QUOTE AND NEWS
Motley Fool  12 hrs ago  Comment 
What does the unexpected arrival of Nokia’s N1 Android tablet mean for HTC/Google’s Nexus 9?
Forbes  12 hrs ago  Comment 
Forbes  Nov 24  Comment 
Considering that Nokia can enter the smartphone market only in 2016 because of a clause in its deal with Microsoft, its decision to launch a tablet by licensing its brand and industrial design is a good way to re-enter the consumer business....
The Hindu Business Line  Nov 24  Comment 
The alliance is to protect Indian children during disasters through the use of telecom and mapping technologies.
Forbes  Nov 21  Comment 
This week’s Android Circuit highlights a number of stories including the return of Nokia to the consumer market with an Android tablet and launcher, Google aims Play at China, running Lollipop on a Nexus 7, the good and bad points of the Nexus...
TechCrunch  Nov 21  Comment 
 News is picking up in time for the holiday season, with Nokia announcing the Android-powered N1 tablet. Meanwhile, Intel got into the fashion game with the new MICA data-connected bracelet, complete with a Sapphire OLED touchscreen. Plus, Parrot...
Motley Fool  Nov 20  Comment 
Nokia's new tablet is shocking in that it is inspired by everybody else but former partner Microsoft.
Motley Fool  Nov 20  Comment 
Nokia's new Android tablet is a huge surprise, for more than the obvious reasons.
TechCrunch  Nov 20  Comment 
 This week on the Droidcast, it’s Darrell Etherington, Greg Kumparak, and Engadget’s Chris Velazco, and we’re talking in more detail about the Nexus 6 now that the full reviews are out. Bottom line: It’s big. We also tackle Nokia’s...
Cellular News  Nov 19  Comment 
Nokia Networks says that it has won a 3G contract from Bharti Airtel Click here for more.




 

This article refers to the phone manufacturer. For the currency Norwegian krone (NOK), see Norwegian Krone (NOK).

Nokia is a designer, manufacturer, and service provider of mobile devices, creating the world's first handheld mobile phone in 1987, as well as an active player in the internet and communication industries[1]. Nokia is the largest vendor of telephone handsets in the world, with 38% of the global market share for mobile devices[2]. In fiscal year 2010, Nokia recorded revenues of €42.4 billion and net income of €1.9 billion.

With increasing competition chipping away at its profitability, Nokia has made an aggressive push into new initiatives to differentiate itself, if not keep up with, other handset makers. It launched online services and applications market through Ovi applications platform, which has gained traction and has reached 3 million app downloads a day from over 165 million users in 2010[3] .

Company Overview

Nokia began as a Finnish pulp mill in 1865 and has since undergone numerous transformations, becoming Finland's largest company and the largest producer of mobile phones in the world. Nokia began producing telecommunications equipment in the 1970's, and since the early 1980's on mobile phones have comprised the core of its business.

Business Segments

In FY2010, Nokia reported net sales of €42.4 billion and net income of €1.9 billion. Nokia’s improved net sales and profitability was due to improved economic and financial conditions following the significant deterioration in demand during the recession. Nokia's business is organized in three units: Devices and Services, NAVTEQ, and Nokia Siemens Networks.

Devices and Services (67.2% of net sales in FY2010[4])

This segment develops and produces Nokia's mobile devices. The segment has taken many initiatives to keep pace in the competitive smartphone market. The Ovi Store provides Nokia users access to applications, music, and games. One of Nokia's most popular smartphones, the N8, integrates Symbian 3 OS and offers unique features including a 12 megapixel camera, HD video editing, live Facebook feeds, free turn-by-turn navigation software, fast flip scrolling, and more[5].

NAVTEQ (2.4% of sales in FY2010[4])

NAVTEQ was a Chicago-based web and mapping company acquired by Nokia in 2008. More specifically, it provides digital map information and location-based content and services for navigation and mapping applications.

Nokia Siemens Networks (31.3% of net sales in FY2010[4])

Nokia Siemens Networks (NSN) is a joint venture by Nokia and Siemens AG, combining Nokia's former Networks business with Siemens' carrier-related operations for telephony networks.It sells telecommunication infrastructure equipment to mobile phone operators, and holds roughly 21% of the $82 billion global telecommunications equipment market, second only to Ericsson[6].

