Nokia’s march to the top

IIPM : EXECUTIVE EDUCATION

After its continuing dominance in the global market, Nokia now aims to conquer the important US market

It was exactly a year ago, when Nokia’s CFO Rick Simonson outlined company’s plan to increase pressure on its closest rival Motorola. Simonson pointed towards further reducing the entry-level prices of Nokia’s phone in an attempt to widen its lead over Motorola in the global handset market. Nokia’s strategy worked well with its global market share soaring to an emphatic 39.4% in the Q3 07 while Motorola lost its second position to Samsung and now has a minimal market share of 12.9%.

However, what Simonson and his team could not turnaround was Nokia’s fate in the important US market where this global handset leader occupies a distant fourth position. According to Strategic Anlaytics, Nokia is struggling to compete in the US market with a minimal market share of 11% while Motorola is comfortably placed at the top with an impressive 33% share. Even the players like Samsung and LG, which stand nowhere near Nokia in the global market are giving it a tough fight in the US. The fact is that Nokia hasn’t been able to come up with a definitive winning formula for the US market. Nokia’s dismal performance there can also be attributed to the fact that the company hasn’t been able to collaborate effectively with the wireless service providers. Even the appointment of Mark Louison (as President for North America) to collaborate with specific US carriers, didn’t furnish the desired outcome.

However, on January 10, Mark Louison announced that the Nokia would be launching 12 new handset for the US market in the year 2008. “It’s not unreasonable you’d see between six to 12 new operator-specific devices this year. It’ll probably be more than this,” said Louison.

He further commented, “You’ll see some of that in the first half of 2008, with the velocity to increase that in the second half and going full steam ahead in 2009.”

Despite all these, Nokia must not forget that even Motorola is playing its cards to stay ahead in the US market and improve its performance in the global arena. “With Motorola’s new product line coming out soon, the company should be able to achieve continued growth in shipment volume during the fourth quarter,” says Tina Teng, analyst for iSuppli.

With its new subscriber specific strategy, Nokia can definitely hope to amend its poor performance in the US market. However, with Samsung and Motorola making inroads into the global handset markets with a renewed vigour, maintaining the global crown, along with marching ahead in the US mart won’t be a cakewalk for this Finnish giant.

B&E edit bureau: Devdeep Singh

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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