Bloomberg News

Apple Beats HTC as Nokia Customer Loyalty Has First Decline

October 05, 2011

(Updates with analyst comment in eighth paragraph.)

Oct. 5 (Bloomberg) -- IPhone users are most likely to buy their next handset again from Apple Inc. as Nokia Oyj’s customer loyalty dropped for the first time, a survey shows.

About 93 percent of iPhone owners in the U.S. and 88 percent in the U.K., Germany and France said they would probably or definitely go for another Apple handset, said Paul Brown, an analyst at Strategy Analytics, citing a poll. Nokia’s brand loyalty was 63 percent in Europe, compared with 74 percent a year earlier, while only one in two Nokia users in the U.S. plans to buy the next handset from the Finnish manufacturer.

“A lackluster portfolio of user-friendly touchscreen devices is one of the key reasons for this decline,” Brown said in an interview. “By creating a powerful brand image, along with a compelling user experience, Apple has managed to create a high level of brand loyalty amongst existing users.”

Gearing up for the holiday season, Apple yesterday introduced an upgrade of its best-selling product with voice recognition features and a higher-resolution camera. Nokia, seeking to stem a loss of market share to Apple and makers of Android handsets like HTC Corp. and Samsung Electronics Co., said its introduction of products based on Microsoft Corp.’s Windows Phone 7 is scheduled for the “weeks ahead.”

More Crowded

Nokia rose as much as 4.1 percent in Helsinki trading after Apple yesterday didn’t introduce a more revolutionary iPhone 5 model. At 2:47 p.m. local time, the stock was up 2.7 percent at 4.09 euros. Apple dropped 0.4 percent to the equivalent of $371.69 in German trading. The stock yesterday fell 0.6 percent in New York.

The highest user satisfaction rate among major mobile-phone vendors may help Cupertino, California-based Apple defend its position as the largest smartphone vendor as the market becomes more crowded. At the same time, Nokia, based in Espoo, Finland, allied with Microsoft to lure consumers and app developers with the Windows Phone system.

Strategy Analytics, which surveyed 1,497 users in Europe and 987 in the U.S. in August and September, plans to release a full report including China and India next week.

“A key challenge for Apple next year will be whether the company can maintain such high loyalty rates following the retirement of iconic chief executive Steve Jobs,” Analytics analyst Neil Mawston said.

Topping HTC, RIM

Jobs, who co-founded Apple with Steve Wozniak in 1976, ceded the CEO post to Tim Cook in August while remaining chairman.

HTC’s handsets based on Google Inc.’s Android ranked second in the survey with an 81 percent expected repurchase rate in Europe and 75 percent in the U.S. Research in Motion Ltd., maker of the BlackBerry, reached 72 percent in both regions, while Samsung Android phones polled at 66 percent in Europe and 73 percent in the U.S.

Android was the best-selling smartphone operating system worldwide in the second quarter as sales rose more than fourfold to 43.3 percent of the market, led by Samsung and HTC, according to researcher Gartner Inc. Apple had an 18.2 percent share.

“Apple created a new experiential bar that all of a sudden everything else was measured against,” Nokia Chief Executive Officer Stephen Elop said yesterday.

Nokia became the world’s biggest handset maker in 1998 and fell behind in smartphones after Apple’s 2007 introduction of the iPhone, which raised consumer expectations for handsets that can handle corporate e-mail and play movies and music.

The iPhone increased its satisfaction score in Europe this year from 59 percent in 2008 when it was first included in the Strategy Analytics poll. Earlier data from the U.S. weren’t available. Nokia polled between 72 percent and 74 percent in earlier Europe surveys before posting a decline this year.

Nokia scored 23 percent user satisfaction for its Web browsers in Europe compared with 67 percent for Apple. Nokia rolled out new browsers for its handsets this summer.

--Editors: Simon Thiel, Kenneth Wong.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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