Helsinki…you have a problem! (Actually it’s Espoo which has a problem, but Helsinki sounded better.)
If you want to know why Nokia is in trouble, you need to look no further than its market share declines during the second quarter of 2009 in the company’s home market of Western Europe. This region accounts for a majority of its high-end phone sales. During the quarter, Nokia handset sales were down 19 percent (year-over-year), according to market research firm IDC, to about 15.3 million units. Overall handset sales for the quarter were down 6 percent and will be down a total of 10 percent for 2009, IDC says.
This data exposes Nokia’s Achilles heel. The reason why Nokia is suffering is because it doesn’t have a hit device to address the fast-growing smartphone market. Smartphone sales were up 25 percent to 8.8 million units compared to a year ago, IDC says. That’s about 1.75 million smartphones for the quarter. Guess who’s winning sales in the smartphone category? Apple, which sold about 1.4 million iPhones, and RIM, which sold 1.2 million BlackBerrys during the quarter.
Updated: I asked IDC to share shed some more light on the sales of the smartphone sector for the second quarter of 2009 and they emailed with this nugget of information:
Research in Motion 13.2%
What we’re seeing is a complete upheaval in the handset market. We’re seeing two traditional powerhouses — Nokia and Sony Ericsson — be upended by North American and Asian competitors, some of them newcomers to the market. These two companies will continue to lose market share for a couple of reasons: Carriers like Vodafone are launching their own smartphone devices and most importantly, Google’s Android-based devices made by companies such as Motorola and HTC are about to hit the market in large numbers in 2010.
Nokia is particularly vulnerable because it doesn’t quite have a presence in the U.S. market. Let’s see how it does in Asia and rest of the world.