Nokia cuts phone prices by up to 20% The steep reductions, the firm's second round this year, are earlier and bigger than expected Originally published April 28, 2004 CHICAGO -- Leading cell phone-maker Nokia Corp., stung by market-share losses to Motorola Inc. and Samsung Electronics, is trying to win back business by slashing prices. Nokia is quoting prices on a variety of cell phones averaging 15 percent to 20 percent below those offered to dealers in early April, according to a leading analyst's report Tuesday. The report by Schwab Soundview Capital Markets analyst Matt Hoffman said Nokia is sweetening its offers with more generous credit terms and other incentives for dealers to stock up. The steep price cuts--Nokia's second round this year--are earlier and larger than expected. "That's extremely aggressive," said Gartner Inc. principal analyst Hugues de la Vergne. "That's essentially saying, because we're the 800-pound gorilla in the market, we're going to do whatever it takes to maintain share while we make adjustments to our product line." Hoffman and other analysts said the cuts will spur the industry's already strong sales while forcing some competitors to react. "Nokia's price moves should make rivals take more notice than did its February cuts," Hoffman's report said. Manufacturers most directly affected are Sony Ericsson and Siemens, Hoffman said in an interview. Motorola is better positioned, thanks to strong sales of its "triplets," a trio of camera phones that offer similar styling and features but at different prices. "When you have a hit product like the triplets, it makes it easier to hold pricing on the rest of your lineup," Hoffman said. In the U.S., T-Mobile offers the v300; Cingular Wireless the v400; and AT&T Wireless the v600. Even so, he and others expect Motorola's average sales price to decline to $158 or less in the second quarter from $161. Nokia vowed to do whatever was necessary to win back market share when it reported disappointing first-quarter results April 16. Revenues from cell phones declined 6 percent, and the number of phones shipped grew by 19 percent, badly lagging the industry's 29 percent growth, Nokia said. The Finland company's market share declined by 5 percentage points to 29 percent while Motorola's climbed nearly three points to 16.5 percent, according to Hoffman's latest estimates. No. 3 competitor Samsung saw its share rise by nearly 4 points to 13 percent. "Market share is absolutely critical in the mobile device market," Nokia Chairman and Chief Executive Officer Jorma Ollila said April 16. Nokia, a manufacturing juggernaut, uses its huge economies of scale to produce the industry's highest operating margins. That allows the company to cut prices while remaining highly profitable. But Nokia is paying a price for being slow to introduce clamshell designs and other popular features such as large high-quality color screens into its lineup. The company stuck to a shape known as the "candy bar" when flip phones became the rage. "It was almost like Henry Ford saying you can have a Model T in any color as long as it's black," said Yankee Group analyst Roger Entner. Price cutting is a temporary salve. "I believe they will be able to get some market share back, but price cutting is only working at the symptoms and not at the causes," Entner said. "They have to work really hard in getting new blockbuster phones out there." The company said it plans to launch 31 new phones before the end of the year, six of which will feature clamshell designs. =========================================== source:http://www.baltimoresun.com/technolo...ness-headlines Now they realize the threat. But pricing is not the fundamental problem. The problem is somewhere else! __________________ they seem to be getting ready for the major microsoft-motorola attack expected by the end of this year.  __________________ Not by the end of the year, by this summer but nobody knows what the plan is with the Mpx220.... Mpx200 will be getting sold for quite some time since there are no new information on a clamshell microsoft OS smarphone.... Without mentioning the Business Mpx pocket pc phone.. I suspect Mpx220 will include a 1 mega pixel camera at least otherwise Motorola won't even bother with this phone... Mpx100 is on its way to make history on giant killing sellouts... __________________ and let's not forget samsung. they introduce a wide variety of mid-range clamshell phones at very reasonable prices and are about to dominate the entire asian market due to their very competitive production costs. __________________ just think... Nokia got a good cash reserve, so they can lower the prices easy... Good for the costumers and Nokia won't feel it very badly in they own pockets __________________ vulture is the id 'vulture' from a game? __________________ The MPx100 is a top phone... I'm not too fond of the design though... __________________ investors might not really like that. less