Nokia’s Market Share May Shrink After Launch Of Apple’s iPhone 5


Nokia Corporation (NYSE:NOK)’s new high-end smartphone on Windows Phone 8, Lumia 920, will now be launched in November, much unlike the expected launch in October, which was closer to the announcement date in September. A report from Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) consider the delay to be caused by some work still remaining for software fine tuning instead of any shortages for hardware components.

Nokia's Market Share May Shrink After Launch Of Apple's iPhone 5

The Finnish company, Nokia Corporation (NYSE:NOK) is expected to price the new high end smartphone in almost the similar price range as other popular high-end smartphones (>$600) such as the Apple Inc. (NASDAQ:AAPL)’s iPhone and the Samsung Galaxy S3. The Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) report views such move a disadvantage for the company in improving its market share, given “the lack of consumer traction of the Windows Phone OS and refreshes of both major smartphone OS in Q4 (Android Jellybean & Apple’s iOS 6).”

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The report expects the handset maker to ship around 4 million Lumia smartphones in Q4, but it also expected a launch in early October. After the delay in launch, the new Lumia will hit the markets after the introduction of iPhone 5 from Apple Inc. (NASDAQ:AAPL), which will certainly make it more difficult for Nokia “to regain mind and market share with consumers” despite Lumia having competitive hardware specifications. The report also comments on its estimates of shipments by saying “We believe our Q4 Lumia shipment estimates could be too aggressive, implying downside risk to our sub-consensus estimates (DBe -8% Q4 device margins vs. consensus -3%).”

The report concludes by saying that new device from Nokia Corporation (NYSE:NOK) based on Windows Phone 8 might not be able to change its market share trajectory in the ever more competitive smartphone market. Windows Phone 8 require a high hardware requirements, which will not allow Nokia Corporation (NYSE:NOK) to compete profitably in the fast-growing <$200 smartphone market. The report also says that low cost Android smartphones, less than $100, will eat away Nokia’s almost 50 percent mobile phone business in 2013 and “model continuing unit and revenue declines here.” The report predicts that Nokia may generate negative Free Cash Flow (FCF) in H2 and 2013 “Consensus estimates for Q4 and 2013 device margins seem materially too high and we expect Nokia Corporation (NYSE:NOK) to generate negative FCF in H2 and 2013.”