Nokia (NOK) was having trouble launching hot phones three years ago, Motorola’s (MOT) RAZR would the phone-of-the-year in 2005 and held that title for about 18-months.
But, now Motorola looks like a turtle rolled onto its back. If it wants to find a model for its turnaround, it needs to look no further than its larger rival.
In China, 42% of handset sales go to Nokia. In India, the number is over 60%.
The shareholder’s lament at Nokia is that it had to produce cheap, low margin phones to get into these developing market. But, it appears that the company had a method to its madness. According to Bloomberg:: "Nokia lowered its prices last year in emerging markets to keep Motorola’s share from rising."
Now the company is marketing more expensive phones into these regions as customers replace less expensive models. Because of its huge market share owners of its handsets are more likely to step up to product from the same company.
Nokia took a huge risk. And, it paid off.
Douglas A. McIntyre
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