9/8/2008 12:16:00 PM
Asian competition and handset delays behind Nokia’s warning
Analysts believe that Nokia’s market share warning will only be a temporary issue. The world’s largest handset manufacturer announced on Friday it would not be keeping its market share unchanged in Q3 as expected in July.
Revenues will also be impacted as fewer handsets are sold.
Nokia has been criticized for a number of handset delays recently, while some midrange phones have failed to meet quality standards.
Richard Windsor, analyst at Nomura: ‘The combination of uneconomic price cutting at the low-end and a quality problem in a mid-tier device has hit Q3 volume.’
Weaker consumer confidence in multiple markets, Nokia says, will reduce its market share, although the company expects growth of 10% in the overall market.
Windsor believes the fall in Nokia’s market share is partly down to increased competition, especially from small Asian handset manufacturers that are targeting the growth markets of China, India and Africa with cheap phones.
He adds that Nokia’s unit costs are the lowest in the industry and the Asian manufacturers are likely to be losing money by dropping their prices below Nokia’s. As a result they are likely to be a short term problem for the Finnish phone maker.