Nokia to Reduce Smartphone Prices

Wednesday 6th July 2011 - 17:19

Nokia will reduce the prices of its smartphones in Europe, say sources within the sector profile. Finnish strategy would thus lead to a price war on mobile phone market.

Finnish company’s smartphones began to increasingly lose market share in Europe in favor of Android mobile operating platform produced by Google. Thus, Nokia may report losses for the second and third quarters of this year.

One inside source told Reuters that the Finnish giant will make cuts up to 15%, especially for the N8, C7 and E6 models, designed for business customers. For other phones, the discounts will be smaller.

"There were no discounts for certain models, but the scale of the measure on the portfolio has not been seen for a long time," said the source, who works at a European telecommunications operator.

Nokia shares fell by 1.5% during yesterday’s trading and early this year declined by 40% because of the fears that switching to the Microsoft Windows operating system will not contribute to improving the competitiveness with Apple’s iPhone.

Nokia spokesman declined to comment on price, but said the changes are part of the normal business process.

Nokia's strategy, ready to affect the other mobile phone manufacturers

Nokia measures could trigger a price war, affecting companies such as Motorola, Sony Ericsson and LG Electronics, warns Neil Mawson, an analyst at Strategy Analytics. He believes that both, the operators and the customers will benefit from lower prices of smartphones, but the producers with low profit margins will face serious problems.

According to Nomura, Samsung Electronics will become in this quarter the largest manufacturer of smartphone devices worldwide, exceeding Nokia. Finnish company's share on smartphone market fell to 25.5% in the first quarter of 2011, from 39%, the value recorded in the previous year, according to the market research company Gartner.

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