Personal Tech Pipeline | Nokia's Handset Market Share Back At 35 Percent: Survey (Reuters)
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February 28, 2006

Nokia's Handset Market Share Back At 35 Percent: Survey (Reuters)

Personal Tech Pipeline

PARIS (Reuters) - The world's biggest mobile phone maker Nokia <NOK1V.HE> is back at 35 percent global market share after a sharp dip in 2004, a survey said on Tuesday.

It took the cell phone behemoth from Finland almost two years to recover the ground it lost in 2004 after it failed to introduce popular folding models, and it can take its 40 percent target seriously again, market research group Gartner said.

"I think it's still a hard target to get, but it looks definitively more possible now than when they were talking about it a year ago," said analyst Carolina Milanesi after Gartner published fourth quarter shipments of cell phones to consumers.

Nokia's market share with sales to consumers is higher than the 34.2 percent market share based on already published shipments to distributors, which means more Nokia phones found their way to end users than handsets from other vendors.

Competition is relentless and other top five vendors such as Motorola <MOT.N>, Sony Ericsson <6758.T> <ERICb.ST> and LG Electronics <066570.KS> all gained share in the fourth quarter. Only Samsung <005930.KS> slipped slightly.

The big losers were outside the top five, Milanesi said.

"As competition continues to drive price pressure in the low-end, and a design and technology 'arms race' in the high-end, the survival of the fittest depends more and more on economies of scale, or very carefully cut out niche markets."

Nokia's failure in 2004, when its market share slipped to below 30 percent, was that it mostly sold simple stick phones, while consumers wanted folding models packed with features.

Nokia has meanwhile plugged most of those holes in its portfolio of phones, but the Finnish firm's comeback is built on something else too: booming demand for very cheap phones.

"They had a good strategy in the low end segment. They didn't go after the ultra-low cost handsets (priced below $40), but they were successful with 1100 series products, which is priced a bit higher," Milanesi said.

"Plus, on top of that, they have the Nokia brand. That paid off in emerging markets," she said.


Nokia, with 35 percent market share in the fourth quarter, is almost twice as big as No.2 Motorola with 17.8 percent global market share in the quarter.

In eastern Europe, the Middle East and Africa its position is even stronger with three times more market share than its nearest rival, Gartner said.

Most of the sales growth last year came from emerging markets, where low priced phones and low service charges fueled demand. There are over 2.2 billion mobile phone subscribers now.

Nokia's 35 percent market share grew from 33 percent in the year-ago quarter, while Motorola climbed from 16.3 percent on the back of its popular RAZR thin phone and ultra cheap models it has introduced for emerging markets.

Nokia's highest ever market share was in 2002 when it achieved 35.8 percent for the year. Its highest market share in a single quarter was 36.9 percent in the fourth quarter of 2001, Milanesi said.

No. 3 Samsung's market share slipped to 12.1 percent from 12.2 percent as the South Korean firm has chosen to concentrate on the lucrative segment of medium priced phones and premium handsets, with high quality cameras, displays and lots of memory for songs and pictures.

LG's market share went up to 7.2 percent from 6.8 percent in the year-ago period, and may continue to rise now that Vodafone <VOD.L> has decided to start selling the brand. The firm has told Reuters it aims to grow by up to 30 percent in 2006.

Sony Ericsson, helped by its Walkman and camera phones, went up to 6.9 percent from 6.3 percent.

BenQMobile which took over Siemens' handset business slipped to 4.7 percent from 6.5 percent, despite a small success with its pink Poppy phone which was a good fall-back for retailers when the pink Motorola RAZR was sold out.

Gartner reiterated it expects the total handset market to grow by between 10 and 15 percent in 2006 from the 817 million handsets sold to consumers in 2005.

By: Lucas van Grinsven, European Technology Correspondent

Copyright 2006 Reuters. Click for Restrictions

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