Nokia's Stumble a Wake-Up Call?

The news is in for Nokia's market share and the news isn't good. Reuters story subtitle was "Gartner survey cites rocky relationships, lack of new models" and reports that while the overall handset market grew by 34% in the first quarter, that "the big story is in Western Europe, where Nokia has lost 10 percentage points of market share," (Gartner analyst Ben Wood).

Nokia reported that its handset sales actually increased during the period, though stating that their worldwide market share slipped to around 35%. Gartner claims that it was as low as 29%. Nokia vice president Antii Vasara attributed at least part of the drop to Nokia's policy of putting their own branding on devices, instead of helping operators to differentiate products. Analysts also point out that Nokia's product line in the period had lost ground in features and styles to their competition.

Andrew Orlowski, writing for The Register points out that Nokia's weakness is in the mid range product offerings. He writes that "Nokia's low end looks extremely competitive and its high end is faring well, despite some concern with the 3G products." But the mid range products "looks dated set alongside newer rivals" and Nokia needs to take its Series 40 phones and make them more stylish while improving useability. This is likely what Nokia had in mind when it released the 3220 with its innovative (dare I say COOL) wave messaging.

But with "carriers gravitating toward vendors that respond to their customization requests" as Derek at tech dirt points out, Nokia needed this wake-up call. A slow decline in market share might not have been the shock to the system that this kind of significant slump is likely to provide. A flurry of products shipping in the summer and fall, and a change in their willingness to cooperate with operators could easily shift the analyst reports back into a positive spin.

On all of this negative news Nokia's stock has dropped, reports CBS Marketwatch. Just three months ago the stock traded around $23 and is down to $14.33 today. If you believe that the decision makers in Espoo can turn their battleship around in the face of this crises, NOK is probably a good buy right now.