Smartphones surging, Nokia to tumble: analysts

HELSINKI Thu Apr 7, 2011 9:23am EDT

A model demonstrates a Nexus One smartphone, the first mobile phone Google will sell directly to consumers based on its Android platform, after a news conference at Google headquarters in Mountain View, California January 5, 2010. REUTERS/Robert Galbraith

A model demonstrates a Nexus One smartphone, the first mobile phone Google will sell directly to consumers based on its Android platform, after a news conference at Google headquarters in Mountain View, California January 5, 2010.

Credit: Reuters/Robert Galbraith

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HELSINKI (Reuters) - Growing demand for phones running on Google's Android platform will help the smartphone market grow in 2011, boosting companies like HTC and Samsung Electronics who are betting on the platform.

Android's popularity has helped the Asian manufacturers to rise fast in smartphone rankings, and HTC overtook Nokia in market capitalization for the first time on Thursday.

Shares in HTC were worth $33.4 billion at their Thursday close, with Nokia stock worth $33 billion.

Nokia still has higher volumes, selling 19 phones for each HTC phone sold last year. But its average sale price was just $85 compared with HTC's $360, according to Strategy Analytics.

Surging growth in the high end of the market, helped in part by new models of HTC, will lift global sales of cameraphones 21 percent in 2011 to 1.1 billion handsets, topping the 1 billion mark for the first time, Strategy Analytics said.

The smartphone market will grow 58 percent this year and 35 percent the next, research firm Gartner said on Thursday.

Android, a distant No. 2 to Nokia's Symbian just last year, will increase its market share to 39 percent in 2011, while Symbian's share will roughly halve to 19 percent following Nokia's decision to dump the platform.

Apple's iPhone platform will be slightly bigger than Symbian this year, while Blackberry-maker Research In Motion will control 13 percent of the market and Microsoft Windows Phone 6 percent.

Nokia decided in February to start using Microsoft as its main smartphone platform, a move Gartner expected would boost Windows Phone market share to 11 percent next year and to 20 percent in 2015.

"This is not about giving Nokia too much credit, this is about saying that Nokia will do everything they can to stay in this business. Anything less than this would mean the end of Nokia," analyst Carolina Milanesi said.

NOKIA RATING CUT

On Thursday, Moody's cut its credit rating on Nokia, citing the Finnish company's weakening market position and uncertainty over its transition to Microsoft's Windows Phone software.

Moody's cut its rating on Nokia's senior debt to A3 from a previous A2. The agency also cut the company's short-term debt ratings to Prime-2 from Prime-1, and said the outlook on the ratings was negative.

"The rating downgrade primarily reflects Nokia's weakened market position in its core business, mobile devices, which has reduced the company's margins and funds from operations," said Wolfgang Draak, Moody's senior vice president and lead analyst for Nokia.

Standard & Poor's also cut its rating on Nokia late last month.

"The growing quality of high-tier cameraphones is making them an increasing threat to the lower end of the point-and-shoot digital camera market," said Neil Mawston, analyst at Strategy Analytics.

The research firm forecast that sales of cellphones with 5-megapixel or higher resolution cameras would more than double this year to 361 million phones. At the same time it sees the digital still camera market growing a mere 1 percent to 130 million units.

(Editing by Jon Loades-Carter and David Cowell)

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Comments (5)
ulludapattha wrote:
“This is not about giving Nokia too much credit, this is about saying that Nokia will do everything they can to stay in this business. Anything less than this would mean the end of Nokia,”

Nokia has already done everything it can to stay in this business. Nokia surrendered unconditionally to Microsoft in February this year. This unconditional surrender, the final terms of which have yet to be finalised, already means the de facto end of Nokia as the mobile world has known before.

Apr 07, 2011 5:43am EDT  --  Report as abuse
heymanlook23 wrote:
Hello, and welcome to stuff I said in 2009….I still use my google g1 (first android phone) and have known ever since day 1 that it would surpass the iphone. I even said it on many sites… it was just too obvious that google knows what they are doing better than anyone else. Anyone in tech and IT saw this coming a long time ago….

Apr 07, 2011 9:12am EDT  --  Report as abuse
vidso wrote:
I love Nokia, but I hate Microsoft!
N900 is the last good phone!

They should have stuck with Maemo/Meego or merge it with Android…

Apr 07, 2011 10:18am EDT  --  Report as abuse
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