profit for nokia. but the article say that SE will be affected alot. but i'm 100% sure that they won't siemens on the other hand could be in more danger and there new 65 phones are not good. and there's a small chance they'll be delayed because they still have to much software problems, but most big problem is the camera and the menu speed. __________________ Nokia seems to care more about their market share than good profit. This didnt come as a surprise at all since Nokia are doing worse than expected but to slash the price is definitely what I would consider as a panic move. They still have a lot of resources to spend and lose. I think Nokia are afraid to face the true fact that people seem to prefer other brands than Nokia. __________________ McKinley i agree... it would have seemed alot better if they did aggressive R&D Price is only a matter for cheap ones, when it becomes middle high components, the quality is a bigger factor I thought i found a potential in7230, but it doesn't seem that they realized it. It will make Nokia as a cheaper brand bart i see. __________________ sunystory@hotmail.com nope, it's from texas  __________________ no, price isn't just for the cheap ones, I think everybody looks at the pricetag if they buy something, it's just a temporary solution, before new phones are presented... They did a marketing research with enquetes and most people said Nokia is to expencive... Some devices have a to high price for what it is, a phone like the communicator and premium 8910i can have a big price ticked, but in the mid-range (like the 6xxx series) and in the fashion (7xxx series) are the prices to high, and those had to drop... the 6230 only costs 400 Euro anymore in belgium, that's 50 down and that is good... A lot of people don't bought it yet because the high price, but now... (germany 420Euro and the netherlands also 400Euro) __________________ I agree , The price is just a temporary solution to combat the fact that many of their current phones are still soldiering on with sub par screens and such. To prevent them from loosing too much more Market share before their next wave of phones arrive , and also to try and take the pressue of the people at R&D who might be encouraged to rush out new products with buggy software in an attempt to stop their falling sales and market share. __________________ but on the other hand, as i just read on another website; this can be the beginning of a pricewar, like we saw on the computer marked a few years ago. Other big players like samsung, motorola, Siemens,... can also lower there prices and the small ones (Alcatel, SE, Philips, trium, ...) can become the victim... __________________ kristof.vanriet I would say it is true that small corps as alcatel, SE, philips, sharp will be in danger if motorola and samsung play or siemens play such way. Motorola and Samsung, i think, won't do low-price strategy. they will keep the average price high. Their premium brand strategy will increase their potential of premium phones, while Nokia will become a low-end commercial phone company. In fact, these companies have more budgets than Nokia to keep their price lower than Nokia. But what samsung and motorola see is the net profit. Nokia might gain some more market share, but their management earning will sharply decrease. I think it is potentially bad for Nokia to do low-price strategy. I think it is really a temporary combat of lowering price. Samsung electronics, at least, doesn't want its fellow SE to die. It won't happen, and it can't happen. __________________ might be but never the less, Samsung wants to become number one... they 'said' it once in an interview... and if a company want's to be, a pricedrop (ps. the price of premium 8910 and communicator haven't droped) is allways a good technique (near term); but indeed on long term it's not a good idea. First of all Nokia needs to fill some gabs in there portfolio (like more clams and mid class devices) and make some more phones like the 6230 and make less like 7600-3650 experimental phones __________________ Motorola already controled budget segment (under 120 USD), Samsung controled segment above 120 USD Now, Motorola begin to sale phones with prices above 120 USD, it's growth for company sales... Samsung just develop more models inown segments and has potential to growth too... Nokia on the other side has a very big product line but hasn't potential to growth (only budget models). For instance here in Russia most popular models from Nokia is 1100, 2100, 3310, 3100 The same situation in Europe (we aretalkink about quantities)... __________________ EldarMurtazin Happy to see you in the forum! __________________ Quote:
