Nokia Shouldn’t Fiddle While Its Market Leadership Burns

Nokia posted a 30.5 percent drop in earnings today on sales of 12.2 billion euros ($16.5 billion). This wasn’t surprising as the Finnish phone maker had warned the world last month that this would happen. But it’s frustrating that the company, which saw its market share erode by 2 percent from the previous quarter, would blame price cutting by its competitors for taking buyers. Part of the problem is that Nokia’s late to the game when it comes to giving buyers what they want.
Sure, price-cutting is a pain to deal with, but since Nokia said it doesn’t plan to answer those price cuts with cuts of its own, it needs to get in gear and focus on boosting sales of its high-end phones. Although, price cuts in that market are coming too.
Nokia has made some brilliant phones but has lagged when it comes to building new ones targeted at the consumer population, which is snapping up smartphones at a rapid clip. An analyst told Forbes that half of the total value of the cell phone market will comes from sales of smartphones next year. But the people spending those dollars aren’t the business users who have purchased Nokia’s N or E series of devices — they want music players, touch screens and whizzy apps that allow them to see their social networks. Nokia’s getting started with the launch of its 5800 XpressMusic handset earlier this month, so we’ll see if that will help keep it on top.
Also as part of the earnings call, Nokia revealed that it would pay Qualcomm 1.7 billion euros ($2.29 billion) in the fourth quarter as part of a patent settlement made earlier this year. I’m hoping this means good news for getting Nokia phones on Verizon’s CDMA network.