Saturday, 14 April 2012

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Has Samsung surpassed Nokia as the top mobile phone maker?


New estimates show that Samsung may have grabbed the top spot from Nokia during the first quarter, though the actual forecasts vary and final numbers have yet to be tallied.

Nokia may have relinquished the mobile phone crown to Samsung last quarter after a 14-year reign.

Finnish phone maker Nokia revealed this week that it likely sold 83 million mobile phones in the first quarter. Though it managed to sell 2 million Lumia Windows Phone handsets, those weren't enough to offset the overall downward spiral.

Samsung's first-quarter sales or shipments, however you look at them, are less certain at this point. Most analysts seem confident that the numbers came in higher than 83 million, though estimates vary.

A new Reuters poll found that analysts on average expect Samsung to have sold 88 million phones last quarter. A Bloomberg survey of analysts came up with a shipment estimate of around 92 million. And a report from Asymco analyst Horace Dediu calculated a figure of 85 million units shipped.

Though the numbers clearly aren't in Nokia's favor, I think it's premature to be playing taps for the company just yet.

Final results have yet to be tallied -- Samsung doesn't report actual figures until April 27. And estimates often fudge the difference between sales and shipments, using the two terms interchangeably when they're not. Sales record the actual number of units sold to consumers; shipments record the number of units shipped to retailers but not necessarily sold.

Samsung typically reports on shipments and has itself fuzzed the line between the two in the past. To say that Samsung's shipments may have outpaced Nokia's sales is like comparing peaches and oranges.

Regardless of which company is No. 1 or No. 2, there's no question that Nokia is struggling to revive its past fortunes, while Samsung is seemingly on an unstoppable roll.

Many analysts see a clear difference between the two companies. Nokia's dominance has rested in the low-end feature phone arena, where it's been a global leader. But the company has struggled to compete in the higher-end smartphone market, where it's been overshadowed by Apple and Android in recent years.

On the flip side, Samsung quickly rose up the smartphone ranks, even surpassing Apple last year. And though conventional feature phones still hold a healthy chunk of the market, they've been losing that once-dominant share to smartphones.

Looking at the two companies by the numbers, Dediu found that Nokia's smartphone business as a percentage of all its phones fell to 14 percent last quarter from 24 percent in the third quarter of 2010. Over the same time, Samsung's smartphone lineup shot up to 50 percent of its overall portfolio from 10 percent.

"Nokia is slower than expected in responding to the smartphone market, whereas Samsung is doing better with models like the Galaxy Note," said an analyst quoted by Bloomberg. "The net result is Samsung edging out Nokia faster than expected."

To gain further traction into the smartphone market, Nokia is hedging its bets on its Lumia Windows Phone handsets. But even if the Lumia lineup takes off, the company faces a major challenge trying to turn itself around quickly enough in such a competitive industry. Just as it took years for Nokia to lose its once-dominant market share, it's likely to take years for the company to get it back.

Raj Rajput  [  MBA ] 
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