Nokia Juggernaut Plows Forward - InformationWeek

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1/24/2008
02:25 PM
Eric Ogren
Eric Ogren
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Nokia Juggernaut Plows Forward

Can anything stop the international powerhouse that is Nokia? It posted its fourth quarter numbers, and in stark contrast with Motorola, Nokia's profits surged 44% and its worldwide market share reached 40%. It appears as though the year-long internal reorganization has paid off in spades. Nokia's mobile phone business is firing on all cylinders, and it's packing a V-16.

Can anything stop the international powerhouse that is Nokia? It posted its fourth quarter numbers, and in stark contrast with Motorola, Nokia's profits surged 44% and its worldwide market share reached 40%. It appears as though the year-long internal reorganization has paid off in spades. Nokia's mobile phone business is firing on all cylinders, and it's packing a V-16.Nokia's 40% is more than Samsung, Motorola, and Sony Ericsson's market shares combined. Nokia is so far ahead of the competition that only a major stumble by the Finnish colossus could stop it. Samsung, Motorola, and Sony Ericsson are clearly scrapping for second place for the time being. Nokia shows no signs of slowing down.

It increased its numbers across the board. Nokia sold 133.5 million phones in the fourth quarter alone, raking in profits of some $2.7 billion. Volume was up 20% compared with 3Q07, and 27% for the full year compared with 2006. Gross margins are up from 14.6% to 15.9%. Earnings per share jumped by 57%. And for the year, Nokia sold an approximate 336 million phones, up 17% sequentially and up 16% year on year. Yowza.

Several key factors played into Nokia's success in 2007. For one, it spent the year re-jiggering its internal businesses into a three-columned organization that spans devices, networks and services. It did a good job of keeping costs down, while flooding both emerging and mature markets alike with desirable products.

The N95 multimedia computer, for example, has been an international rock star of a phone. Its advanced media capabilities, particularly the camera, have made it a very popular handset with those who can afford the ~$700 price tag.

What's amazing is that Nokia accomplished all this even as it has steadily lost market share in the United States. Though I've heard unofficially from Nokia that it is taking the U.S. market seriously, it still has a lot of work to do here.

Nokia, more than any other handset maker, took advantage of Motorola's continued woes. It ate up former Motorola customers as they abandoned the company's handsets in favor of Nokia's fresher designs.

If Nokia can better-tackle the U.S. market, it is possible it could gobble more of Motorola's market share. (Motorola is currently the market leader in the United States.)

If I were the other manufacturers, I'd sorely want to steal back some of Nokia's market share. How they'll ever be able to pull it off, I have no idea.

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