Barcelona: At a glance, the steel-blue clamshell mobile phone capable of displaying streaming video at broadband Internet speeds could be mistaken for one of the more than 100 different models made by Nokia Oyj, the world’s leading cellphone maker.
But the F230 is the latest high-speed device from ZTE Corp. of Shenzhen, China, whose 3% global market share pales next to the stake held by Nokia, which analysts estimate reached a record 40.2% in the fourth quarter.
Still, Li Ying Feng, general product manager for ZTE’s most advanced models, said he was not intimidated by Nokia, whose market share is more than the combined shares of its three top rivals: Samsung Electronics Co. Ltd, Motorola Inc. and Sony Ericsson Mobile Communications AB. In the shadow of the giant, Feng said ZTE was on track to double its cellphone sales to 60 million this year.
“We consider the mobile handset business to be very competitive,” Feng said during an interview at the mobile world congress here, an industry convention. “The market can change at a moment’s notice because there are so many variables to success.”
Ambitious plans: A sign points the way to the Nokia Oyj head office in Espoo, Finland. Nokia has the largest global market share.
With its largest global market share ever, Nokia is in a good position to extend its lead over its competitors as the firm’s low-cost production and distribution chain churns out record sales in the emerging markets of Africa, West Asia, India and Brazil. In India alone, Nokia is selling eight million cellphones a month.
But despite Nokia’s growing bulk, competitors say the Finnish manufacturer is still vulnerable to the vagaries of the cellphone business, where fickle consumers and aggressive challengers could bite into the company’s lead in a few months if the market leader misses the latest innovation or style twist.
“The game is definitely not over,” said Daniel Moloney, president of Motorola’s cellphone business.
Motorola ranks third in the world market after Nokia and Samsung, with a 12.3% market share, according to Strategy Analytics, a research company.
In 2005, Motorola had temporarily closed the gap with Nokia with its Razr model, and made a similar gain in 1996 with the StarTac, the first clamshell phone.
The tenacity of competitors is one reason Olli-Pekka Kallasvuo, the Nokia chief executive, said he was by no means ready to declare victory. On the contrary, Kallasvuo said, Apple Inc., with its iPhone, and Google Inc. and Microsoft Corp., which both make software that competes with Nokia’s Symbian operating system, are new, serious challengers.
“I think the situation is much more complex,” he said. “What we have are several industries that are converging, sometimes even colliding with each other. There have always been competitors. There will always be competitors.”
Despite the sober view from Kallasvuo, Neal Mawston, an industry analyst at Strategy Analytics in London, said Nokia was poised to enter a new market phase in an increasingly strong position—its lead growing, and no clear challenger with the necessary global clout in sight.
“Nokia has a world-class product portfolio and very few rivals can compete with that,” Mawston said. “They are now enjoying huge economies of scale that success conveys. Anybody who tries to get in a handset war with them is going to get hurt.”
Some Nokia suppliers marvel at its ability to keep growing.
“Nokia has done an admirable job in building great handsets that appeal to a broad section of the market,” said Scott McGregor, chief executive of Broadcom Corp., a chip maker based in Irvine, California, that supplies Nokia with Blue Tooth close-range wireless data microprocessors. “We salute their ability to hold and grow their lead, which is not easy when you get this big.”
Although Nokia is big, many competitors are profiting, too. Samsung of Korea, with a 14% market share, is on track to sell more than 200 million phones this year, an increase of 25%, said Yongcho Chi, an executive vice-president in Samsung’s mobile division. Chi also said the business was profitable.
“In terms of the market, there is plenty of room for someone like Samsung,” Chi said.
One potential brake on Nokia are mobile operators, who are reluctant to become dependent on a single cellphone maker that could use the leverage to demand better terms from sales.
“Nokia is an impressive company but it is certainly in our interest to ensure that there are a range of competitors in the market,” said Boris Nemsic, chief executive of Telekom Austria and its wireless unit, Mobilkom Austria. “The handset business is packed with innovators, such as HTC of Taiwan and ZTE of China, which keeps prices low.”
But with no rival closing in, the biggest threat to Nokia at the moment may come from within.
The company is pursuing a costly, ambitious plan called Ovi to build a profitable business in the elusive market of mobile services, a goal that so far has eluded many mobile network operators.
For Ovi, Nokia has acquired a series of software companies, including Navteq, a US maker of digital map data. Nokia is paying $8.1 billion (Rs32,076 crore) for Navteq, wagering that satellite location services will chart a new path to sales and profit.
©2008/INTERNATIONAL HERALD TRIBUNE