Nokia is a company getting squeezed both at the top and bottom segments from different breed of competitors.In the high end smartphone segment it is losing mindshare,brand appeal and pricing power to Google and Apple while on the lower segment it is losing out to local noname cheap competitors.Nokia’s Indian Fortress was crumbling in the face Samsung and Local Players Competition last year and has now taken alarming proportions with a whopping 18% marketshare loss in the last 6 months.The competition is only intensifying with Local Indian companies introducing low cost smartphone powered by Google’s Free and very popular Android O/S.Nokia has been trying to turnaround its fortunes with the help of N8,Meego and a new CEO. Nokia’s recent quarter has shown improvement with cost cutting efforts leading to improved profits.However the mid and long term future remains bleak required a drastic change in strategy .Something like a merger with RIMM
Nokia faces Low Cost Chinese Competition
Earlier I thought that Nokia was on the backfoot in China and India from ultra low cost white box Chinese vendors.However it turns out that it true for even other geographies like Africa and Latin America.Chipsets made by Chinese vendors are being used by local assemblers like Micromax,Spice in India to beat Nokia at its own game.Nokia has failed miserably to face the Chinese onslaught as its global marketshare has shrunk to 28% which is the lowest in the last 12 years.Nokia’s share remain cheap historically and on an absolute basis trading more like a value play rather than a technology company.But given its vulnerable strategic position and continuous marketshare losses,investors hoping for a higher share price may remain disappointed.
Nokia Oyj’s mobile-phone market share tumbled to its lowest ever as unbranded Chinese device makers gained ground on the low-end, while Apple Inc.’s iPhones advanced in smartphones, researcher Gartner Inc. said.
Gains by so-called “white-box” vendors who sell small runs of cheap phones prompted Gartner to raise its forecast for full-year industry growth to 30 percent from 13 to 15 percent earlier, Carolina Milanesi, an analyst with Gartner’s Egham, U.K. unit, said in an interview.White-box vendors now sell through market stalls and mom- and-pop retailers in India, Russia, the Middle East and Africa and Latin America, where the operators don’t own the channel, Milanesi said.