Nokia surprised the market this week and announced a return to the consumer devices business with its new tablet, the Nokia N1. The networking major introduced its latest offering at the Slush 2014 conference in Finland. The Nokia N1, designed and built by Nokia Technologies, will be manufactured by Taiwanese contract manufacturer Foxconn and is likely to be priced competitively at around $249. Running the Android Lollipop operating system, its hardware features and specifications are interestingly very similar to Apple’s iPad Mini 3, which suggests that the company is trying to compete with the global tablet market leader but offering its product at a significantly cheaper price. However, Nokia plans to launch its product only in China initially (in February 2015) and later introduce it in Russia and select European countries. It hasn’t announced any plans to introduce the product in the U.S. any time soon.
Considering that Nokia can enter the smartphone market only in 2016 because of a clause in its deal with Microsoft, its decision to launch a tablet by licensing its brand and industrial design is a good way to re-enter the consumer business. However, it also raises a couple of important questions. With the global tablet market showing signs of slowing down, is it prudent to launch a tablet? How tactical is the plan to launch the tablet initially only in China? In this article, we talk about these aspects of the Nokia N1 and also discuss how it compares with the existing products in the market.
Our $8 price estimate for Nokia is about in line with the current market price.Global Tablet Market Trends
Global tablet shipments stood at 53.8 million units by the end of third quarter ending October 2014, growing less than 12% year-over-year (y-o-y) compared to a growth of about 52% in 2013. This marked slowdown in the growth of tablet shipments is a result of increasing availability of large-screen smartphones and “phablets,” which essentially are a mix of phones and tablets. The fact that users tend to share tablets among family and friends, unlike smartphones which are more personalized, is another contributing factor for sluggish growth in demand.
Innovation And Price Driving Tablet Sales
A comprehensive analysis of the aforementioned tablet shipments data reveals that the market for low-cost tablets is growing faster than premium ones and that growth is primarily concentrated in emerging markets such as China and India. The former is further validated from the fact that iPad sales have consistently declined for three straight quarters this year. While it would be premature to say anything about worldwide tablet sales in the future and customer preference in general considering that global tablet penetration is still very low, current trends suggest a shift towards newer brands which offer innovative features at competitive pricesThe rapid rise of Chinese electronics maker Xiaomi in its domestic tablet market this year is a case in point. Xiaomi has managed to increase its share to 7.6% in China’s tablet market within a quarter of its tablet’s launch (Xiaomi Mi Pad), competing against heavyweights such as Apple (29%), Samsung (8.2%) and Lenovo. There is ample opportunity for Nokia if the company finds the right balance between product features, price and the target market.
Nokia N1′s Opportunity In China
The Nokia N1 is a premium quality 7.9 inch Android tablet with a single piece anodized aluminium design and a layer of Corning’s Gorilla Glass 3, much like Apple’s iPad Mini 3. It is both thinner and lighter than the iPad Mini as well as Xiaomi’s Mi Pad. In terms of technical specifications, the N1 offers a 64-bit Intel processor clocked at 2.3 GHz with 2 GB of RAM, 32 GB onboard storage, IPS LCD display, 8-megapixel rear and 5-megapixel front cameras. This is on par with the best in the current market. It also has a few new features such as the reversible Type-C USB connector and Nokia’s new Android app- Z Launcher.
With comparable, if not better, hardware specifications and features than other top-selling high-end tablets, the Nokia N1 establishes itself in the premium tablet segment. However, it scores over the others in price. Compared to $399 for the iPad Mini 3, the Nokia N1 is expected to retail at $249, before taxes. This price point makes it a worthy competitor to Xiaomi’s top selling Mi Pad in the Chinese market, which is available at a starting price of $243 for the 16 GB model.
Other than branded tablets, there is a surge of small Chinese companies selling white-label tablets in China which retail for around $100. This is demonstrated by the fact that 50% of tablet shipments in China in the second quarter this year represented companies which each have a share of less than 1% of the market. While it is not possible to compare the innumerable white-label tablets to the premium and branded products, they will certainly add to the competition for Nokia in China. Total tablet shipments in China in the first five months of this year stood at about 11.1 million, up about 16% y-o-y.