NSN announced that it would purchase Motorola's telecom network equipment business for $1.2 billion, strengthening its positioning in North America and resulting in WiMAX market leadership. The segment makes set-top boxes, cellular infrastructure systems, wireless broadband systems, analog and digital two-way radios, and voice and data communication products for cable and phone companies. The deal also grants the joint venture relationships to more than 50 wireless operators, as well as access to 30 active CDMA networks in 22 countries and 80 active GSM networks in 66 countries[7][8].

Trends and Forces

Acquisitions and Joint Ventures

NAVTEQ, one of the two primary global electronic mapping companies, was acquired by Nokia for $8.1 billion. NAVTEQ generates income by licensing its databases to GPS in-car navigation system companies and other technology companies such as Google, Microsoft, and Yahoo! . Through this acquisition, Nokia can integrate location-based programs and products into their mobile technology. By introducing GPS information through primary service rather than through third party companies, Nokia can effectively lower the costs of providing GPS navigational equipment to the end-user, establishing itself as leader in the market.

Nokia and Siemens AG participates in a joint venture whereby the two merged business operations in mobile communications and telecommunications. The joint venture considerably enlarged Nokia's operations, especially in cell phones, leading to further economies of scale.

  • OZ Communications, Inc.

In November 2008, Nokia acquired OZ Communications Inc, which provides mobile phones with the technology for mobile messaging and emailing[9].

Emerging and Developed Markets

While Nokia's overall sales are roughly even between the emerging and developed markets, the global market for cell phones is not homogeneous. While many other handset makers rely on "one-size-fits-all" product line, Nokia's ability to cater to consumers across income segments is part of its value proposition. Emerging markets are characterized by a large volume of customers purchasing their first handset, while repurchases and upgrades are common in the developed market. In fact, China and India represent Nokia's largest markets. Increasingly, mobile devices are being used for money transfers in developing areas that do not have established banking systems[10]. Nokia's release of Nokia Money, a new mobile financial service giving mobile device users access to basic financial services. Nokia expects the service to operate alongside Obopay, an Indian developer of mobile payment solutions and Nokia investee[11].

Competition

Nokia occupies a dominant position in the global handset market, contributing over 38% of the global market's wireless handsets. Samsung and LG Electronics continue to gain ground, representing about 21% and 11% of the mobile handset market. These three companies have gained market share at the expense of Sony-Ericsson and Motorola, who have suffered as part of the secular consumer trend towards more advanced mobile technology[12].

Aside from the competitors mentioned above, Nokia faces fierce competition from smartphone makers such as Apple and Research in Motion, who are quickly snapping up industry profits and market share with their offerings, the iPhone and Blackberry. While Nokia remains the dominant player, recent developments in the industry show how quickly fortunes can change in such a competitive and innovative market as the handheld market. Nokia must continue to roll out new technologically advanced products which appeal to the mass consumer market to maintain their market position.

References

  1. "Story of Nokia," About Nokia-Company Website
  2. "Nokia Q4 2010 net sales EUR 12.7 billion," Nokia Investor Relations, 01/27/11
  3. "Nokia: Three Million Apps Downloaded Daily, 165 Million Ovi Users," Robin Wauters, TechCrunch, November 18, 2010
  4. 4.0 4.1 4.2
  5. "Could a Hot New Smartphone Lift Nokia’s Stock?," Trefis Investment Research, 09/14/2010
  6. "Ericsson market share jumps in Q4: Dell'Oro," Reuters, 02/16/2010
  7. "Nokia Siemens buys Motorola network ops for $1.2 billion," Reuters, 07/19/2010
  8. "Nokia Siemens snags Motorola’s wireless equipment unit for $1.2B," MobileBeat, 07/19/2010
  9. Nokia completes OZ Communications acquisition, November 4, 2008
  10. "World Poor Spell $7.9 Billion in Mobile Cash for Vodafone, MTN" Bloomberg, 06/20/2009
  11. "Strategy Analytics: Global Handset Market Returns to 10 Percent Growth in Q4 2009," Enhaced Online News, 01/28/10
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