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Nokia: market share lowering due to iPhone

updated 09:00 am EDT, Fri September 5, 2008

Nokia Lowers Share Outlook

Nokia today preemptively lowered its market share estimates for the summer quarter, warning that it expects to lose share compared to the spring. The company had previously predicted that its market share would remain largely flat but now claims that multiple concerns have forced it to change its view; the firm remains deliberately unspecific regarding which firms are taking that share but claims that its loss will come from its own "tactical decision" not to keep up with "aggressive pricing of some competitors," alluding to the heavily subsidized iPhone 3G launched during the same quarter.

The firm indirectly claims that Apple is making a grab for market share at the expense of its long-term welfare, suggesting that its own more cautious approach is more effective overall.

"Nokia's strategy is to take market share only when the company believes it to be sustainably profitable in the longer term," the company argues. "Nokia has not broadly participated in the recent aggressive pricing activity - as it believes that the negative impact to profitability would outweigh any short term incremental benefits to device unit sales."

The company also cites a tougher overall market and considers the entry-level market separate from its pricing concerns. An unnamed and likely unreleased mid-range cellphone has also taken longer to mass-produce than expected, Nokia says.

Finland-based Nokia has regularly maintained a definite lead as the largest cellphone manufacturer in the world with as much as 40 percent market share over multiple quarters but has largely gone uncontested in the media-oriented smartphone market until the launch of competing offerings from Apple and Research in Motion. Most of Nokia's Nseries phones have often been substantially more expensive and regularly go without carrier subsidies in North America, costing a minimum of $560 US for the unlocked N78 NAM and peaking at the $895 N96.

Nokia has also partly contradicted its claims of firm pricing in Canada, where the phone maker worked with Rogers to cut the N95 8GB's price in half to match that of the iPhone 3G. Apple's phone had launched just before the cut with nearly all of the same features.

Korean firms LG and Samsung are also known to be gaining in the market but have credited most of their success to sales of mid-range phones that have primarily taken share away from Motorola and Sony-Ericsson rather than smartphone manufacturers.



By Electronista Staff
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Comments

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  1. Intosh

    Fresh-Faced Recruit

    Joined: Sep 2008

    -10

    Quite a Spin there Fanboy

    No one is alluding to the iPhone, except Apple fanboys wearing their rose-colored glass lens. Apple fanboys wish the iPhone is a contender in terms of market share but fact is the big boys like Nokia, Samsung and LG are moving millions of phone a day. With the kind of volume the iPhone is having, with all due respect, it does not have any significant impact on the major manufacturers in terms of total volume and market share.

    Boy, I hate those Mactards.

  1. slapppy

    Fresh-Faced Recruit

    Joined: Mar 2008

    +4

    Milliions of c*** a day

    Why don't you post what kind of phones they are moving millions per day. The free or 20 dollar POS phones when they sign up. Duh!

  1. jscotta

    Fresh-Faced Recruit

    Joined: Jun 2002

    +1

    Nokia is a Mactard?

    Intosh, since it is Nokia making the claim, albeit indirectly, that the aggressive pricing for the iPhone is a play for marketshare, then it would seem that Nokia itself is one of your Mactards. Wow.

  1. Intosh

    Fresh-Faced Recruit

    Joined: Sep 2008

    -9

    Typical Mactard

    How typical behavior of Mactards to call other non-Apple products c***. Well, 20 dollar POS is better than expensive POS.

  1. jamiec

    Fresh-Faced Recruit

    Joined: Aug 2006

    +3

    Not the iPhone

    "Aggressively priced" is something completely different from "heavily subsidized." Apple makes quite a tidy profit on each phone, and in any event it is only competing in a very narrow slice of Nokia's vast market.

    Nokia is referring to larger companies like Samsung and LG, whose phone margins are barely above 10%, not to a relatively low-volume competitor like Apple, whose margins on the iPhone are well above 30%.

    It's pretty clear to me that Nokia isn't referring to Apple as participating in the "recent aggressive pricing activity." However, though they may not participate in it, they certainly helped precipitate it -- Samsung and LG have reduced their margins even further lately partly to shore up against the iPhone, particularly in the 3G space.

  1. Constable Odo

    Fresh-Faced Recruit

    Joined: Aug 2007

    0

    How many N95s are

    sold in a year, anyway? Does anyone know. 20,000 or 50,000? I'm just asking for some point of reference. Those handsets are relatively expensive but they do have a lot of features for those that like to boast about hardware.

    The best thing about those Nokia's are supposedly their 5 MP cameras. I guess they're good for taking pictures and videos. I guess they have a niche market sewn up. The iPhone can't compete with only a 2 MP camera that doesn't even take videos yet.

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