Nokia upbeat on rivalry with Motorola

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Nokia, the world’s largest mobile phone maker, on Monday signalled its confidence that it could increase market share at the expense of Motorola by raising its forecast for the second quarter of 2007.

Nokia said it expected its market share of mobile devices to be more than the 36 per cent that it recorded in the first quarter.

Analysts said Motorola’s market share has been falling since a U-turn in strategy that is supposed to restore its profitability.

Motorola, the second-largest mobile maker, last month reported a loss of $181m 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 raise its market share in the second quarter of 2007 was based on “Motorola’s weakness”.

Nokia, led by Olli-Pekka Kallasvuo, chief executive, said on Monday 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 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 raised its market share for several years through the popularity of its 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.

The impact was almost immediate. Motorola saw its market share plunge to 18 per cent in the first quarter of 2007, from 20.4 per cent in the same period last year, according to Strategy Analytics, a Boston-based research firm.

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