Gartner: Nokia market share falls below 30% - ten-point drop in European share
The world’s largest manufacturer of mobile telephones, the Finnish-based Nokia, lost more than five percentage points of its worldwide market share in the early part of this year.
According to the technology research company Gartner, Nokia’s share of the world’s mobile handset sales was 29% in January to March of this year, down from just under 35% one year ago. The figures bear out those of Strategy Analytics, released almost six weeks ago.
Nokia has lost market share especially in Western Europe, where the decline has been ten percentage points in a single year. Early in 2003 Nokia’s share was more than 50%, falling to less than 40% in the first quarter this year.
According to calculations by Gartner analyst Ben Wood, Nokia sold fewer handsets in Western Europe than last year, while its competitors increased sales significantly; total sales in Western Europe grew by a quarter from last year.
Wood says that all of Nokia’s key competitors have improved their positions in Western Europe. The South Korean Samsung and Germany’s Siemens both increased their market shares, and the US manufacturer Motorola nearly doubled its share of the European market. The Japanese-Swedish Sony-Ericsson also saw some improvement, even though the company had production difficulties.
Nokia also lost market share in worldwide handset sales, even though the number of mobile phones sold by Nokia increased by 19% from a year back; other manufacturers were able to increase sales even more. In January-March about 153 million mobile telephones were sold around the world, which is 34% more than a year ago.
In addition to Western Europe, where some 20% of all handset sales occur, Gartner analysts say that Nokia lost market share in North America, where the number of its handsets sold was about the same as a year ago. Growth in Nokia sales came from Asia, and other so-called developing markets.
The reasons offered for the trend are familiar: Nokia has not paid sufficient attention to maintaining good relations with mobile operators. In many countries, mobile service providers are the key sales channel for handsets. For instance, Motorola has been more responsive to operator needs, and has tailored its telephones according to their wishes.
Ben Wood also says Nokia’s range of products also does not appear to be as competitive as before.
Nokia remains strong in the sale of cheap models, as well as more complicated smart phones, but Wood feels that the company’s competitors have more attractive medium-range products. The lack of a "clamshell" model to compete in this popular segment is seen as one concrete reason for the decline.
"In a mature market, telephones are style items as much as they are technology. People buy a new model because it looks good."
Nokia’s designs have been so successful that for a long time "everyone" had to have a Nokia phone.
Ben Wood says that Nokia needs to find a new design that would be a new hit.
He notes that Nokia is already working to repair its ties with mobile operators.
Analysts say that Nokia needs to make concessions to key clients such as Vodafone. This could mean displaying the operator’s brand on the handset, or a separate key which links the user directly with the operator’s own services.
During the present quarter Wood believes that Nokia will be able to stabilise its market share at the very least. "The company could even increase its share, but this will happen by cutting prices."
In April, when the first signals of the loss in market share were already given, Nokia said that one of the ways that it would fight for its position in the market will be by cutting the prices of its telephones.
Wood does not want to predict developments for the rest of 2004 before Nokia makes public its new models. "I am surprised that the company has not yet done so", he says.
Wood nevertheless sees a significant change in the competitive situation in the mobile phone market.
"Traditionally Nokia has been the only one capable of a 110% performance. Now they have real competitors who are quite successful."
Previously in HS International Edition:
The ups and downs of mobile phone fashion (30.5.2004)
Nokia's market share falls to 29% in first quarter handset sales (29.4.2004)
Nokia's competitors improve sales and profits in first quarter of 2004 (22.4.2004)