LONDON (Dow Jones) -- It may be a small consolation to struggling Motorola, but European rival Nokia is rapidly losing market share on the US company's home turf.
Nokia on Thursday said that while its global market share rose to 36% in the first quarter from 35% a year earlier, it suffered a "significant" market share decline in North America.
In the region, handset volume collapsed 43% to 4.8 million units. Nokia attributed the decline to delays to the launch of its N75 smart phone as well as to "the excess inventory of certain competitor's products."
Morotola, which posted a loss in its latest quarter, recently slashed the price of some of its older handsets such as the Razr in order to get rid of an inventory buildup.
Nokia Chief Executive Olli Pekka Kallasvuo told analysts on a conference call on Thursday that he's confident the N75 will hit the U.S. market soon and that delays were mostly due to operator testing.
But observers said the arrival of the N75, with a suggested retail price of $399, may only make a small difference.
"The price of the N75 is fairly high for the U.S. market, where consumers spend less on phones than in Europe. Unless it's heavily subsidized by operators, I wouldn't expect that model to turn things around for them in the U.S.," said Carolina Milanesi, a director in the mobile device practice of tech research group Gartner in London.
She emphasized that Nokia's efforts to establish a better relationship with tier-one operators such as Verizon Wireless; Sprint Nextel, AT&T and Deutsche Telekom's T-Mobile is much more likely to bear fruit.
"They're doing the right thing now, which is to work with these guys" she said.
Still, Kallasvuo warned not to expect immediate results.
In particular, he said that a new business model at Verizon Wireless and increased cooperation with Sprint Nextel on a long-range wireless technology called WiMax are unlikely to bear fruit until 2008.
"50% of the U.S. market won't see a real impact until 2008," he said.
At AT&T, however, the story is a bit different. Kallasvuo believes the benefits of having a research-and-development center dedicated to the design of U.S.-specific products in San Diego is going to bring about higher sales this year.
"Here, AT&T is the most important target," he said.
In the enterprise-solutions segment, which provides handsets to business users and where BlackBerry maker Research in Motion (RIMM) reigns in the U.S., Nokia reported sales up 75% to 326 million euros this quarter.
But Milanesi said the segment is too much in flux at the moment, with the likes of Microsoft Corp. (MSFT) making inroads, to say for sure that Nokia is gaining share from RIM.
(END) Dow Jones Newswires"
Posted to the site on 19th April 2007
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