Jul 16, 2009 11:25 AM,

Nokia to increase solutions, if not market share

By Sarah Reedy

Nokia sees the bottom in sight even as it cuts it market share outlook; counting on solutions to help it touch ground

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The higher-end smartphone market has not been Nokia’s strong suite in North America due in large part to a lack of carrier relationships. Nokia has two E-series devices deployed with AT&T, the E71x and Nokia Surge, in the US. Worldwide, Nokia has sold five million E71s since it launched. As in Q1, however, the 5800 XpressMusic was the real catalyst of Nokia’s device sales. The company sold seven million of the music phone in Q2 bringing the total to 3.7 million devices sold. Nokia also shipped 500,000 N97s, its highest-end smartphone yet, last month. Kallasvuo said the N97 is ramping up quickly in terms of customer demand, and he expects it to fare well compared to the N95, one of Nokia’s most successful smartphones yet.

“There is more competition in the marketplace than at the time we launched the N95, but having said that, if I look at the traction the N97 is having in the marketplace, it is being received very well,” Kallasvuo said. “We have to remember that the world is big; there are many markets here, and looking at the realities in one market only is not the way to do it.”

In total, Nokia had 46 million active users, defined by an ongoing relationship with the handset maker, in the beginning of the third quarter, and Kallasvuo said it plans to have 80 million by the end of the year. For Q2 Nokia increased its sequential global market share 1% to 38%, but year-over-year, it has lost 40% of its previous shares. Nokia increased its smartphone market share to 41% worldwide.

SONY ERICSSON BLEEDING CONTINUES

Sony Ericsson (NYSE: SNE, NASDAQ:ERIC) also reported its earnings today before the market opened. The fifth-largest handset maker posted a loss of 283 million Euros, continuing the tone set in the first quarter when sales fell by 36%. The handset maker also launched two new phones with AT&T yesterday. The Sony Ericsson C905a Cyber-shot and the W518a walkman are built with a focus on picture taking with an 8.1-megapixel camera and music with social connectivity, respectively. These areas fall in Sony Ericsson’s traditional strong suite, but are also product categories that have suffered as consumers migrate away from mid-range feature phones to higher-end smartphones.

Both Nokia and Sony Ericsson maintained that the market would contract 10% during 2009.