Tuesday, February 07, 2006

Nokia: Dialing North America

BusinessWeek writes about lagging efforts in North America where its 20 percent market share trails Motorola's 35 percent. According to Gartner analyst Hugues De La Vergne, "while Nokia grabbed global share last year, growth in North America was flat."

Nokia CEO Jorma Ollila is aiming to change this, but it might be an uphill battle since it doesn't have the cool handsets that Motorola does. According to IDC, in the fourth quarter of 2005, Motorola's handset unit sales jumped 40.6 percent, while Nokia, only had a 27% increase from a smaller base.

Nokia will target high-end phones, such as music handsets like the the Nokia N91, due to start shipping soon. It also pushing its Internet tablet the Nokia 770.

It also hopes Motorola's Razr is getting closer to the end of its lifecycle. Paul Sagawa at Sanford Bernstein estimates the "Razr design account for about 30% of Motorola's total handset volume, and while Motorola keeps adding new features and colors (a Razr in pink was a hot seller at Christmas), the design could soon start feeling stale."

However, the iTunes enabled Slvr from Motorola just might pick up where the Razr left off. Ittai Kidron at CIBC World Markets predicted the "device could sell as many as 20 million units in 2006."

Also waiting in the wings for Motorola is the Q smartphone. Deutsche Bank analyst Brian Modoff doesn't think the Qwill ship in huge volumes, but "anticipates that it should help Motorola's margins.."

Handsets like the Slvr for Cingular and the Pebl for T-Mobile are also helping "Motorola strengthen its relationships with carriers looking to differentiate offerings from its rivals," said Bill Hughes at In-Stat. Motorola "is going to create a device for every carrier," he added.

Richard Doherty at Envisioneering Group also noted that "[Motorola is] clearly reacting to a lifestyle market opportunity." Nokia is attempting to go in this direction too, but does Motorola have too much of a head start? Hughes at In-Stat said, "Motorola has more features, while Nokia is known as cheaper, reliable. The revenue is going to the people who have different features."

CIBC's Kidron concurred stating, "While Nokia could gain some share, they are definitely not going to displace Motorola."