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Nokia smartphone share continues to shrink in fall

updated 09:25 am EST, Thu January 22, 2009

Nokia Q4 2008 Results

Nokia today reported fall 2008 financial results that point to a major contraction in its performance, especially in smartphones. The Finnish company's operating profit tumbled from the equivalent of $3.25 billion in late 2007 to just $641.96 million for the last quarter in 2008, or a drop of about 80.3 percent; its net sales have also dropped 19.4 percent to $16.52 billion and reflect a continued drop in the number of phones it sells, which fell about 15 percent year-over-year to 113.4 million devices and 4 percent versus the summer.

Estimates run by Nokia itself have the drop resulting in further market share losses beyond similar drops in the summer. The phone maker now believes it has about 37 percent of the total cellphone market, dipping from 40 percent in the last quarter of 2007 and from 38 percent in the previous quarter.

Smartphone percentages were particularly low for the company. Although Nokia believes the number of smartphones shipped by any company grew to 48 million, a boost from 40.1 million in late 2007 as well as from 44.2 million in the summer, its own smartphone shipments have continued to drop and reached just 15.1 million phones during the holidays versus 18.8 million a year earlier and 15.4 million from the third quarter of 2008. About 8 million of the phones were Nseries models, while 3 million were Eseries business phones such as the E71. The 5800 XpressMusic and other devices fill in the remaining 4.1 million.

The average selling price of a Nokia phone reflects this and has dropped from $108.30 towards the end of 2007 to $92.64 in late 2008 as customers turned towards lower-end hardware.

Nokia doesn't attempt to explain its rapidly shrinking smartphone share, which now accounts for nearly 31.5 percent. The figure is a significant drop from 35 percent in the summer and a steeper-still decrease from 46.9 percent in the fourth quarter of 2007. However, the company is known to have lost a significant amount of share to Apple, which despite shrinking back from its summer high still shipped 4.36 million iPhones and would therefore have about 9 percent of the smartphone market for the newer period. RIM's BlackBerries have also steadily increased in influence, with 6.7 million shipments between September and November.

Nokia has been taking steps to counter the steady decline in its influence by introducing its first touchscreen smartphones nearly two years after the original introduction of the iPhone, having shipped the 5800 XpressMusic at the end of 2008 and announced the slide-out N97, which becomes its official flagship and arrives in the first half of this year.

by MacNN Staff



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