Nokia surges clear of rivals as Motorola faltersNokia, the world’s largest mobile phone manufacturer, looks to be streaking ahead of its main competitors with Motorola saying it expects to lose money on its core mobile phone division this year after losing market share over the past few months.
Nokia, the Finnish group that transformed itself from a forestry company and a producer of rubber boots into the world’s largest handset maker, is thought to have taken substantial market share from its US rival over the past three months, with Sony Ericsson and Samsung also expected to gain ground. Amid the hype around Apple’s entry into the mobile phone market with its top-end iPhone, Nokia has been forging ahead with a number of high-end handsets and a strong position in emerging markets.
Motorola looks in danger of losing its position as the world’s second-largest mobile phone maker after reporting a collapse in sales during the second quarter of the year. With the Korean manufacturer Samsung gaining ground on the American technology company, pressure is building on Motorola to develop a new hit phone to replicate the success of its wildly popular Razr handset. The company’s decision to pull out of the race to sell low-end handsets in emerging markets has boosted its average selling price but hit its volumes.
Motorola sold up to 35 million handsets in the second quarter of the year, 21 per cent lower than the 45 million it sold in the previous three months and 31 per cent lower than a year ago. After missing its sales and profit targets over the period, the company said it no longer expects to make a profit from its mobile phones sales this year.
The profit warning further increases pressure on Ed Zander, its chairman and chief executive, who has fought attempts by the billionaire activist investor Carl Icahn to oust him. Mr Zander joined Motorola in 2004 after a successful period at the helm of Sun Microsystems, and has overseen the demerger of the company’s semiconductor division Freescale and refocused the company on larger customers as well as consumers.
Richard Windsor, an analyst with Nomura Securities, said that Motorola’s problems look to be of its own making as data from its rivals such as Sony Ericsson suggests that underlying market growth remains robust. “Motorola is rapidly becoming a regional player with a strong position in North and South America and very little else. Motorola’s direction seems to be towards becoming a niche player in certain markets and segments. While this strategy could work, helping average selling prices and margins, it will come at the expense of long-term growth as all the action remains in emerging markets,” he said.
Sony Ericsson, the world’s fourth largest mobile phone maker, sold nearly 25 million handsets over the same period as it continued to benefit from the popularity of its Walkman music-oriented handsets and its Cybershot camera-focused models. But the company missed aggressive growth targets despite recording a 55 per cent jump in profit in the second quarter. The company’s average selling price fell to €125 (£85) as it targeted growth at the lower end of the market.
