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Nokia Expands Range to Fight Fall in Share of Handset Market

Posted on: Tuesday, 15 June 2004, 06:00 CDT

NOKIA CONFIRMED its declining share of the mobile phone market yesterday, saying first-quarter sales were 44.7 million handsets, giving it a market share of 32 per cent.

The Finnish company has seen its share of the booming mobile phone market gradually shrink as competition has increased from the likes of Motorola and Samsung.

Two firms of independent analysts - Strategy Analytics and Gartner - have put Nokia's market share figure at 28.9 per cent. Gartner's highest market share figure for Nokia was 36.9 per cent - recorded in the final quarter of 2001 - while Nokia's own highest market share figure was 38.9 per cent.

Even though that has now fallen to 32 per cent, according to its own estimates, Nokia was adamant yesterday that it could recover lost ground, and repeated its aim of reaching a 40 per cent market share.

The company has lost out to faster-growing rivals because of a poor product portfolio, including being too slow to catch on to the fashion for flip- top phones, also known as clam shell phones. It has also been too focused on selling basic, entry-level phones rather than the more sophisticated devices with cameras and colour displays, which have proved increasingly popular.

Jorma Ollila, the chairman and chief executive of Nokia, yesterday said: "We have now sharpened our product portfolio in key areas, bringing to the market new phones in the mid-range, and adding more clam shells to our offering."

At its showcase Nokia Connection 2004 event in Helsinki yesterday, Mr Ollila also said that price cuts it had made for some of its models resulted in increased sales. However, analysts have expressed concern that Nokia is buying increased sales at the cost of profit margins. Last month Goldman Sachs and Morgan Stanley published downgrades on Nokia. Morgan Stanley drew attention to figures from Carphone Warehouse, the leading retailer, which showed that prices on some Nokia products had been slashed by up to 26 per cent.

Nokia fell into line with analysts on how many mobile phones are likely to be sold this year. It said total sales across the whole industry were expected to reach 600 million worldwide with the number of total mobile subscriptions to reach 2 billion by 2007. It said one-third of the 600 million would be camera phones and that globally around 800,000 people a day were subscribing to mobile phone services.

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