Nokia scrambling for lost market share in smartphone era (NOK)

Nokia (NYSE: NOK) has been losing market share for several years, so as the Financial Times reports

Stephen Elop, Nokia’s chief executive, is considering radical changes to the company’s strategy as its fourth-quarter results showed it rapidly losing ground to Apple and smartphone makers using Google’s Android operating system…

Nokia’s shares fell almost 9 per cent shortly after its fourth-quarter results confirmed a steep decline in its smartphone market share and the company gave a disappointing outlook for the first three months of 2011.

The world’s largest mobile maker said its smartphone market share in the last three months of 2010 was 31 per cent, compared with 38 per cent in the third quarter.

In an attempt to stem the losses, Nokia

has cut the prices of its smartphones in Europe in an attempt to slow the decline in its share of the higher end of the market, two industry sources said on Tuesday. …

One of the sources with direct knowledge of Nokia’s pricing said the steepest cuts of around 15 per cent were made on prices for the company’s flagship model, the N8, the multimedia phone C7, as well as the business user-targeted E6.

Other price cuts were smaller, both sources said. “There are no very big cuts per model, but the scale – across the portfolio – is unseen for a very, very long time,” said one of the sources, who works at a European telecoms operator.

Nokia’s share of the smartphone market fell to 25.5 per cent in the first quarter from 39 per cent a year earlier, according to research firm Gartner, and many analysts expect the share to fall further during 2011.

Whether these price cuts will be successful remains to be seen. In other Nokia news, GigaOM discusses a recent report showing how NOK has been overpaying to keep top talent for 14 years – to the tune of $4.5 million per employee!

Their story centers on a rebellion staged in 1997 by Nokia product developer Jyrki Hallikainen. Hallikainen convinced 44 other engineers from the business to join him at a new manufacturing outfit, which was to be set up under the auspices of Dutch electronics giant Philips. The team resigned en masse, sending shockwaves throughout Nokia’s senior management. They were taken by surprise by the move, and desperate to stop the collapse happening — particularly since it would rip the heart out of their main research and development team.

The report details how Nokia’s mobile phone boss Pekka Ala-Pietilä (later the company’s president and now the CEO of Blyk), asked Hallikainen and his rebels what it would take to keep them on board. Their price, the documents reveal, was $200 million — the equivalent of around $4.5 million dollars for each of the engineers who were, effectively, holding the company to ransom.

Most of the rebels returned to their jobs at Nokia and Hallikainen continued on his own with the new company, Microcell — which was sold to Flextronics for $80 million five years later.

Covestor models that hold NOK as of 7/5 include:

 

Sources:

“Nokia loses smartphone market share” Financial Times, 1/27. http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBgQFjAA&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F255a8506-2a07-11e0-997c-00144feab49a.html&ei=pNoTTo6TEsyemQW-2cihDg&usg=AFQjCNGV7F5w7yxZp3V1Z2aBdNYzBOWhQA&sig2=-rejvfnFnTjZI7NFcK3n6Q

“Nokia cuts smart phone prices” The Globe and Mail, 7/5. http://www.theglobeandmail.com/news/technology/mobile-technology/nokia-cuts-smartphone-prices/article2087050/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2087050

“Nokia’s $200m secret shows the rot goes way, way back” GigaOM, 7/5. http://gigaom.com/mobile/nokia%E2%80%99s-200m-secret-shows-the-rot-goes-way-way-back/