Feature phone squeeze looms for Nokia

Michael Carroll
15 Aug 2012

Gartner predictions of a slowdown in feature phone sales in the second half could hit Nokia hardest, given the firm’s reliance on the devices to maintain its position in global vendor rankings.

The research firm forecasts continued pressure on sales of feature phones to end users in the back half, after a year-on-year decline in the second quarter. Overall sales fell 2.3% to 419 million units, however smartphone sales grew 42.7% over 2Q11 highlighting that the drop was mostly due to lower feature phone purchases.

While Nokia’s sales fell 14.8% year-on-year to 83,420, Samsung’s were up 29.5% placing the South Korean vendor at the top of the table for the second consecutive quarter. Digging into the numbers shows Nokia’s feature phone sales actually grew quarter-on-quarter, but the research firm notes the vendor is coming under pressure from emerging handset makers and white-box manufacturers.

Smartphones continue to be an Achilles heel for Nokia, Anshul Gupta, principal research analyst at Gartner, says. “Declining smartphone sales is worsening Nokia’s overall position,” he states, adding that the firm is “facing reduced profitability” as a result. Heaping pressure on the firm’s high-end strategy is Gartner’s assertion that record sales of Samsung’s Galaxy S3 fuelled the overall rise in smartphone numbers during the quarter. Samsung reportedly sold ten million of the devices in two months.

Sales figures by operating system are a matter of interpretation for Microsoft, which increased its share from 1.6% in 2Q11 to 2.7% in the recent quarter. That said, the platform is still eclipsed by Nokia’s legacy Symbian software, despite its share falling from 22.1% to 5.9% year-on-year.

Samsung’s success helped the Android platform maintain its position at the top of the operating system sales charts, though that comes against a background of weaker iPhone sales during the quarter as consumers hold off for a new model.

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