Nokia's Global Market Share Threatened from All Sides

As both KFC’s parent company, Yum! Brands Inc., and Wal-Mart turn to Chinese markets for the growth they aren’t seeing in the West, Nokia has also been targeting Asia in an effort to maintain its global market domination. It’s third quarter results, however, came as a disappointment, with significant growth in China and Asia-Pacific offset by lower profits. As The International Herald Tribune reported:

Third-quarter profit at Nokia fell 4 percent to €845 million, or $1.1 billion, even as sales rose 20 percent to €10.1 billion.

One of the reasons for this profit dip is the company’s 9% average price decrease, a direct result of its attempts to gain share in emerging markets with inferior purchasing power.

Back in the saturated markets of North America and Europe, Nokia’s attempts to raise prices by adding all the email and camera facilities required to make a hi-tech handset are failing in the face of the other big market players. The IHT again:

But Nokia and Motorola, which this week posted the smallest sales growth in five quarters, are losing market share in Europe and the United States to more expensive phones made by Samsung Electronics and Sony Ericsson Mobile Communications, according to recent data.

Yet another concern on the horizon for Nokia executives, however, could be found at the back of a drawer. Or rather at the back of millions of drawers and cupboards all over the world.

The Associated Press’s David N. Goodman reported on the increasing role of recycled cell phones in the spread of wireless communication through the developing world. His article focussed on ReCellular, Inc., a collector, reseller and recycler of used wireless phones.

Based in small-town Michigan, ReCellular gets 75,000 used phones a week -- most collected in charity fundraisers -- and refurbishes more than half of them for sale around the world. The remainder are salvaged for parts and reusable raw materials.

According to the article, ReCellular, which saw about $40 million in revenue last year and is responsible for about a quarter of the refurbished phones sold worldwide, is doing a good and growing business.

Moreover, with average retail prices lower than those offered by the major cell phone manufacturers, companies like ReCellular could soon start eating into the emerging market shares upon which Nokia is currently so dependent to maintain its global market domination.