Nokia to lower Q3 market share estimation
Largest mobile phone manufacturer, Nokia, announced from its headquarter that it is about to lower this Q3 market share estimation, compared from previous quarter. On Q2, Nokia profited EUR 1.47 billion, from EUR 13.2 billion net sales.
What’s with the decision? Could Nokia be pessimistic about market outlook? Nokia said, there are multiple factors that cause it to lower the estimation, but only one factor mentioned in the press release. The one factor is Nokia will not join other competitors on aggressive pricing. Finn giant mentioned:
These factors include Nokia’s tactical decision to not meet certain aggressive pricing of some competitors, the overall market competition, including the entry markets, and the temporary impact of a slower ramp-up of a mid-range Nokia device. Nokia’s strategy is to take market share only when the company believes it to be sustainably profitable in the longer term. Nokia has not broadly participated in the recent aggressive pricing activity - as it believes that the negative impact to profitability would outweigh any short term incremental benefits to device unit sales.
Nokia believes that price war is only for short term, while it wants to have longer term sustainable profit. Thus, price war is not for Nokia league. Understandable that as market leader, the almost 40% loyal market share is Nokia’s strongest base. It doesn’t need to lower its prices to meet consumer requirement, in fact consumer are willing to pay more to have the Nokia’s devices.
As the market slowdown continue, the worldwide selling has decreased, starting from Q2. Nokia then be realistic by re-estimating its Q3 estimation. Fair enough for me of course. The strong selling by iPhone 3G has not significantly affected Nokia’s market since most selling comes from mid-to-low budget phones.
Still, Nseries and Eseries will get shock therapy from competitors like iPhone 3G, new arrival BlackBerry Bold, upcoming HTC Dream Android, and upcoming Palm Treo Pro. I must say this Q4 2008 is going to be interesting to watch over.
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