Business

Nokia: Building on the No.1 Spot

Written by Gaurav Bhola, MSM, Managing Editor & Community Manager on July 24, 2007 8:04 am EST

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The world’ largest cell phone maker missed the boat on the slim handset wave but it is not worried. The Finnish cellular phone giant is finally launching a slim handset, the Nokia 6300. The Nokia 6300 builds upon the company’ tradition of feature rich competitive mobile phones.

Nokia and Sony Ericsson did not initiate any slim cell phones during 2006, as Motorola continued dominance of the slim phone market with the Moto Razr. Motorola the No. 2 cellular company in the world grabbed the slim phone initiative; Nokia missed the opportunity to capitalize this market share.

Nokia has struggled in recent years to gain market share in the U.S. But in other countries it is a huge player. At the end of 2006, Nokia had 35.1% global market share, compared to 20.6% for Motorola, 12.2% for Samsung, and 6.9% for LG.

Nokia has done phenomenally well in penetrating emerging markets, especially Asia and Africa. In China, Nokia is filling in the gap left by Motorola, who once had the stronger presence. Motorola has been languishing from the effects of deteriorating phone prices amidst tough competition in emerging markets and against Nokia.

Nokia’ potency lies in its large range of phones that cater to high, mid, and low end consumers. Also Nokia’ strengths are its distribution systems and product innovations, where it has winning formulas tailored to each country. A good example: for India, Nokia produced dustproof keypads, critical in dry and unpaved areas of the Indian Subcontinent.

Ingenious and in-depth country-specific research and development efforts have helped propel Nokia to $3.7 billion in Indian sales for 2006. Now the company stands as a market leader in India, the fastest-growing cell phone market in the world.

However, it is in the U.S. where Nokia is in the constant shadow of Motorola and others. Nokia lost the No.1 spot in 2004 to Motorola mainly due to the lack of design advances such as the clamshell phone. It again lost the opportunity with the popularity of slim phones such as the Motorola Razr. The company has not been successful in penetrating beyond the low margin, bottom end cell phone market in the U.S.

But that may be changing soon. Nokia is establishing a new design studio in Espoo, Finland. It seeks to win back the U.S. market share that it had dominated for seven years previous to 2004 by elevating importance of design in product development.

Nokia now sees form as a critical part of function in the global arena. The company has come to the conclusion that fashion-conscious consumers exist at every level of the income spectrum; whether the consumer lives in a village in China or in Beverly Hills, aesthetics are important. The Nokia heritage of product innovation combined with new jazzed up design is going to be a tough formula for competitors to beat.

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