment On June 30, 2013, at 4:19 AM, ctyank99 wrote:

    Nokia will pay you up to $300 to trade an old phone for a Lumia

    http://www.engadget.com/2013/06/28/nokia-trade-up-program/

  • Report this Comment On July 01, 2013, at 4:24 PM, FJ1J wrote:

    In the second graph, you compare "Symbian" and "Lumia". These are two different things. One is an OS and the other Nokia's (hardware) handset series.

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