We believe Nokia will be more focused on the branded tablet market for now. However, if it offers innovative financing options as well as a convenient shopping experience, Nokia might be able to lure some customers away from the white-label offerings as well.
Google probably fears the European Commission most of all right now because the EC could conceivably level the playing field in such a way that Google's ongoing move to replicate its desktop search dominance in the mobile space will be derailed. Microsoft, Facebook and Google remain the 3 most popular holdings of hedge funds (with Alibaba and Apple moving up the charts) so obviously that kind of development will wreak havoc on its valuation even as its cash cow search business continues to produce all that cash flow.
I was thinking same thing since it works on WiFi it should be able to work here in the states also, but I'm not sure. What about support in English if needed? I would love to get one but I will wait to make sure I get support in English.
I'll agree with your opinion and as always, well educated, correct judgment. You are my
"Rock Superstar" on this MB and I'm serious...yes, serious...That's it. (-;
Very funny! I enjoyed that post a lot. I had Zut on ignore but having read his post now, I think I'll raise him back from the nether regions.
Re the political question - interesting question. Something I didn't know about. It doesn't alarm me but it's interesting for sure given Finland's history. One theme that does come to mind though is that ploughing the middle furrow, neutrality, is a very valuable approach these days, especially for a country like Finland that doesn't have a vested interest but is a highly moral country, like many of those Scandinavian countries.
(As I think you know better than me - I remember that lesson you gave me on Finnish language and history. Good stuff, Clcellve! There's more to the world than stocks, thank goodness.)
it may sell well to those that can't afford apple stuff. not everyone has that kind of disposable income.
and, yes, a lot of folks are brain-branded by apple but it's not the leader in phones and tablets anymore. while only android is ahead of them at the moment more new stuff is coming out all the time. jolla and b-berry are doing interesting tablets, in case you haven't heard about those.
nothing has traction other than i.o.s. and android at the moment but that can change: msft was tops in smartphone o.s.es and in tablets until apple came along with their stuff. but i have to admit no one is rocketing up the list of market share figures at the moment.
Hey boss, is this your speadeemon "friend"...and you say millions, upon millions every quarter...
well, I wish you were right Chief
This is just a proof of concept product that will gain traction simply if Foxconn makes this the official tablet of the company. They have over 1 million workers on Mainland China alone to go with the sizable but dwindling number of hardcore Nokia fans who drove Android X to over 6 million in pre-order sales and over 1 million in actual sales when it came out. What is going to be interesting is how Foxconn is going to sell this and presumably other products from Nokia's product pipeline. Foxconn doesn't have any legacy sales and distribution system so they can afford to take a clean sheet approach to the opportunity.
Lenovo will continue to sell through its traditonal channels and carriers in China, but they have also created a totally new company that will emulate Xiaomi's direct to consumer, build to order, online model. This hybrid approach is likely to be Foxconn's strategy in building out their sales and distribution system.
But first, there is going to be THAT conversation with Apple......
agree with forbes, smith
one of my friends is going to china for chinese new year, will ask to get me one and i'll let you know how it looks
from the specs seems like a great tablet - looking forward to see nok selling millions of them every quarter in china and everywhere else around the world
Should sell well only problem is people are so into Apple it is insane.Brainwashed.Apple has a pretty damn good racket going.Problem with not only the Americans but people in general are easily brainwashed.Americans are the worse.
didn't say it out loud, but i did type that and post it as a message. does that clear things up for you? (-;
[try to] remember: it had the screen that worked even with gloves on? no silicon implants needed (in the fingertips!) to make it work.
and the true black display that no one else has?
seems like there was another feature it had that is still unmatched too.
oh, yeah, the slowest camera ever on a cell phone! but the pictures were HUGE (which was why it had/needed so much internal storage.)
but, low price, no. even now it still sells for $340 from at+t
and that price cut was only 6 weeks ago.