Why Nokia Is Leaving Moto in the Dust

Phones for high- and low-end consumers, a great supply chain, and lots
of cash—the Finnish company has it all (except the iPhone)

by
Jack Ewing

Pop singer Alicia Keys and Ramkishen Pyarelal, proprieter of a Mumbai
tea stall, may not have a lot in common. But they both carry Nokia
mobile phones. If you want to know why Motorola (MOT) is in such trouble these days, the celebrity and the Indian street merchant provide a big part of the answer.

From stylish $750 handsets with built-in global-positioning receivers to $45 basic models with black-and-white displays, Nokia (NOK)
saturates the booming mobile-phone market in a way neither Moto nor any
other competitor has been able to duplicate. Nokia's formidable lineup
of some 100 models is just one of many reasons why more than one out of
every three handsets in the world traces its origins to the Helsinki
suburb of Espoo.

The former producer of rubber boots and timber, which famously made
a risky decision in 1992 to focus on mobile technology, seems to be
doing everything right these days. Nokia's supply-chain management may
be the best of any company in the world. It has a big head start in
fast-growing markets such as China and India. And it has $9.5 billion
in cash and practically no debt, so it can invest far more than rivals
on developing new products or conquering new markets—and thus
build even more intimidating economies of scale. "We are about to
report our billionth customer, so we must be doing something right,"
says Anssi Vanjoki, a Nokia executive committee member responsible for
multimedia devices.

Shock-Resistant

Thanks to those advantages, Nokia's global market share has climbed
to 37%, and some in the industry think it could hit 40% this year. "If
there's a time when that goal looks realistic, it's now," says Gartner (IT) analyst Carolina Milanesi.

Motorola managers can take some comfort in recalling that Nokia, too,
has endured some devastating crises. Back in 1995, its manufacturing
system nearly collapsed under the weight of rapid growth. And in 2003,
Nokia was slow to introduce clamshell-style phones and color displays.
From the fourth quarter of 2003 to the first quarter of 2004, its
market share plunged from 34.6% to 28.4%, according to market watcher Strategy Analytics.

Similar woes have driven other mobile-phone producers from the market. Onetime contenders such as Panasonic (MC), Philips (PHG), and Siemens (SI) (which later sold its phone division to Taiwan's BenQ)
today have market shares below 1% each. But under former Chief
Executive Officer Jorma Ollila and his successor, Olli-Pekka Kallasvuo,
the stoic Finns emerged even stronger. By diversifying its products and
its geographical reach, Nokia now seems far less vulnerable to shocks
than it was three years ago. "Nokia has definitely learned from that
experience," says Neil Mawston, an analyst with Strategy Analytics.
"They have spread their risk a lot more."

All Things to All Consumers

One lesson Nokia learned was that it doesn't pay to rely too heavily
on a few top-selling models. Motorola, by contrast, became overly
dependent on the Razr. Nokia has nailed both the high and low ends of
the market and pretty much everything in between. For affluent buyers
who want the latest technology, the $750 top-of-the-line N95 includes
an Internet browser, music player, GPS satellite receiver, and the
ability to connect to Wi-Fi networks as well as standard cellular
services.

Even Nokia's entry-level phones offer extras that appeal to Mumbai
tea sellers and vast numbers of other low-income people enjoying their
first taste of telecommunications.

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Distributed by Hasan Shrek, independence blogger. Also run online business , matrix, internet marketing solution , online store script .
Beside he is writing some others blogs for notebook computer , computer training , computer software and personal computer

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