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NOK Seeks Nook in U.S.
Thursday January 17, 1:59 pm ET
ByChris Versace, RealMoney Contributor


It's no secret that Nokia dominates -- yes, I said the "D" word" -- the mobile-phone market. The company is closing in on 40% share and has a few things up its sleeve to help it get there.

One of the areas it needs to focus on -- and it is gearing up to do so -- is in the U.S. mobile market. With more new domestic-focused products emerging as we move through the year, near term, Nokia shares will be influenced by factors driving the mobile-phone market over the next few months: seasonality, consumer-spending concerns, ASP pressure and market-share swings to name a few.

Down and Out in the U.S. Mobile Market

First and foremost, Nokia needs to address its position, or lack thereof, in the U.S. mobile-phone market. While it was once a highflier in the U.S. back in the early part of the decade with its 8260 model, the company has fallen flat with the core domestic GSM operators -- read that at AT&T Wireless -- and exited the CDMA market -- so it has little to no position at Verizon Wireless or Sprint-Nextel .

As such, Nokia's U.S. position continued to trend down in 2007 and reached only 13% in the 2007 third quarter. By comparison, Motorola , which slipped from being the second-largest mobile-phone manufacturer globally to the third, was the U.S. leader with a 33% share in the 2007 third quarter, per Strategy Analytics.

While we do not have all of the OEMs' December-quarter results as yet -- most notably Nokia, Motorola and LG -- based on Samsung's December-quarter shipments alone, it's probable that Nokia lost some share of the domestic mobile-phone market.

Is Nokia Approaching an Inflection Point?

Nokia has acknowledged its position, as well as the plain mathematical fact that in order to drive overall market-share gains, it needs to improve its position in the domestic market for both GSM- and CDMA-flavored technologies.

As such, the company hopes to launch six to 12 new phones customized for North American carriers in 2008, compared with three in 2007. Some of the models are slated for the first half of 2008, with more hitting the market in the seasonally strong second half of the year.

As expected, Nokia will bring customized phones for AT&T and T-Mobile USA, but it also will look to re-enter the CDMA market as well, as it seeks to jump-start its relationship with Verizon Wireless also by supplying it with customized products. Unlike the GSM product, Nokia will be using third-party manufacturers in Asia that will be making the products to Nokia's specifications.

More Bang in the Second Half of the Year

In my view, these new products should help Nokia gain some incremental share, particularly from Motorola, whose product offering is in dire need of a refresh. The hurdle Nokia faces will be getting carriers to approve and offe the devices. I suspect we'll hear more on these product in early April at the annual CTIA trade show; we may get some nuggets when Nokia reports its December-quarter results on Jan. 24.