Published on January 23rd, 2009 | by Arsalan Mir3
Nokia To Go Smarter
As we were discussing the shift towards the smart phones in our recent posts ‘Battle for the Smart Phone’s soul‘ and ‘Making Technology Accesible for Everyone‘, news just flows in that the cellular market leader Nokia will now focus more on smartphones. And that means smart applications and better hardware. Nokia will focus on five core service areas: music, maps, media, messaging and games.
After an unexpected decline in sales and net profits in the last quater, Nokia has geared up for the smart-phone competition. As reported by Total Telecom, CEO Olli-Pekka Kallasvuo expressed,
The macroeconomic environment is a challenge, “and will remain so in 2009,” said Kallasvuo, as he lowered guidance for market volumes for this year.
Nokia now expects device volumes to fall by 10% industry-wide this year, having predicted a 5% decline just last month. However, Kallasvuo noted that the decline is likely to be steeper in the first half of the year than the second, raising hopes that a revival is not too far away.
The overall device market shipped 305 million units in the fourth quarter, down 9% on-year and down 2% sequentially, Kallasvuo said. The decline comes on the back of “weaker consumer confidence, unprecedented currency volatility and credit tightness,” said Kallasvuo.
“Our devices market share was 37% in Q4, down slightly on a sequential basis,” the CEO admitted. Nokia claimed 40% of the market in the year-ago quarter and 38% in Q3.
However, Kallasvuo expects Nokia’s market share to remain flat, on a sequential basis, in the current quarter and “we are targeting share gains in 2009,” he said.
And Nokia has identified the smartphone space as key to improving its market share.
The vendor reported a slight decline in its share of that market to 32% in Q4.
“Our smartphone volumes were down,” Kallasvuo noted. “[But] our smartphone portfolio is heading in the right direction,” he insisted, highlighting the 5800, which launched in some markets in November, and the recently-unveiled N97 in particular.
Kallasvuo reiterated his intention to expand Nokia’s smartphone presence a number of times during the presentation, including tackling new markets and a wider range of price points and consumer segments.
“Smartphones are not high-end only,” the CEO said. “And that is what you see from Nokia in 2009.” The executives on the conference call were keen to point out that smartphones are not all about the hardware.
“[We are] expanding the definition of smartphones,” and combining the devices with services, said Nokia chief financial officer Rick Simonson.
Nokia will focus on five core service areas: music, maps, media, messaging and games.
“[We will] increasingly combine those [five services] with a large portfolio of devices,” said Simonson. But these “product combos… [are] not the same thing as giving the services away for free, Simonson added.
Where as an analyst told ZDNet UK that,
Nokia’s reported sales had fallen short of analyst expectations. “I expected flat quarter-on-quarter sales rather than a drop, and that is a sign that things are tough,” she said.
Milanesi pointed out that Nokia had seen a particularly sharp decrease in device sales in the Greater China region (36 percent down year-on-year) and in the Middle East and Africa (23 percent down). “[Sales in] emerging markets are slowing down, and that’s where Nokia has a lot of market share,” she said.
“For China, we’re still looking at where has this all gone — so far, we haven’t seen [sales] going to other vendors,” Milanesi said. “So, either the market is getting smaller, or [manufacturers of cheap, unbranded handsets are picking it up]. When people are on tighter budgets, they will go for a phone that might look like a Nokia but costs 10 times less.”
Thats not all, in 2009 smart-phones are going to see a fierce competition as apart from the current market players rumours are in that Huawei, Motorola and Samsung are also ready to come up with an Android based smart-phone some time in the second quarter.
Lets see if this smart-phone race goes smart with cost too.