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Nokia struggles to boost sales in US
Mobile phone sales in emerging markets such as China, India and Brazil account for 71% of Nokia's stock value, while developed markets such as the US and Japan contribute a mere 19%, according to new estimates from market researcher Trefis. The figures come as Nokia unveils a new range of smartphones running the latest version of the Symbian open-source operating system in an effort to boost sales in the US.
Speaking at a press conference in San Francisco, Nokia VP David Rivas said the devices were about "renewal" of the company's brand. Nokia is hoping it can reverse a trend that has seen its high-end handsets increasingly sidelined by US consumers in favour of devices from Research In Motion and Apple.
The Trefis figures underline that though Nokia is still the world's biggest mobile handset maker, it is struggling to generate revenues in key markets. One explanation for Nokia's recent poor performance in the US is that its handsets are not considered as desirable as devices such as the iPhone or the recent Google phone. This is something Nokia is hoping to counter with devices such as the N900 and its new Symbian^3 phones. Another suggested cause is that Nokia has soured relations with US mobile operators by trying to take too much control of the customer experience in its push to become a services company.
Nokia still has a 36% share of the world handset market, according to Gartner, and although its market share is low in the US, Japan and Korea, it is strong in the developed European market. There is also considerable value in Nokia's emerging market strength. Trefis says mobile phone sales will this year hit 840m in these markets, where Nokia has a 43% share. In contrast, sales will hit just 460m in developed markets.
However, in the long term Nokia knows it must increase its share of the smartphone market. This is the fastest-growing segment of the mobile sector and the space in which margins are highest. Nokia's efforts to rebrand itself as a services company also depend on its being available on high-end, internet-capable devices, so a strong presence in the smartphone sector is essential.
According to Trefis' analysis, the proportion of Nokia's stock value not accounted for by mobile phone sales comes from its mapping subsidiary Navteq, communications unit Nokia Siemens Networks and its existing cash hoard.
