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Nokia sales down as emerging market appeal wanes

Nokia registered a 30% drop in sales of mobile devices in the first quarter of 2014, with the group’s revenue down €0.5 billion compared to last year’s €3.1 billion.

The group’s net loss was €239 million, down from €272 million last year.

The results indicate that Nokia may be losing its footing in emerging markets. Although it is the most prominent handset vendor in many markets, the desirability of its devices may be falling in the face of increasingly affordable high-end competition.

Vasileios Tziokas of Upstream comments: “Emerging markets consumers’ desire for smartphones is increasingly being met by an onslaught of cheap handsets from all corners. The feature phones that built Nokia’s brand in developing markets are falling out of favour, and despite releasing an Android phone in emerging markets, this was not enough to stem the losses.”

Nokia’s share of the global mobile market reached its apex in 2008 with 40%, but since then the proliferation of popular iOS and Android devices has seen the Finnish company sidelined. Its 2011 tie-up with Microsoft saw it adopting the Windows Phone OS, but this did little to reverse its fortunes, with Lumia devices failing to achieve the success of their competitors.

The Finnish vendor recently released the Nokia X, which uses Google’s more popular Android OS, but the device has thus far not spurred much interest among consumers. Tziokas notes: “While the Nokia X shows that the company is aware of the change in customer demands, it highlights that cracking emerging markets requires in depth local knowledge. The combination of Android OS, Microsoft services and Nokia’s brand power should have been a run-away hit, but so far its success has been limited to China.”

Ironically, being designed to have too broad an appeal may have negatively impacted the device’s fortunes. “An alternative route for Nokia is to partner with local mobile operators who understand their customer base and have the capabilities to create culturally relevant and localised content”, added Tziokas.

 

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