May 15, 2007 3:00 am

Nokia confident of taking more market share from Motorola

Nokia, the world's largest mobile phone maker, yesterday signalled its confidence that it could increase its market share at the expense of Motorola by raising its forecast for the secondquarter of 2007.

Nokia said it expected itsglobal market share of handsets shipped to mobile operators and retailers to be more than the 36 per cent that it recorded in the first quarter.

Analysts said Motorola's market share had been falling since a U-turn in strategy that was supposed to restore its profitability.

Motorola, the second-largest mobile maker, last month reported a loss of $181m (£91.5m) for the first three months of 2007.

Carolina Milanesi, research director at Gartner, the telecommunications consulting and research firm, said Nokia's confidence that it could increase its market share in the secondquarter of 2007 was based on "Motorola's weakness".

Nokia, led by Olli-Pekka Kallasvuo, chief executive, said yesterday that it expected "its share of the global device market to increase sequentially in the second quarter of 2007, from its estimated 36 per cent share at the end of the first quarter".

Last month, Nokia said at its results for the first three months of 2007 that it expected its market share to be unchanged in the second quarter.

Nokia has a better view of its likely second-quarter performance following the clearance of a glut of mobiles shipped by manufacturers to network operators and retailers. Some analysts said the glut was principally the result of operators and retailers struggling to sell Motorola mobiles such as the Razr phone.

Nokia's market share of 36 per cent in the first quarter of 2007 compares with 35 per cent in the same period last year.

The increase was driven by strong sales growth in Asia and Europe, which offset a decline in the US.

Until last autumn, Motorola expanded its market share for several years through the popularity of the Razr phone and an aggressive price-cutting policy, particularly in developing countries. But the strategy backfired as the Razr's popularity waned and Motorola's profitability tumbled because its manufacturing operations were not as competitive as rivals.

Ed Zander, Motorola's embattled chief executive, changed strategy and the company stopped bidding for contracts where profit margins were thin or non-existent.

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