Nokia issues second warning in three weeks

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Nokia issues second warning in three weeks

By CAROLINE GABRIEL

Published: 5 December, 2008

READ MORE: Nokia

Nokia has issued its second warning on market downturn in a matter of weeks, telling its Capital Markets Day that the slowdown in mobile devices has continued "more rapidly" in the fourth quarter than it had previously envisaged. It now expects Q4 handset volumes across the industry to come in below the 330m units it predicted three weeks ago, a forecast that had itself been reduced from earlier ones.

This means that, for full year 2008, the weaker Q4 would lead to volumes below Nokia's previous forecast of 1.24bn units. The market leader also said it had "insufficient visibility in the marketplace" to stick by its November estimate that it would maintain market share of 38% or more in the current quarter. In 2009, it expects the total handset sector to decline in volume by about 5% compared to 2008, but it is targeting an increase in its share, especially in smartphones, and is chasing a return to the 40% level of earlier this year.

On the infrastructure side, the Nokia Siemens joint venture expects the market to be flat in dollar terms in 2008, compared to 2007, and to fall by 5% or more in 2009.

Korea's LG had also made gloomy statements earlier this week, although it thinks it can achieve a small year-on-year growth in sales (compared to a typical 30% over the past few years) and an increase in its global market share in 2009. "The pace of growth is set to slow noticeably," said Skott Ahn, CEO of LG's mobile communications unit.

One of Nokia's defences against the downturn will be an increase in its presence in emerging markets, and in particular, pushing cost effective webphones and internet services to users who currently have little connectivity. This will mean a heightened focus on its lower end software platform, Series 40. Nokia has released a new software developers' kit (SDK) for S40, along with a new flagship device for the platform, the 6260 slidephone. New features of S40 6th Edition include several that were previously confined to the more sophisticated Series 60, such as support for the Nokia WebKit Open Source Browser.

The new SDK aims to enable low cost, low power webphones that give at least a flavour of the multimedia experience of higher end smartphones. So there is support for Adobe Flash Lite 3.0 for rich graphical content development; and a new HVGA Portrait 320x480 main screen UI resolution. The SDK also adds Java-based location APIs to support navigation and location aware applications, in line with Nokia's move to drive its mapping functionality into broader markets.