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Market Position: How Nokia's Dominance In Emerging Markets Adds Value

Stocks in this article: NOK

In addition to Nokia’s ( NOK) promising segments which I previously explored in Mobile Devices, Nokia Siemens Network, and Location and Commerce, Nokia has a dominant position in emerging markets which it can continue to monetize. According to Forbes, Nokia has 20% market share in Asia. Nokia’s Asha phones which have many features of smart phones, are incredibly popular in emerging markets. The Asha is already one of the most popular phones in India and China. Nokia combines touch screen capabilities, Wi-Fi connectivity, and entry level app support with a low cost operating system in the s40 OS to produce a low cost, entry level smart phone.

Nokia is aggressively touting emerging markets; they recently announced a partnership with China Mobile, the world’s largest carrier with 700 million customers, to sell the Lumia. This is a key strategic relationship which will help Nokia execute their stated goal of “connecting the next billion people to the internet”

Forbes estimates that Emerging Markets accounted for 70% of handset revenues last year. This is a promising statistic, as phone ownership in emerging markets grows and smart phone ownership in emerging markets grows. The hope is that as Nokia’s customers in emerging markets begin to upgrade to smart phones, they will remain with Nokia. Nokia is not simply depending on hope to accomplish this however. Nokia recently acquired SmarterPhone AS, a Norway-based mobile phone OS developer. SmarterPhone’s proprietary OS is extremely cost-efficient to build and will eventually replace the aging s40, giving Nokia basic phones smart phone features at basic phone prices.

Nokia’s commitment to emerging markets and their dominant position bode well for the future as the demand for smart phones in emerging markets continues to grow.

 

Written by David Emami

This article is part 3 of 4.

1)  Finding Value

2)  Core Competencies

4)  Lumia/Windows Phone 8 (coming soon)

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