iPhone Competitors: Nokia

It won’t be too far fetched to say that today, Nokia is the Microsoft of the mobile devices industry. This Finnish giant is the one company that Apple would definitely need to bite at if it wants to create its place in the mobile devices market.

On the other hand, Nokia has proven to be resilient and the experience of 2004 when it lost ground to Motorola’s Razr will help it address the iPhone challenge better. It’ll be interesting to see how Nokia reacts to the anticipated paradigm shift in the mobile devices market, post the launch of the iPhone. Here is my prior analysis of Nokia wrt the convergence device movement.

Finland based Nokia Corp(NYSE: NOK) is the world’s largest manufacturer of mobile devices. In Q2 2007, the company shipped over 100 million units worldwide accounting for 37% of total units shipped. Nokia’s dominance in the market can be judged by the fact that it was a shade under about 3 times clear of the nearest rival Samsung, which shipped 37.3 million units in Q2 2007.

For Q2 2007, Nokia reported net sales of EUR 12.6 billion, a 28% year on year increase. Net profit increased by 148% to EUR 2.8 billion at EPS of EUR 0.72. However, the profit included a net positive impact of EUR 970 million mainly from gains on the formation of Nokia Siemens Networks. The EPS for Q2 2007 excluding special items was EUR 0.32.

Nokia’s total mobile device shipments with 29% year on year growth outpaced the industry, which grew at 14%. In the convergence devices market, the space which the iPhone is targeted at, Nokia grew by 54% riding on shipments of 9 million Nseries and 2 million Eseries devices. In Q2 2007, Nokia accounted for more than 50% of the total convergence devices market.

Nokia has long been selling mobile devices through three business groups, mobile phones (eg: Nokia 6300, Nokia 5200, and Nokia 5300), multimedia (eg: Nseries), and enterprise solutions (eg: Eseries). With iPhone joining the fray, it is the multimedia series that is under maximum threat in the near term. In the longer term, there are question marks around the Symbian OS, which may not be sufficiently elaborate to shoulder the entire convergence device movement. Nokia’s Linux phone strategy, therefore, is something analysts ought to watch carefully.

Nokia’s ADRs closed 8.7% higher at $30.90 after the August 2, Q2 earnings call.

This segment is a part in the series : iPhone Competitors