WSJ -- Motorola Gains on Nokia In Mobile-Phone Market.
December 26, 2002
Motorola Gains on Nokia In Mobile-Phone Market
By JESSE DRUCKER and DAVID PRINGLE
Staff Reporters of THE WALL STREET JOURNAL
Is Moto getting its mojo back in the U.S.?
After years of slip-ups in the world-wide mobile-phone market, Motorola Inc. is breathing down the neck of Nokia Corp. in North America, putting pressure on the world's dominant mobile-handset maker.
Now Finland-based Nokia is laying the groundwork to turn Motorola back in 2003. But some analysts estimate that Motorola will pull even with Nokia for the position of market-share leader in North America by the end of the year. "It's going to be a photo finish for No. 1 in North America this quarter," says Bryan Prohm, a senior analyst for Gartner Dataquest, a technology-consulting firm in Stamford, Conn.
Motorola has been trying for years to make up for its mistakes in the late 1990s, when it was slow to adopt digital technology in the U.S. and quickly went from a clear market leader to a distant second. Analysts say the Schaumburg, Ill., company has made strides in the U.S. during the past 18 months: The company has had some success with new handsets, particularly the fashionable V60 flip phone.
During the first three quarters of 2002, Motorola's North American market share grew to 26.2% from 22.8%, while Nokia's fell to 32% from 40%, according to figures from Gartner Dataquest.
Some analysts expect Motorola's gains in the U.S. to continue into the fourth quarter with its stepped-up "MOTO" marketing campaign and the recent introduction of its sleek, color-screen T720, which Verizon Wireless Inc. made its centerpiece for the holiday selling period.
"This quarter we will catch them or just pass them" in North America, says Tim Cawley, the senior vice president for Motorola's Personal Communications Sector in North America, who says the handset division has more than tripled its marketing spending in North America compared with a year ago.
But Nokia isn't sitting still. It launched the latest volley earlier this month when it announced an agreement with Sprint Corp.'s Sprint PCS, offering handsets with the country's fourth-biggest mobile-phone carrier for the first time since early 2000.
The move will give Nokia a bigger presence in the large U.S. market for CDMA, or code division multiple access, the most popular standard in the alphabet soup of technologies used by U.S. mobile-phone carriers. Previously, Nokia, loath to pay licensing fees to CDMA-chipset inventor Qualcomm Inc., struggled to produce chipsets that satisfied CDMA operators, like Sprint PCS and Verizon Wireless, the joint venture of Verizon Communications Inc. and Vodafone Group PLC that is the biggest U.S. wireless carrier. Next month, Nokia will begin introducing the first of several color-screen phones in the U.S.
Nokia acknowledges it lost market share during the third quarter in North America. "We had a quarter when we were in very few [advertising] campaigns," Jorma Ollila, Nokia's chief executive, told analysts during a conference call in October. "But we are in campaigns starting in September. That will change the picture dramatically."
Indeed, Nokia says it already has gained share in North America during this quarter. It plans to launch 15 phones in the U.S. during the first half of 2003, including 12 color-screen devices, sporting everything from built-in cameras to a foldout "qwerty" keyboard for BlackBerry-style e-mail services. Kari Tuutti, a spokesman for Nokia, says these models will be marketed vigorously in the U.S.
Nokia typically has launched phones in the U.S. several months after the equivalent models went on sale in Europe. But Mr. Tuutti says: "Next year there will be much better synchronization of launches." Two leading U.S. carriers are adopting GSM, or global system for mobile communications, the dominant network technology elsewhere, and Mr. Tuutti says this will allow Nokia to better exploit its global economies of scale in the U.S.
Mr. Ollila said at a meeting with analysts in early December that Nokia also had made a determined effort during the past six months to catch up in the CDMA market, but he added: "It will take a bit more time to get the [CDMA] product portfolio broad enough. In 2003 and 2004 we will get there. We have high ambitions."
While Motorola is gaining on Nokia, Samsung Electronics Co. may be gaining on Motorola: The South Korean manufacturer has increased its global market share roughly 50% over the last year to become the third-biggest handset maker. "This could be a situation where Motorola's got its eye on Nokia, and Samsung comes up and takes second place," says Brian Modoff, a telecom-equipment analyst for Deutsche Banc Securities Inc.
Because Motorola continues to slip elsewhere in the world -- its handset sales world-wide fell 2% during the third quarter -- some question the ultimate significance of its gains in the U.S. "You've got to start somewhere," Mr. Cawley says, "and a few years we were losing a lot of battles elsewhere in the world."
Write to Jesse Drucker at jesse.drucker@wsj.com and David Pringle at david.pringle@wsj.com
Updated December 26, 2002 5:28 a.m. EST
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