UPDATE 2-Nokia says halving smartphone offering

Thu Dec 3, 2009 2:43pm EST

* Sees tougher competition in smartphone market

* Says smartphone portfolio far more focused next year

* Analysts welcome "huge shift" for the company (Adds analyst quotes, product details)

By Tarmo Virki, European technology correspondent

HELSINKI, Dec 3 (Reuters) - The world's top cellphone maker Nokia (NOK1V.HE) will drastically cut back on the number of different smartphone models it rolls out next year as the Finnish firm tries to shrug off new rivals Apple Inc (AAPL.O) and RIM RIM.TO.

Nokia continues to sell more smartphones than any of its rivals, but has lost ground as competition grows.

"We see ... really fierce competition certainly in the high end, but we also see it in the mid to low end of smartphones increasing," Jo Harlow, the new chief of Nokia's smartphone unit, said in a webcast on Thursday.

"We will defend our position, but we believe we also have tools to play offence as well as defence," said Harlow, former captain of Duke University's women's basketball team.

Nokia plans to push smartphone prices down while increasing margins, helped by its market-leading Symbian operating system, Chief Executive Olli-Pekka Kallasvuo said earlier this week.

Harlow was appointed to head the new unit in October, after the firm reported smartphone market share falling to 35 percent in the September quarter from 41 percent in the previous quarter.

Nokia, which introduced around 20 smartphone models in 2009, said it had cut its smartphone portfolio for next year roughly in half.

"Reducing the number of smartphone models makes a lot of sense ... but Nokia has to be very careful in finding the right balance: its large product portfolio has been one of its strong competitive advantages in the past," said Bernstein analyst Pierre Ferragu.

Antti Vasara, head of smartphones R&D, said the company can put more effort behind the fewer products.

"We have cut down unnecessary differentiation, so that we have a far more focused portfolio for next year," he said.

RIGHT MOVE

"Nokia's phone selection includes too many models that look and feel the same, and we believe this dizzying array of choices confuses consumers," said Pablo Perez-Fernandez, analyst with MKM Partners.

"Simplicity is always best, so, cutting the number of models while improving the rest of the portfolio is a sensible move."

Pressured by shrinking demand and financial losses, Sony Ericsson (6758.T)(ERICb.ST) and Motorola Inc MOT.N -- the world's fourth and fifth largest handset makers, respectively -- have also revamped their portfolio plans this year.

Nokia has in the past benefited from its wide offering as rivals had only a few models on the market, and analysts stressed the company has to be careful in making cuts.

(Reporting by Tarmo Virki; Editing by Will Waterman and Richard Chang) ((tarmo.virki@reuters.com, +358-9-680 50 235, Reuters messaging: tarmo.virki.reuters.com@reuters.net))

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.