Nokia lowered its second-quarter outlook for sales of mobile devices and services Wednesday, citing factors such as competitive pressures at the high end of the market and shifts in product mix. For all of 2010, Nokia said it now expects a lower market value than the company held last year.
It appears Nokia has little confidence that the new devices it plans to bring to market later this year will be enough to overcome the inroads that rivals have made at the high end of the mobile-product spectrum, noted Gartner Research Director Carolina Milanesi.
“Android has come up very quickly as a viable platform, and vendors such as Samsung and Sony Ericsson are stepping up their smartphone portfolio offerings,” Milanesi said in an e-mail. “This will make Nokia’s home market in Europe even more competitive than in 2009 — not only in the high end but also in the mid-tier segment,” she added in a blog.
High-end Weakness
One reason Nokia cited for its revised outlook is the shift in the company’s product mix toward somewhat lower gross margin products — a trend that Milanesi noted has been under way for almost a year now.
“Since the N95, Nokia has been missing a cutting-edge high-end device that drives brand value through the portfolio,” Milanesi explained. “Sales in the mix are more and more into the low end where margins are lower.”
Nokia also noted that the recent depreciation of the euro is affecting the cost of goods it sells, as well as the company’s operating expenses and global pricing tactics. Though Gartner expects handset prices to be under stronger pressure for those vendors buying in U.S. dollars and selling in euros, the research firm doesn’t think currency issues are the main reason for Nokia’s financial revisions.
Lower-tier smartphones and non-smartphone products continue to…