Nokia Cuts Smartphone Prices as Market Share Declines

Nokia Reduces Prices of Smartphones to Stop Market Share Drops

by Anton Shilov
07/05/2011 | 11:18 PM

Nokia Corp., the world's leading supplier of handsets, has reportedly reduced pricing of its smartphones in a bid to slowdown market share loss. The reduced prices - by as much as 15% - should make the company's advanced mobile phones more appealing for end-users, who do not want to get handsets featuring Symbian operating system that is set to be phased out.

 

“We have absolutely seen the drops. They are under aggressive pressure from entry-level players and equally their customers in the channels know they’re in a strong negotiating position," said Ben Wood, an analyst with CCS, reports Bloomberg news-agency.

After Nokia said it would phase out its Symbian operating system and migrate its smartphones to Microsoft Windows Phone OS in February, the popularity of its current-generation smartphones began to drop quickly. Given the fact that there is no future for Symbian and consequently developers will not create efficient software for such handsets going forward, it is not a surprise that Nokia is about to lose its smartphone market leadership to Apple and Samsung Electronics in Q2 2011, according to a number of market observers.

 

According to analysts, Nokia cut pricing on its phones by 9% to 15% in the recent weeks, which is significantly above average price adjustment. Nokia N8, Nokia C7 and Nokia E6 have seen the largest price declines. It remains to be seen whether with such aggressive price cut the company will remain profitable or will maintain its market share.

“All the major houses cut prices two to six times a year, typically in small adjustments. For a company like Nokia, anything above 5% is an above-average adjustment. With revenue declining sharply because of unusually weak demand, they’ve got to make these large price cuts," said Neil Mawston, an analyst at Strategy Analytics.

Unfortunately, even significant price-cuts may not help Nokia to regain its market share. Operators are unwilling to sell Nokia smartphones due to various reasons and therefore even with reduced pricing the company's share may continue to go down.

"In May, European operators largely rejected the new Nokia models, particularly the E6 and C7. This is now driving panic price cuts for those models but, without operator support, price cuts rarely work," said Tero Kuittinen, analyst with MKM Partners, reports Reuters news-agency.

Nokia did not comment on the news-story.