Nokia turns to Asia to maintain dominance in global market

Hendarsyah Tarmizi ,  The Jakarta Post ,  Jakarta   |  Wed, 02/27/2008 12:08 PM  |  Business

The Jakarta Post's Hendarsyah Tarmizi was recently invited with three other Indonesian journalists to attend Showcase Nokia 2008 in Sydney, Australia. The two articles below are his reports.

With sales growth slowing in mature markets in Europe and North America, Nokia, the world's largest mobile phone vendor, is turning to Asia and Pacific.

With their relatively low mobile phone penetration, Nokia hopes the growing markets of the Asia and Pacific region will yield new growth opportunities and let the company maintain global handset dominance.

"The sales in the region are growing, and the growth trend will continue, given its relatively low market penetration," said Southeast Asia and Pacific vice president for sales Chris Carr at Showcase Nokia 2008.

He thinks the growing markets in the region can help offset the slowdown in Europe and North America and help Nokia stay ahead of competitors.

Total mobile phone sales volume in Asia was up about 39 percent for the first six months of 2007 against the same time period in 2006, with over 149 million unit sold, according to a GfK Asia survey.

China and India, the two largest markets in the region, are growing at similar rates, with respective volume increases of 46 percent and 44 percent and sales value increases of 28 percent and 32 percent, compared to 2006.

Carr estimates mobile devices in Asia and Pacific will grow at least 15 percent this year, above the average worldwide growth of 10 percent.

He said the company's extensive handset portfolio, robust technology and efficient logistics operation, gave it a competitive edge over other vendors and Nokia would be able to strengthen its foothold in the region.

According to him, with such advantages, the company was positioned to meet the growing demand from consumers in all the existing market segments -- not only in terms of income levels but also lifestyles.

"In Indonesia, for example, we offer a wide range of mobile phone models to be able to meet the different needs of consumers in all market segments."

Although the handsets for low and middle-market segments remain the largest contributor to Nokia's sales in the country, the demand from consumers in the high-end market is also growing, he said.

"Indonesia is, for example, one of the largest markets for our communicators in Asia."

In addition to offering a wide range of handset choices, he said Nokia would also continue to improve efficiency so as to make its devices more affordable to low-end customers while improving software to meet expectations of customers at the high end.

"In order to be able to stay number one, we have to be more innovative," he said. "That's why we are now focusing on the Internet and ... convergence."

Nokia's dominance in the world mobile phone market continued last year, leaving other major handset manufacturers Motorola and Sony Ericsson -- and rising stars like Samsung and LG -- far behind.

According to a survey conducted by the U.S.-based consulting company Strategy Analytics, the Finnish handset producer -- market leader since 1998 -- booked total shipments of 437.1 million units in 2007, an increase from 347.5 million units the previous year.

That impressive achievement pushed Nokia's market share to 38.8 percent from 34.7 percent, making the company the largest vendor in the mobile phone market.

At the same time Korean star Samsung has been steadily gaining in the global handset market. Last year, the company's market share rose to 14.3 percent from 11.2 percent the previous year at the expense of Motorola, which saw its market share drop to 14.1 percent from 22.4 percent.

Samsung's 2007 performance made it the second largest player in the mobile phone market after Nokia, displacing Motorola -- now third place -- which failed to duplicate the success of its popular Razr model two years ago.

Meanwhile, Sony Ericsson's market share rose slightly to 9.2 percent from 8.9. But growth continued to slow for the company, even while it managed to stay place in global handheld shipments

Besides product and software improvements, Nokia has also restructured its mobile phone devices group in order to further improve its competitive edge in world handset markets.

Global market share

Q4-06 2006 Q4-07 2007

Nokia 36% 34.7% 40.2% 38.8%
Samsung 11.2% 11.3% 14% 14.3%
Motorola 22.4% 21.7% 12.3% 14.1%
Sony Ericsson 8.9% 7.5% 9.3% 9.2%
LG 5.8% 6.4% 7.1% 7.2%
Others 15.7% 18.4% 17.1% 16.4%

Source: Strategy Analytics

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