Are BlackBerry and Nokia In The Same Boat?
Just like BlackBerry (NASDAQ:BBRY), Nokia (NYSE:NOK) has struggled to make a dent in the smartphone market. The Finnish company’s comeback attempt through the Lumia line, which received software help from Microsoft (NASDAQ:MSFT), is now more than a year old. And while BlackBerry’s comeback move is barely a week old, Nokia’s sales provide an important counterpoint to the former’s prospects.
Nokia and BlackBerry are both fighting to break into the ranks of top smartphone manufacturers, but it will be a tough climb for both companies. In comScore’s fourth-quarter report, their individual shares of the market came in way behind Apple (NASDAQ:AAPL), Samsung (SSNLF.PK), HTC (HTCKF.PK), Google-owned (NASDAQ:GOOG) Motorola, and LG.
Nokia’s struggle is evident in its shipment figures. The company only shipped 30,000 units to its partner China Mobile (NYSE:CHL) ahead of the important sales period surrounding the Chinese New Year, which falls on February 10. The carrier had placed orders for 90,000 devices to be sent before January 30, but supply constraints shorted the delivery. China Mobile billboards across Beijing boasted the slogan “Change Phones for the New Year!” with an image of Nokia’s Lumia 920T, reported Bloomberg, but most of the company’s outlets will not have the 4,599-yuan ($738) device in stock.
Missing the Chinese New Year is a huge setback for Nokia, as the holiday is a gift-giving season comparable to the Christmas shopping rush in the United States. “China is the hottest market by far now and everybody is circling around trying to get in as much presence as they can,” Strategy Analytics analyst Neil Mawston told the publication. “Nokia must not fail in China because it would place their entire worldwide recovery effort at risk.”
Two years ago, Nokia dominated smartphone sales in China and had a more than 50 percent share of the market. But since then, rivals such as Lenovo (LNVGY.PK), Samsung, and Apple have increased their dominance, leaving Nokia with a 1 percent share. The current shortage will enable Nokia’s competitors to strengthen their lead. China Mobile’s New Year advertising campaign also featured Samsung’s Galaxy Note 2, Lenovo’s A798T, the MT788 from Motorola, and HTC Corp.’s T528t, according to Bloomberg.
Even Nokia has acknowledged that supply constraints have hurt sales. Chief executive officer Stephen Elop said in the company’s fourth-quarter earnings release that limited supplies contributed to a 79 percent decrease in Nokia’s Chinese sales year-over-year.
“We are now building more capacity as we speak to match the demand, and we would expect that at some point in not too distant future, we would be in a situation where we are no longer constrained,” chief financial officer Timo Ihamuotila said during January’s post-earnings conference call.