Nokia looks to new handsets to fight sales slip

Nokia hopes to distinguish its products and regain lost market share by leading the mobile-device market in delivering cutting-edge bells-and-whistles on its new handsets, company executives said Thursday during a daylong meeting in New York with analysts.

Next year, Nokia expects 15 percent of the overall mobile phones on the market to include MP3 music players, but it plans to include MP3 players in half of the models it ships. Likewise, it expects two-thirds of its new models to incorporate digital cameras.

Picking up on what it sees as demand for smaller and more modern handsets, Nokia said half of its models next year will be of the clamshell design or have sliding covers. Earlier this year Nokia began adding more clamshell phones to its lineup, after being caught without a mid-range handset with the increasingly popular design.

Espoo, Finland-based Nokia repeated its long-term goal of capturing 40 percent of the mobile device market. Research firm IDC pegs Nokia's current market share at 30 percent, nearly twice that of its closest rival, Motorola.

Nokia forecast overall unit growth in the mobile device market next year of 10 percent, to around 690 million units. Nokia Chief Executive Officer Jorma Ollila said the company intends to grow faster than the market, but did not specify a target. It plans to release 40 new models next year.

Meanwhile, Nokia is trying to trim its development expenses to below 10 percent of net sales within two years, while also accelerating its product development cycles and lowering its overall operating expenses. Nokia started 2004 by missing revenue expectations, as its mobile phone handset sales fell.

"We were able to adjust our operation to the new (industry sales) level -- with some pain, yes, but compared to the whole industry with a very reasonable amount of pain," Ollila said. "When we look forward, I think 'stability' would be the word."

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Stacy Cowley

IDG News Service
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