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Nokia has made a good start to the year with a reinvigorated defense of its handset lead, but it faces a major challenge this from Samsung, even in its European heartland. Nokia could once be certain of keeping its Korean challenger at bay in western Europe, but last year, Samsung gained market share in the region, partly at Nokia's expense, and in 2010 is targeting a 15% year-on-year growth in sales and 30% share. Given Nokia's domination of the European midrange and smartphone segments, some of this increase would have to come from the Finn's devices.

Samsung CEO Sang Heung Shin told Dow Jones newswires that his company aims to increase overall group sales in Europe by 15%, with smartphones and flat screen televisions being the key weapons. On the phone side specifically, insiders said the company would look for closer to 20% growth in revenue terms in Europe, as Samsung gets more serious about smartphones and shifts towards higher priced models. Last year, Samsung sold 54m handsets in Europe, giving it 25% of the market as against Nokia's 40%. "We'd like to break 30% market share this year," Shin said.

Although the company aims to spread its wings in smartphones, its weakest product area, by supporting all the major operating systems, it is looking to its inhouse software platform, bada, for the greatest differentiation and impact. Shin singled out the new Wave phone, the first to run bada, as the single most important handset in the European strategy. This is despite the strong position of Symbian, which Samsung also supports, in the region, and the growing presence of Android. For Android, Samsung has two Galaxy models already in the market, and plans more, and it will also launch more phones running the LiMO OS, to join the existing Vodafone H1 and M1, plus Windows devices to add to its Omnia range.

All this goes against the general trend of the industry, which sees western Europe as saturated and still recession-hit, and looks to other markets for higher growth. But Samsung has two reasons to single out Europe in its quest to better its current 20% market share and to improve its phone margins. One is timing - during the credit crunch, consumer upgrade cycles have often been stretched out, but this is expected to release pent-up demand in the second half of this year. The other is the expansion of the smartphone sector. Open OS, multimedia handsets are reaching downwards from the high end into the mass market, where Samsung's economies and brand excel. Since it has small overall smartphone share, it has plenty of room to gain position in this growing sector, even as the total European handset market looks tough for expansion.

Samsung is taking a radically different approach to its smartphone quest than the rest of the big five, arguing that standard platforms like Android leave limited room for differentiation and so there is a place for a system like bada, which is open to all developers, but tightly controlled by the vendor. This is clearly more reminiscent of the Apple iPhone model than Google's standpoint, though Samsung is also happy to spread its bets and has the scale to support all the major OSs. It remains to be seen whether it can attract significant developer support for bada in Europe - its strong position in the midrange makes bada attractive for programmers targeting emerging markets, but the battle for their time and investment in Europe is far tougher.

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