Nokia Losing Market Share as Price War Heats Up

Nokia today said its third-quarter global market share will decline due to aggressive price cuts by its rivals.

Nokia said it was losing share because of its tactical decision not to match the aggressive price cuts of some of its competitors, seeking instead to be sustainably profitable in the longer term.

In July Nokia had predicted that its market share would be about the same in the two quarters - about 40 percent. It said it expected the mobile device market in 2008 to be hit by weak consumer confidence and also cited tough competition in emerging markets and a slow ramp-up of a mid-range Nokia device.

"In certain markets and in certain areas, including in some of the low end, we are meeting certain aggressive pricing that we believe may not be sustainable," said Rick Simonson Nokia Chief Financial Officer. "So it really is not margins. What we're talking about is units here."

The average selling price of Nokia handsets has continued to fall, because of higher volumes of cheaper phones sold in emerging markets and a negative impact of the weak dollar. In the second quarter, the average price for a Nokia phone was 74 euros ($107), down from 79 euros in the first quarter of the year and 90 euros in the second quarter of 2007.

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