Nokia Slips As Samsung Steals Share
By Carlo Longino, Fri Apr 16 14:00:00 GMT 2004
The two companies released first-quarter earnings today, but that's about all they've got in common: Samsung celebrated record profits while Nokia again warned on second-quarter sales.
This could be the fourth quarter in a row that revenue is down at the market leader, and the company said second-quarter profits will be well below analyst expectations. It's because of the same reasons given a few weeks back -- holes in the product line, slipping handset prices, and a weak US dollar. Nokia's own market share figures, which can be a bit optimistic when compared to outside analysts' numbers, show the company lost 3 points to 35%.
CEO Jorma Ollila told CNBC that the company didn't move as quickly as it should have, compared to changes in products made by competitors, and in a pretty forthcoming statement, said the company was wrong not to embrace flip designs sooner.
Samsung again makes an interesting comparison, as it's thriving everywhere Nokia is struggling. The overall handset market grew by 29% in the quarter to 128 million. Nokia's sales were up only 19 points, while Samsung's shot up 52% to 20.1 million. Those sales would give Samsung over 15% market share compared to about 10% in the fourth quarter of last year. And whereas Nokia's estimates are shrinking, Samsung recently raised its yearly sales forecast.
Strategically and design-wise, the company's opposite of Nokia. Flips are its forte, and it moves as quickly as anyone in adding new features in their devices. Some analyst numbers from last year say that 30 percent of Sony Ericsson's devices sold in 2003 and 18 percent of Samsung's had integrated cameras, compared to only 6 percent for Nokia.
It's clear that Nokia's got to move more quickly to fill in its product mix and be much more aggressive about adding new features to its handsets. The company's touted the fact that it will launch (which doesn't necessarily mean ship) 40 handsets this year. That may sound like a lot, but compare it to Samsung's 130. The Korean manufacturer is also continuing its aggressive rollout of features: 98% of its phones this year will have a color screen, and just over half will have cameras.