The most stinging attack against Nokia is that it sells very few smartphones compared to Apple (NASDAQ: AAPL) and Samsung. The South Korea company has passed Nokia as the world’s largest manufacturer of cellular phones. The average price of a phone sold by Nokia has declined to $164, indicating that its cheap products are most of the inventory it ships.
Nokia may never gain market share against the smartphone leaders. They are entrenched with carriers. The Nokia smartphone operating system is Microsoft (NASDAQ: MSFT) Windows Mobile, which has failed to gain any popularity. So Nokia may abandon the smartphone market completely, or have just a few products to offer the illusion it is still in the arena.
There is money to be made at the low end of the cellular market. The need for cell phones in third world and developing countries will not abate for some time. Most people in these regions cannot afford PCs, and many cannot afford smartphones. Their only way to contact people outside their immediate surroundings is via cell phones they can afford.
Nokia will have to continue to sharply reduce its workforce. And it will have to give up all but token development of products for the high end of the market. It can, however, live off the lower end.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks