Faced with Declining Smartphone Sales, Nokia Eyes Internet Services Market

As reports emerge about a slowdown in smartphone sales, the world’s top cell phone maker reportedly is bolstering efforts to roll out new Internet services.

 

According to Reuters (News - Alert) reporter Tarmo Virki, through Nokia bought U.S. digital maps firm Navteq and ten smaller firms to jump-start its Internet services business, the head of the company’s Web unit, Niklas Savander, said it’s not done.

 

The company likely will target small companies that Nokia plans to offer in the future, Savander reportedly said.

 

According to Virki, Nokia already has introduced a new offering similar to Apple and Microsoft products – a personal information management synchronization service for calendar, contacts, notes and tasks between Nokia phones and its Internet services site.

 

“We obviously think there is genuine consumer demand. Information that is contained on device is becoming more and more critical to people,” Savander reportedly told Virki. “We are incrementally, step-by-step, building up the offering that has to be matched with demand.”

 

The focus on Internet services comes as global smartphone sales slow down.

 

As TMCnet reported this week, popularity of touchscreen devices such as Apple’s iPhone (News - Alert) and a slower global economy led to a reduced rate for smartphone sales in the first half of 2008, according to the Egham, England-based European headquarters of a market research firm with U.S. offices in Stamford, Connecticut.

 

Officials at Gartner say that although 32.2 million smartphones were sold in the second quarter of 2008 – a 15.7 per cent increase from the year-ago quarter – sales increased at a slower rate than in the previous year.

 

“The current economic environment continues to negatively impact the market, limiting consumer spending and replacement purchases in general,” said Roberta Cozza, a principal analyst at Gartner. “In addition, smartphone sales slowed down as a result of new compelling touch technology mainly available on enhanced phones (based on proprietary operating systems) rather than smartphones.”

 

According to the study, Nokia held the number one position with a 47.5 per cent market share in the second quarter of 2008, though its year-over-year growth was about half of the market average. The company is facing increased competition in the market, Gartner said.

 

Research In Motion saw a near-doubling of its market share, from 8.9 to 17.4 percent, while HTC (News - Alert) also saw a sharp increase in market share, from 2.2 to 4.1 percent.

 

According to reports, Nokia needs more design variations among its N-series multimedia phones to stay ahead.

 

“The company has only tweaked its N-series lineup so far this year and many analysts expect it to lose more market share in smartphones in coming quarters,” according to Tamro Virki.

 

Credit Suisse said it expects Nokia’s smartphone market share to fall to 41.6 percent in 2009, hurting profit margins, Virki reports.

 

As demand for smartphones among casual users grows, TMCnet Contributing Editor Susan J. Campbell reports, companies such as RIM and Palm are seeing more pressure.

 

“The smartphone is appealing to more than just the business user, forcing a change in the marketing approach in order to dominate the market,” Campbell wrote in a recent article.

 

“According to John Moore in a CNBC.com special report, both Palm and RIM are prepared to do battle as Apple and High Tech Computer (News - Alert) focusing on consumer-friendly features and design,” Campbell writes.

 

Meanwhile, Virki writes, Nokia has not unveiled user numbers for its Internet services.

 

“The growth in Nokia’s core handset business is much more subdued, and the company warned last week it would lose mobile phone market share in July-September as it aims to stay away from heated pricing battle,” Virki writes.