Nokia offers clamshell models and flexibility in attempt to win back handset market share

CEO Ollila: No need for major strategic changes

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The empire is striking back. Nokia introduced five new mobile phone models on Monday, three of them of the popular "clamshell" design, and promised that it would also be taking more account of operators’ requests for tailored services in its phones. Nokia is seeking to regain the ground it has lost in the handset market in recent months, when its market share has declined by several percentage points.
      Nokia’s Chairman and CEO Jorma Ollila nevertheless played down suggestions that the company was being obliged to have a major rethink on strategy.
      On Monday the world’s largest mobile phone manufacturer showed off five new handset models, with which it hopes to patch up gaps in its product portfolio that have cost it dearly in the last few months. In particular Nokia was lacking in attractive and competitive phones in the mid-range sector at around EUR 150-300.
     
A further handicap has been seen in the lack of suitable clamshell models as consumers are finding these an increasingly attractive design at the expense of the traditional "candy bar" model of mobile handset. Consequently, three of the new models on show have the flip-open design that Asian and American models boast. All will be in the stores by the end of this year, and the company will then have a clamshell phone in nearly all price segments.
      Nokia has woken to the fact that the initial popularity of these handsets in the areas where they are made has now spread to European consumers. It is in the European market in particular that Nokia has seen its sales take a hit. Some estimates suggest that as many as 40% of mobile phones sold this year will have this folded-over design.
     
In spite of its market-share losses in the early part of this year, which have required some aggressive price-cutting from the company, Nokia’s Chairman and CEO Jorma Ollila stresses that the dip is not leading to significant strategic changes. The product assortment has been re-thought, with some new products, an acceleration of some production schedules, and some models shelved or removed from the range.
      One notable change in the wind, however, is the fact that in addition to listening to consumer demands, Nokia is planning to take a more flexible approach to operators’ requirements. Asian manufacturers in particular have been willing and eager to tailor their models to meet specific requests from operators. This is believed to have played a further part in eroding Nokia’s lead in the handset market.
      Now the company promises to lend a more attentive ear to demands for individual services by operators, for example in more flexible interfaces with operators’ own service portals at the touch of a key. At the same time, some operators have preferred to see their own logo on the handset, something that Nokia has hitherto been reluctant to agree to.
     
Nokia admits freely that it underestimated the rapid take-off of the clamshell phone designs and that it should have added these to its portfolio sooner. The company, which has previously prided itself on being a design leader, is now willing to copy and innovate at the same time.
      Even after its torrid time in the first three months of the year, Nokia remains the largest manufacturer of mobile phones, and its share of orders on the networks side this year has shown an encouraging leap forward, pushing the company ahead of rivals Ericsson, although the Swedish company still holds on to a larger share of the overall market.


Previously in HS International Edition:
  Gartner: Nokia market share falls below 30% - ten-point drop in European share (9.6.2004)

Links:
  Nokia Press Release

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