Analysts: ‘Nokia’s blip will pass’

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Nokia’s forecast for a decline in Q3 marketshare has been dismissed by the manufacturer and analysts as a temporary blip.

Nokia UK managing director Simon Ainslie (pictured) said: “Traditionally we have had a 10 to 15 per cent lead in market share.

“But market shares go up and down. Samsung has had a huge raft of products this year, and its share has continued to grow, but it has cost them a lot of money to do so.

“The business model in this space has changed. A lot of our features have been service orientated, such as Ovi and Comes With Music.”

A rush of products and aggressive pricing has allowed competitors to get within three per cent of Nokia’s long running lead, but some point to Motorola as an example that aggressive pricing is not a sustainable strategy.

Global Insight analyst Seth Wallis-Jones said: “With market share around 40 per cent, it would’ve been difficult for Nokia to maintain this heavily dominant position. With the economic slowdown there are indications that spending on mobile devices has been hit.

“Competitors have responded by squeezing margins, and while Nokia has aimed to do this for new handsets, it has resisted selling handsets unprofitably.”

This reluctance to aggressive pricing policies has been suggested as a reason for a fall in share, while a slow reaction to the high-end touchscreen segment has also been proposed.

Wallis-Jones added: “Samsung and LG have been particularly quick to release mid-range and high-end touch-screen phones, tapping into the demand for iPhone-like devices. The iPhone itself will also have taken some share of the high-end market.”

The smartphone market has already seen a dip for Nokia, as BlackBerry maker RIM moves further into the consumer market, doubling its smartphone market share in a year to 17.4 per cent, while Nokia’s share slipped three per cent to 47.5 per cent.

According to research firm Gartner, RIM sold 5.6 million smartphones between April and June, up from 2.5 million in the same period last year.

Nokia also spent this year concentrating on other parts of its business, including investing through the Symbian OS and becoming a service provider.

Ovum analyst Adam Leach said: “The services will add value and make their high and mid-range products more attractive.

“Nokia has been under pressure in the high and mid-end ranges, but its portfolio should be refreshed before Christmas.

“The drop in share will be temporary; it will regain its market position. LG has been gaining ground with heavily discounted offers, but it isn’t sustainable.”

 

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