10/19/2009
EE Times
Nokia Corp. has a fat target on its back and an increasingly tough task keeping rivals from hacking away at its market share eye each quarter as competition intensifies in the wireless handset equipment sector.
To accelerate what executives have termed the need for a “cultural” change at the company, Nokia on Friday (Oct. 16) moved CFO Rick Simonson to head the mobile phones unit and charged him with the task of handling “strategic sourcing” for the entire devices division. Timo Ihamuotila, head of global sales, was appointed to replace Simonson in the CFO role.
“Rick Simonson’s deep knowledge of the business and its financials will be valuable for the significant part mobile phones play in Nokia’s business,” said Olli-Pekka Kallasvuo, Nokia CEO in a statement. “In addition to his background in finance, Timo Ihamuotila’s expertise from leading a diverse range of business areas will be a tremendous asset in his position as CFO.”
Simonson’s appointment indicates Nokia is concerned about its competitive position in the handset market despite its overall dominant position in the segment. The long-term Nokia CFO is expected to address component constraints issues that plagued the company in the third quarter, a development that is expected to stretch into the ongoing quarter.
“We would have sold more phones in the quarter without the component constraint,” Kallasvuo said. “The constraint hit the smartphones side of the business more.”
The recently ended third quarter demonstrates the challenge Nokia faces especially in the higher margin smartphones segment where pressures from a wide range of rivals have intensified in recent months as suppliers like Apple, Blackberry, Motorola and Samsung jostle for additional market share.
Nokia held onto its 38 percent market share in the third quarter but a closer look at the numbers paints a more cautious picture. While Nokia’s total handset shipments grew 5percent sequentially in the third quarter—and fell 8 percent year-over-year—the overall market performed better with total shipment rising 7 percent from the second quarter and down 7 percent from the year-ago comparable period.
The implication is that some competitors are gaining on Nokia despite its stable market share. Some of the gains are taking place in North America where Nokia’s shipment fell a staggering 31 percent in the third quarter from the same period in 2008. The company’s third quarter shipment in North America even slid 3.1 percent from the generally weaker second quarter.
Rivals like Apple are making life difficult for Nokia in North America and as the Cupertino, Calif.-based company extends exclusive contracts for its iPhone product in other regions, its Espoo, Finland, rival could face additional market share pressures.
Nokia says it realizes competitors want a bigger piece of the market. Executives assured investors during a conference call to discuss Nokia third quarter results they are accelerating the company’s reorganization in response to the tougher market environment.
“We are not complacent as the competition just keeps on coming,” Kallasvuo said. “We can and we will improve.”
