Nokia Admits Sharper Decline in Market Share, Fails to Meet Estimates

Strategic Insights -

Nokia, the world's largest producer of mobile phones, has admitted its market share in the first quarter fell to 32 percent, a sharper decline than initially indicated. Despite this setback, the company is holding onto its long-term target of gaining 40 percent of the global handset market. However, analysts are skeptical of Nokia's ability to recover quickly, citing increased competition and misjudging handset trends.

Key Takeaways:

  • Nokia's market share fell to 32 percent in the first quarter, a sharper decline than estimated at 35 percent.
  • The company's long-term target of gaining 40 percent of the global handset market remains unchanged, despite the setback.
  • Nokia's executive vice-president, Matti Alahuhta, stressed that the company is still as big as the second and third-largest suppliers (Motorola and Samsung) combined.
  • Motorola has 18 percent of the market, while Samsung has 14 percent.
  • Nokia's own estimates of the global market size are lower than those of market researchers like Gartner and Strategy Analytics, who put Nokia below 30 percent market share.
  • The research firms' estimates of the global market size are higher, with Nokia now believe it to be 141m handsets in the three months to March 31.
  • In the second quarter, Nokia has taken measures to stabilize its market share, including cutting prices and refocusing marketing campaigns.
  • The company has unveiled five new handset models, including three using the clam shell or foldable format.
  • Nokia's product portfolio and capabilities give the company "a lot of confidence" in improving market share, according to CEO Jorma Ollila.

Statistics:

  • Nokia's market share fell to 32 percent in the first quarter.
  • The company's market share is estimated to be 35 percent in 2003.
  • Motorola has 18 percent of the market.
  • Samsung has 14 percent of the market.
  • The global market size is estimated to be 141m handsets in the three months to March 31.

Sources:

  • "Nokia, the world's largest producer of mobile phones, yesterday admitted its market share in the first quarter fell to 32 per cent" (Source: The Economist's Lex column)
  • "According to Nokia, Motorola of the US had 18 per cent of the market and Samsung of South Korea, 14 per cent" (Source: Nokia press release)
  • "Nokia's own estimates remain higher than those of market researchers such as Gartner and Strategy Analytics, both of which have put Nokia below 30 per cent" (Source: Strategy Analytics report)