__________________ D-Off probably i was not specific enough. I know Nokia spends alot of R&D to their "telecommunication." But they should spend more on future technologies, as much as current ones. I mean future technology for the upcoming prospective 4G's. The only impressive investment i saw on these future technology is the wireless LAN (Wi-Fi) But again, their focus went a bit off, because it should be concentrated on Wi-Max for phones. In addition, compared to its probably one of the biggest threat, their R&D are pretty small on multimedia segments. It is true that R&D results later. For shorthand market, Nokia will gain more market share, but I doubt about management earnings. I read that the management earning will decrease 5% compared to the previous quarter. This means that eventually their R&D will have to decrease to get that much profit. And I don't think by 20% decrease of price, it won't make their sellings 20% better. This means that they will loose money again. thank you for reading__________________ id imagine its tough for nokia right now because it's holding back newer models so that current sales of handsets (6600, 6230 etc) do not stop, and also because they have to give it a certain period (~1 year) before they can introduce successors to premium line and keep customers who bought 8910i not long ago happy. other than that, ~80% of the money they get from handsets, even with reduced price, is pure profit - it doesn't matter if they sell them cheaper, the aim is to sell as many as possible and rake in as much money as possible (they have already made enough money to offset R&D costs for 7210/7250i, for example). In essence they can't lose any money, just make some at the moment (excluding new 6230 and 7200 which are new launches and even at reduced price later will still sell for much more than they cost). Even in 3G they are dominating here in UK - 7600 cannot even videocall but it is outselling *all* other 3g handsets from NEC/Moto put together - and 7600 is nothing compared to the 3g clams and candybar phones coming later. At a certain point last year they decided the R&D in all these strange funky designs (7600, 3650 etc) was not paying off, and cut back considerably - it means basically all the new coming releases will be very smart and classic nokia design, the type they have dominated the market with in previous years. Of course competition is stronger now, but the new nokias will raise the bar again, easily. Now is a foolish time to say they are going down. They have enough money to keep going for another 5 years even if they did everything wrong. __________________ gaurav311 7600 has a very pure sellings worldwide... __________________ Quote:
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As gauvrav311 said, 7600 is the most sold 3G phone is Europe. It's pretty useless to compare it sales to 2.5G phones, but to other 3G phones. __________________ gaurav311 i don't think Nokia can catch up "multimedia" segments of other companies although they put the same R&D there. They need to invest more on these segments, it is not enough to catch up the R&D of business companies. Nokia is still a commercial company, the pure profit they make is very small compared to other business based companies. This is why business based companies small segments of commercial products sells as a trend. They put enormous R&D on the fundamental core as well as multimedia. Amazingly, I find samsung electronics as an ideal of this type of busimess company. They have tremendous R&D on these multimedia fields, such as screens, memory chips, and so on. Different from Intel, they don't concentrate only on business products such as chips. Different from Sony, they don't only sell commercial products. nearly 50% vs 50% makes up their whole sellings. This means that to lead the market in nearly every fields they are working, they need to put more R&D than other companies in each fields. In fact, they lead the market in 18 segments in the world as firm no.1. (eg, flashmemory, tft-lcd and so on) they in addition are strong in many many other fields, such as mobile phones. The problem arises that most of the fields are correlated. Nokia mainly depends on phones, which make their "convergence" product much weaker compared to these multimedia companies. I think their trend are going wrong. They should put more investments if they try to survive. With 5 years of competition with lower investments than these companies, I don't think they will be able to catch up. Even 10 years, it won't change the difference. If they aim to survive in the market, they should simply put more R&D for a longer time. This is what Nokia lack of. This first quarter, in russian market, samsung electronics led the market with 15% more market share than Nokia, where it was highly dominated by nokia. This really do represent something. It is a serene prediction to think the risks of nokia, but at the same time, such prediction seems truthful. __________________ Quote:
Excuse my ignorance, but isn't it good that management earning will decrease. Most profitable companies are small because with their small size they do not need too much management overhead... Regarding Samsung as a treat for Nokia I have some doubts that Samsung has enough experience in mobile networks, Nokia still has Networks division and that is what Sony needed Ericsson for. Of course that can not prevent Samsung flooding the market (especially low budget market such as Russian) with cheap but attractive phones having yesterday's networking capabilities, developed by someone else __________________ D-Off no it is not my opinion. Ask business week or news week if you doubt about the posting related to the management earning. i don't think it is good if the management earning decreases. management earning is a cost, but a profit you get from management. And yes, it is hard to have a nice net-profit when u are too big. samsung electronics is bigger than nokia. management earning is still higher, net profit is alot bigger than that of nokia. (just consider the fact that samsung net earning is equivalent to Toyota, larger than 10 japanese electronics companies combined. ) This is a really hard thing to do for a big player as samsung. If u meant group samsung it becomes a funny story. It is a shame for samsung group to be compared to a single company, nokia. I really don;t think, (not think, but for sure) samsung group is whole lot bigger than nokia. in addition, samsung electronics alone has big network division. the threat of samsung is not just samsung electronics. there are approximately 250 companies under samsung brand. Just one of it is samsung electronics. If we make a big category, the electronics segment of this group is composed of samsung electronics, samsung sdi, samsung techwin, samsung electricity, samsung advanced institute of technology, samsung-NEC display (recently sold back to samsung). Among them, if you talk about network services, they have network department of samsung electronics (where samsung electronics has been investing here alot) and samsung sdi and samsung advanced institute of technology. samsung had enough experience in this field, developing the first ev-dv network, wcdma release 4. There contribution in 4G will dramatically increase, as many statistics says more than 80% of the promising post 3G technologies are invested by samsung. The recent 4G forum was made by the lead of samsung electronics also. and why do you think samsung phones are based on cheap-but-good strategies? (cheap but attractive? i don't think so) the average price of samsung phones is the highest among every brands. I think it is other way. wouldn't it be cool to see nokia using samsung's advanced network systems, in which many companies have failed to adopt due to technical limitation? The reason that samsung uses some other companies platform is because the network system and service providers lack of capability to adopt samsung phones. Europe has just started 3G, while more than 70% of samsung (100% of domestic samsung phones) are made by 3G. (3G includes wcdma and ev-do/dx. I don't want to put UMTS as 3G. it is an obvious 2.7G, as well as cdma 2000 1x is 2.7G) It is hard to compare nokia to samsung (a group). samsung electronics' supporters are much bigger than you may imagine. Their close relationship to SK telecom, the world's most advanced and renown service provider in the world tells something that nokia should learn. If it is important to know what nokia is for you, it is more important who is important for nokia. btw, please read the posting of mine again and if you still doubt about it, read the link above (from chicago times) it says average selling of phone is bigger than nokia. If you still doubt about it, ask Chicago times. they will kindly answer your question. p.s>i hate to post these in nokia, because it intrudes many of u's. I was not going to answer if you haven't said samsung phones are cheap but attractive. you are already assuming wrong, wrong premises brings wrong conclusion. bye __________________ D-Off btw, i think for mobile network, it is quite funny to compare nokia with a company which has market share more than 50% in a country where broadband infra and network systems are beyond what we call 3G. ETRI (a research institute funded by samsung electronics) shows many of these technologies, which nokia has been giving many Royalties here. in addition, another article of nokia Top mobile phone maker Nokia's plan to cut handset prices is expected to shed global market share off LG Electronics Inc. but Samsung Electronics Co. will remain intact, analysts said yesterday. Analysts forecast the discounts by the Finnish company will be between 10 to 20 percent on average and up to 25 percent for low-end models. LG Electronics, the world's fifth-largest mobile phone maker, would likely suffer from the price war because it targets overseas buyers of mid- to low-end handset models, the same as Nokia, market watchers said. LG is already struggling to keep up mobile phone sales at home and abroad, in contrast to a roaring performance by home appliances. The company's operating profit margins in handsets slumped to 3.1 percent in the first quarter from 5.7 percent a year earlier. "LG will have to wait longer to see its operating profit margins in handsets turn around," said Byun Sung-jin, an electronics analyst at Mirae Asset Securities Co. "The intensifying price competition would also influence Motorola and Siemens," said Byun, who downgraded LG Electronics shares from "Buy" to "Hold" after LG announced a narrowing first quarter operating profit two weeks ago. Last month, Nokia roiled investors by issuing first-quarter profit warnings twice within 10 days. Its share price plummeted 31 percent. Industry analysts said Nokia fell behind in style and design. Strategy Analytics, a Boston-based research firm, said Nokia's market share fell 29 percent in the first quarter from 35 percent a year ago. U.S.-based Motorola added 1.2 percentage points to 16.5 percent and Samsung Electronics gained one percentage point to 13.1 percent. LG Electronics is struggling with two difficult, often contradicting, goals- to shield its unit sales market share by lowering prices and enhance its brand image in overseas markets, Byun said. Nokia's impact on LG would likely be felt overseas, rather than in Korea, analysts said. "Nokia's price reductions would not bring any changes in the domestic market, which is controlled half by Samsung and one-fourth by LG Electronics. When Nokia wanted to make inroads to Korea several years ago, its mid- or low-range models were ignored by Korean consumers, whose tastes are fastest changing and most sophisticated in the world," said Steve Oh, Samsung Securities Analyst. "Nokia has built up a nice corporate image but their products are not yet best choices for design-conscious upscale customers," he said. Samsung Electronics and Sony Ericsson are likely to remain intact, armed with strong brand image and high-end product line-up. Samsung in particular has been in hot pursuit of Nokia. It forecasts a continuing rise in sales in the second quarter and plans to upgrade its sales target of 65 million phones sold in 2004. "Samsung's marketing budget has been on a steady rise. Samsung may strengthen overseas marketing campaigns in face of aggressive Nokia, but it would be still careful to see the marketing spending would not dent profits," said Oh. Siemens was ranked fourth in the global handset sales with 8.4 percent market share, while LG Electronics and Sony Ericsson both garnered 5.7 percent share, according Strategy Analytics. (smkim@heraldm.com) By Kim Sung-mi ============================================== ->"LG Electronics, the world's fifth-largest mobile phone maker, would likely suffer from the price war because it targets overseas buyers of mid- to low-end handset models, "THE SAME AS NOKIA", market watchers said. " For further complaints of the article, i have kindly left an e-mail address. __________________ Quote:
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__________________ orange hi. i think i delivered the messege in a wrong fashion that led misunderstanding. 1. wcdma is a pure 3G as i said. CDMA 2000 1x is 2.7G, although it nearly satisfies the data transfer speed in ITU. CDMA 2000 1X Ev-Do or Dv are pure 3G. samsung domestic phones were 100% Ev-Do starting somewhere in the last year. Recently due to extreme chip demand on market, there were lack of supply to many phones. This led them to "plan" to make some cdma 2000 1x phones again. Samsung domestic phones are therefore virtually 3G's. So no contradiction. 2. as u may read, i was not referring to Ev-Dv or Ev-Do. Nokia is a gsm based company. For them more than Ev-Dv (although it is still much more advanced than the current wcdma release in europe in terms of 1.data transfer 2. better quality of video call 3. reception in mobility 4. reception in high rise cities 5.lower cost if cdma broadband is already built. just need upgrade) it is better for nokia to adopt samsung's wcdma release 4, which provides 10Mbps. I was not explicit enough to explain this in the previous thread. Apologies. is it clear now? thank you for reading regards -sunystory __________________ orange forgot to say something. For Ev-Dv/Do, although wcdma is also 3G, Ev-Do/dv is a much lighter and smaller system. This let the maker to put more function in a fixed volume. This is why more multimedia functions in domestic version. This is the limitation of service providers not to offer similar technology. thanks! __________________ Quote:
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What you mean by Nokia being gsm based company? Nokia delivers terminals basicly to all networks. Even before gsm, it delivered terminals to nmt450/900 networks. Of course GSM is the main thing at the moment, since it's most widely adopted by the operators. And if you didn't know Nokia did the worlds first 1xEV-DV high-speed data call. Quote:
__________________ few things 1. I apologize for confusion about technical term of UMTS 2. Samsung is the first to introduce Ev-Dv system. (release c) 3. Nokia is weak at cdma. It is not even the number 2. It is an obvious number 4 behind, LG electronics, samsung electronics, Motorola. 4.Samsung doesn't define Wcdma. 3GPP does. 3GPP standardized release 4 of wcdma proposed by samsung electronics. It is available to everyone. But the effect of standardization is quite different. Samsung earns benefit from that. Nokia's world's first ev-dv video call uses release c, which is originally samsung technology as an open source If you want to say that i am blinded by cdma2000 marketing, then think that way. i am not a person who is anxious to persuade everyone. If you think i am a freak who wants to advertise cdma, then it is ok. think that way, argue that way, be rude. I won't bother you at all. does it answer? p.s>you have just confirmed that nokia is a gsm based company. samsung is a cdma based company. I didn't say they only make either gsm or cdma. p.s.2> If Nokia is the best phone company to you, then be it. I don't think i have much to argue anymore. p.s3> please direct some link so that i can "study" some phone technology. I am so dumb to understand you. Probably need more help from you. Can you introduce some good labs so that i can learn from there? Oh wait, i am too silly to even go and ask there. -_-^ p.s4> Do you still insist that you have not made any mistakes about samsung domestic phones(They are 100% Ev-Do since this year)? Let's settle everything down, friend. useful link about ev-dv: http://www.phonescoop.com/articles/c...index.php?p=sa Finally, Samsung was presenting the world's first live demonstrations of a complete, end-to-end CDMA 1xEV-DV system. Prototype EV-DV phones were on hand, showing live video streaming and live video calling. The video streaming worked very well and was very smooth. The close-up photo below shows a live video call. The main image is me, which is coming from the other phone, being held by the guy next to me. The inset image (bottom-right) is also me, from the phone I'm using - it's the image being streamed to the other phone. The video calling image was a bit jerky due to a low frame rate, although that's a limitation of the EV-DV Release C standard - the version being shown here. EV-DV Release D will boost the uplink speed dramatically, permitting much better framerates for video calling. Samsung expects to have a prototype Release D system ready in about 6-8 months. another for release 4 wcdma:http://www.samsung.com/Products/W_CD...etwork_RNC.htm  Features World-First Release 4 System High Performance, Easy Upgrade High Throughput, Flexible Interface - 5Gbps ATM Switch backbone - STM-1 links up to 12 links - E1 links up to 192 links - Support E1/DS3/STM-1 interface Robust and Fault-Tolerant Architecture - Redundancy & High Reliablility - Overload control prevents system down Modular and Scable System Capacity of RNC - No. of BTS/RNC : 128 BTS - Voice channel capacity : 5,000 Erlang - Packet data channel capacity : 360Mbps - Easy to expand : depend on traffic Operator-Friendly O&M - User-Friendly GUI - Powerful Operation & Maintenance Features Centralized BTS & RNC Operation & Maintenance Compact Size - 1 Rack Solution Simple Structure Optimized Structure & Design by simple layer structure Simple Rack Structure for convenience of O&M Advanced Architecture Supporting High Speed Data Service & Multimedia Service Providing Voice/Packet data/circuit data at the same time Max user data rate : 2Mbps Effective Overload Control & Quick fault/error recovery Easy Migration Backward/Forward Compatibility Easy Migration to R5/6 : HSDPA, IP UTRAN, MBMS Flexible S/W Structure Easy S/W upgrade Adopting common real-time OS High Expandability Minimizing initial network cost by considering expandability & Upgrade Adding Module as increase of traffic E1(T1) Line & Optic Interface Easy Maintenance Plug & Play Function Auditing & Self-test function for protecting error/fault Quote:
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the samsung phones from the link includes phones released years ago. Not all of them are of course not ev-do. ev-do phones were release quite recently compared to the whole samsung history, as u may know. But the tone of the messege was as if it is nokia vs samsung; comments that i should work in lab to get some idea seemed that i was understanding the market completely wrong. As said, Probably i was quite misunderstanding the tone of your messege. p.s>your korean is a bit rusty? you know how to read it? or you are using translators? -just curious p.s2>My personal preference is, obviously, directed towards samsung or LG electronics. But my hope is that I would contribute on this forum of showing some techs that would be introduced soon in these companies. And those in which I introduce are not fake nor my opinion. Mavi forum |
Saturday, June 9, 2007
Nokia cuts phone prices by up to 20%
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