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Nokia Plans 40 Handset Launches in 2005

http://news.yahoo.com/news?tmpl=story&u=/nf/20041105/bs_nf/28188

Fri Nov 5, 3:12 PM ET Business - NewsFactor

Robin Arnfield, wireless.newsfactor.com

Nokia (news - web sites) (NYSE: NOK - news), the world's largest cell phone manufacturer, plans to launch 40 new handsets in 2005 in a bid to enlarge its already-dominant market share and fend off growing competition from Motorola (NYSE: MOT - news), Samsung and Sony Ericsson (news - web sites).

The Finnish company is hitting back, after holes in its product range allowed its competitors to erode its lead in the mid- to high-end handset market.

Investor Update

In a presentation to investors on Thursday in New York, Nokia said that it intends to increase its competitiveness by widening its product portfolio.

Next year, about two-thirds of Nokia's mobile device launches will contain cameras, while more than 50 percent are expected to be clamshell, slide and other non-bar designs, the company said. In addition, Nokia plans to include MP3 music players in half of the models it ships next year.

Earlier this year, Nokia had admitted that it was losing market share to competitors due to intense competition and said it had been late to react to new trends and introduce products such as clamshell handsets.

Market Growth

Nokia executives also told the New York meeting that the company sees the handset market growing by around 10 percent in 2005 from the 630 million units it expects to be sold in 2004.

While unit sales will continue to show strong growth, prices will fall and the value of the market will increase at a slower pace as a result, Nokia said.

Outpacing the Industry

Nokia forecast that its growth would be faster than the market, and said its goal was to win a 40 percent market share, up from around 30 percent at present.

In the third quarter, Nokia had a market share of 32.5 percent, which was higher than in the first and second quarters, but down from 37.4 percent in the fourth quarter of 2003.

Nokia is trying to cut its development expenses to below 10 percent of net sales within two years, while accelerating its product development cycles and cutting its overall operating expenses.

Demand for Customization

"Globally, operators are demanding more and more customization of devices that allow them to not only offer an exclusive handset, but to tailor the software and experience to the data services that are so important to their ability to drive additional revenue," Forrester Research analyst Charles Golvin told NewsFactor.

"Nokia has been slower than other providers to respond to this demand. Its ability to do a better job of this will be a key determinant of its ultimate market share standing."

The majority of Nokia's models -- and all of its high-end models -- are GSM, which means that in the US they do not reach the entire market, Golvin noted. While the company does have CDMA (news - web sites) handsets for large carriers like Verizon and Sprint (NYSE: FON - news), the number and range of models is much more limited than on the GSM side. For example, there are no CDMA Symbian phones that could compete with devices like the Treo.

"To expand its share in the US, Nokia will need to produce a broader range of CDMA devices," Golvin said.