January 25, 2008 – Business Management Article
Nokia with 40% market share in the fourth quarter of 2007
In what is being regarded as the much-awaited and psychologically important milestone, Nokia (NOK), the Finnish handset maker and global giant, announced that it had achieved a 40% market share in the fourth quarter of 2007. This lead in the global handset business was achieved by Nokia while also becoming more profitable. Nokia increased profit in the fourth quarter of 2007 by 44%, to $2.68 billion, on sales of $23 billion. Increasing sales in emerging markets, coupled with growth in high-end phones were two important factors responsible for the boost in profits. Nokia plans to increase its market share further in 2008.
Read case study on Nokia’s Business Strategy in India (pdf file)
In times of global economic uncertainty…
According to market tracker ABI Research, last year, Mobile phone sales grew 15.8% to 1.15 billion units. But in times of global economic uncertainty, Nokia’s growth is commendable largely aided by the fact that consumers regard phones as necessities and they keep buying new handsets. Nokia has the right products and a distribution strategy to reach the customers. Nokia’s rivals are struggling to match Nokia’s marketing and distribution networks. Nokia can leave its’ competitors further behind by leveraging the increased sales volume, greater economies of scale, and investing more in new product introduction and research and development.
Motorola’s market share dips in the fourth quarter.
Meanwhile, a day earlier, Motorola announced that its profits plunged 84%, to $100 million, as sales declined almost 19%, to $9.6 billion. Motorola’s market share shrank to 12.4%, from 13%, in the fourth quarter. Motorola, the biggest U.S. maker of mobile phones, is also struggling with its inability to deliver phones that can match the popularity of its bestselling Razr. Motorola suffered in places such as Europe and emerging markets with sales of low-end phones and also high-end, multifeature 3G smartphones. However, it did sell more than 8 million Razrs, 3 million Krzrs, and 1.5 million Razr2s. Even established competitors like Samsung Electronics and Sony Ericsson are are yet to match Nokia in emerging markets, where basic phones sell for less than $40. Nokia sold 133.5 million phones in the quarter, more than its three closest rivals combined.
Apple’s iPhone sales are impressive and Nokia is paying attention
Since its launch in March 2007, Nokia has sold more than 5.5 million units of its multimedia handset N95. This is more than the iPhone with sales of about 4 million units. But the iPhone is not available in many parts of world and costs more than an N95. Nokia is aware of iPhone’s popularity and has plans to launch a handset with the same touch-screen technology that made iPhone popular.