Nokia’s Home Loss: Foreshadowing the Future?

Maybe there isn’t enough national pride, or maybe Nokia (NYSE:NOK) needs to reconsider its smartphone strategy — either way, Samsung (SSNLF.PK) has taken the lead in the Finnish market.

When the smartphone rush began, Nokia had a difficult position to maneuver from. Apple (NASDAQ:AAPL) came in strong with its own phone and own operating system, but it was shortly followed by a wide variety of devices from various manufacturers running Google’s (NASDAQ:GOOG) Android operating system.

Historically, Nokia has developed its own operating systems. Nokia has also traditionally been a market leader in cellphones around the world and in Finland. For a brief moment, Nokia was making smartphones with its own operating system, but that didn’t remain the case for long.

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With the PC industry in decline, Microsoft (NASDAQ:MSFT) probably saw what a good opportunity the mobile market was presenting and saw Nokia as a good strategic partner. Nokia was already renowned for mobile phones, and Microsoft had its own reputation for the Windows operating system and other software. For Microsoft, a deal meant getting to partner up with a major player in the mobile phone industry, and for Nokia, it meant having widely recognized software while still doing something different from most competitors — many of which were going to Google for software.

Unfortunately, even after some time, the combination of Microsoft and Nokia hasn’t seemed to put a real dent in the market. With iPhones steadily coming out and consistently snatching up a decent market share, and with Android devices gaining ever more market share, there’s not a lot of room for anything else.

Despite the struggle, Nokia has stuck with Microsoft and continued releasing more of its flagship Lumia devices. But, apparently that’s not enough for the company to build up market share, and it may not be helping it prevent erosion of its market share, as can be seen in Finland.

Nokia has grown out of Finland from the 1860s, when it started business as a Finnish lumber mill. The transition to a major mobile player may not make a lot of sense, but the company’s past success should speak for itself.

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However, something has clearly gone awry for the company, as even in its home market, it has been overtaken by Samsung. A year ago, Nokia had a 48 percent market share in Finland, with 65 percent back in 2010, according to research firm IDC, but that fell to 33.6 percent in the first quarter of 2013. Meanwhile, Samsung brought its market share up to 36.1 percent in the same quarter.

What this appears to show is a weakness in smartphones for Nokia. Of Samsung’s sales in Finland, 80 percent were smartphones. On the other hand, Nokia’s split between smartphones and more basic mobile phones is about 50-50. So, Nokia would still come out on top of Samsung in terms of just basic cell phones, but the market trend in many countries is for consumers to move away from basic phones and towards smartphones, which could foreshadow a bad future for Nokia.

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