Who would you blame for a 90% drop in profits? The world’s largest mobile manufacturer only made £108 million compared to £1.08billion for the same quarter last year. Nokia have already announced 1,700 job cuts but is it enough?
Some of it down to the economic climate and reluctance to change handsets but it still sold 93 million handsets compared to 115 million certainly not a 90% drop in units sold.
The problem is not the numbers of units sold but the mix of units sold. At the lower end they are losing out to cheaper phones which is not as profitable for Nokia. At the high end they have Apple, Samsung, RIM all eating from their table.
However Nokia aren’t the only big player feeling the cold. Sony Ericsson reported their third consecutive loss with a $387 loss in the 1st quarter of 2009 on falling sales and has also announced 2000 job cuts. They shipped 14.5 million units in the quarter down 35% year on year.
So both mobile giants are missing out on the low end and face increasing pressure at the high end. There has to be casualties in this crowded market and without continued profit the research may so down and dry up and that’s just as potentially dangerous as not keeping up with the Apple’s.
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