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WebSite, Design and Web Hosting News - Incoming Nokia CEO sees US market as trendsetter
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Incoming Nokia CEO sees US market as trendsetter

2006-03-10 15:33:00

Mobile handset giant Nokia sees the United States market as having importance out of proportion to its size in setting industry trends, its incoming chief executive said in remarks published on Friday.

Success in the United States is more important than just the resulting revenues, said Olli-Pekka Kallasvuo, who takes over from CEO Jorma Ollila in June, in an interview with Finnish weekly magazine Suomen Kuvalehti.

"The United States is especially important, because world trends originate there," he said.

"Many things spread elsewhere from there, rarely the other way round. If something succeeds in the United States, it can easily become a global success. The 'clamshell' phone was an example of this," Kallasvuo said.

Nokia grew its unit sales in North America by 22 percent in the fourth quarter compared to a year earlier, with the region now accounting for about 12 percent of its global volumes.

But researchers Gartner say the Finnish company only has about 21 percent of the North American market, running second to U.S. rival Motorola Inc. and much lower than Nokia's global 35 percent share.

Two years ago, Nokia lost ground to competitors when it misjudged the market for folding or 'clamshell' handsets, and had to scramble to recover market share.

And Motorola also stole a march on Nokia with its ultra-thin RAZR design that fast became an icon after it came out in 2004.

Kallasvuo acknowledged that consumers were currently focused on thin models.

"Design and, for example, the slimness of phones are constantly on the leadership's mind," Kallasvuo said.

With more than one in every three mobile phones sold around the world a Nokia, Kallasvuo attributed part of its success to being able to react to change quickly.

"Fast reaction is often more important than the precise forecasting of market growth. In this we have been better than competitors," he said.

"Often we have tried to operate so that we enter a market at an optimal time -- not too soon. In this way we have often been able to maximize profitability, but sometimes we have been a little bit late and suffered an image hit."

In the fourth-quarter of last year, Nokia reported growing sales boosted by strong demand for its phones, but its profit margins suffered as it sold more low-priced handsets, which also lowered the average selling price (ASP) of its models.

Kallasvuo said ASPs were often misinterpreted.

"The average selling price would be easy to raise, if we left the cheapest phones unsold. But they are all profitable," he said.

Nokia has traditionally led the lower-cost phone market in sales, benefiting from its massive scale and production volumes, but does not see itself limited to that market.

"That you are strong in the lower (price) segment does not prevent you from being strong in the upper segment," Kallasvuo said.

"Different strategies are needed for different segments, but we believe that it is possible to be strong in all at the same time."

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