Inching closer to its long-sought goal of 40% of the global market, Nokia Corp. confirmed last week that its business is firing on nearly all cylinders.
The Finnish vendor notched impressive, year-on-year, double-digit gains in handset volumes in every region but North America. The company’s overall revenue and profits are up sharply, exceeding the market’s expectations, and last week that news sent Nokia’s stock up as much as 8%.
The vendor’s nearly 101 million global handset shipments was enough to earn it 38% of the global market, a quick increase of two share points in one quarter and a four-point gain over the year-ago quarter. Coupled with Motorola Inc.’s precipitous decline, particularly in emerging markets where Nokia excels, the market leader has put some distance between itself and challengers such as Motorola and Samsung Electronics Co. Ltd., which has captured the No. 2 position.
World beater, U.S. struggles
Even a world beater such as Nokia, however, faces specific, immediate challenges.
Handset shipments to the U.S. in the second quarter fell 21% year-on-year to just 4.1 million units, out of approximately 34.4 million units sold at retail. Motorola, whose global market share is sinking, still holds a vast lead in the U.S. market; it sold more than 11 million devices in its home market last quarter.
(Nokia’s declining number of units shipped was somewhat at odds with recent data on U.S. retail sales from Strategy Analytics that showed Nokia gaining 1.5% for the quarter. Retail sales, however, can reflect gains with consumers while shipments decrease, presumably to stabilize inventory.)
World hegemony perhaps cannot be declared without success in North America. Nokia has said it will methodically pursue business with top-tier carriers here, even as it grows alternative channels-or “complementary channels,” as Nokia is careful to say to avoid alienating its customers.
But the Finnish vendor’s performance in the quarter just past provides further confirmation that it has succeeded in addressing both the volume-based, low-margin, entry-tier handset business in emerging markets as well as in the mid- and high-tier segments that rely on the replacement cycle in mature markets. That’s going to buy it time to consider how best to bolster its market leadership.
“Our Nokia thesis is based on a 1
