Finland is a country of about five million people, so you really couldn't blame the population for much of Nokia's problems directly. However, according to research conducted by Recon Analytics, Finnish mobile users replace their handsets at a much slower rate than most others.
In the UK, mobile phone users replace their handset every 22 months, while in France they wait about two and half years. In the United States, handsets are replaced on average every 28 months. In South Korea, it is 26 months, and so on.
In Finland, the home of Nokia, which dominated the global mobile phone market for the majority of its life (well, since it got in the business), mobile phone users wait six years on average to replace a handset. "Maybe it's no accident that Nokia is having a tough time developing smartphones given that in their home market so few people are replacing their handsets," Roger Entner, founder of Recon Analytics, said.
Entner accepts that the research conducted by the firm cannot categorically prove a correlation between Nokia's recent decline particularly in the smartphone market, and the rate at which Finns replace their mobile phones. He does think however that the weak demand for new handsets may have dulled any sense of urgency for Nokia to keep up in the market.
In other words, if most people around you use old (or what they'd call old elsewhere) mobile phones and have little interest in upgrading, the pressure or incentive to innovate might disappear.
Income levels pushed Brazil (81 months) and India (93 months) to the bottom of the list for handset replacement rates, but the Income level in Finland is in line with the UK and France. Instead, the biggest reason is probably the amount of subsidizing done by carriers.
In the United States, and in both the UK and France, carriers typically subsidize the cost of an expensive smartphone. So take the iPhone 4 as an example; in France, one carrier puts up a subsidy of $379, while in the UK, a carrier offers a subsidy up to $660. This typically locks the customer into a multi-year contract with the carrier.
In Finland, the subsidy for an iPhone 4 falls to $84. It is a trade off however, as Finns also tend to get much better deals on the costs of calls, messaging and data than you could expect in other European countries.
Written by: James Delahunty @ 27 Jun 2011 22:42
