Bloomberg News

Apple Dislodges Nokia as World’s Biggest Smartphone Maker

July 29, 2011

(Updates Apple share price in ninth paragraph.)

July 29 (Bloomberg) -- Apple Inc. and Samsung Electronics Co. both surpassed Nokia Oyj in smartphone shipments for the first time last quarter as the Finnish company sold fewer units from its aging Symbian product lines.

Apple accounted for 18.5 percent of global smartphone shipments in the second quarter, compared with 13.5 percent a year earlier, Strategy Analytics said today. Nokia dropped to third place, falling behind Samsung after its market share shrank to 15.2 percent from 38.1 percent, the analysts said.

Nokia remains the biggest handset producer overall, even though its market share has fallen to the lowest level since 1999, Strategy Analytics said. The stock is down 47 percent this year, reflecting Nokia’s difficulties in competing with the iPhone and handsets using Google Inc.’s software. Apple, which posted record profit last quarter, has jumped 21 percent.

“This shift in market share has been going on since the introduction of the iPhone, and Nokia has been unable to find an answer,” said Leon Cappaert at KBC Asset Management in Brussels, who helps manage 400 million euros ($570 million), including Apple shares. “Component availability seems to be easing and the second half will be very good for iPhones and iPads.”

‘Unexciting Portfolio’

Global handset shipments grew 13 percent to 361 million units last quarter, led by 76 percent growth in smartphones, which are more advanced handsets with computer-like capabilities for running applications and playing media, Strategy Analytics said. Sales of smartphones totaled 110 million units.

Nokia’s share of the global handset market, which includes smartphones and more basic models, fell to 24.5 percent last quarter from 34.7 percent a year earlier, the research firm said.

“Samsung is breathing down Nokia’s neck,” Neil Mawston, a London-based analyst at Strategy Analytics said. “An unexciting touch-phone portfolio, inventory correction, wavering demand for the Symbian platform and limited presence in the huge U.S. market continued to weigh on Nokia’s near-term performance.”

Nokia was little changed at 4.06 euros in Helsinki trading. Samsung, which today reported second-quarter profit that beat analysts’ estimates because of higher mobile-phone sales, has fallen 11 percent this year.

Apple Shares

Apple dropped $1.34 to $390.48 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 21 percent this year.

Cupertino, California-based Apple, the world’s most valuable technology company, counts the iPhone as its biggest source of revenue.

IPhone sales rose to 20.3 million units last quarter, buoyed by overseas demand, particularly China, Apple said this month. The product accounted for 46.6 percent of revenue at Apple, according to data compiled by Bloomberg.

Apple is said to be planning a new iPhone with a faster chip for September that also boasts of a more advanced camera, two people familiar with the product said in June.

In contrast, Nokia had its first quarterly loss since 2009 after handset sales slumped following an accord to shift to Microsoft Corp. software.

Chief Executive Officer Stephen Elop, who joined from Microsoft last September, is struggling to sell handsets based on Nokia’s 10-year-old Symbian software that he is phasing out as he prepares new models based on Microsoft’s Windows Phone.

The market for low-end phones known as feature phones contracted 4 percent in the second quarter, Framingham, Massachusetts-based IDC. said in its market share report.

The shrinkage was the first since the third quarter of 2009 and was most noticeable in richer countries where users were shifting to smartphones, the IDC researchers said.

IDC calculated second-quarter handset shipments growing at 11.3 percent to 365.4 million units, owing partly to higher estimates for shipments from smaller vendors. LG Electronics Inc., Apple and ZTE Corp. rounded out the top five handset makers, according to both research firms.

--Editor: Anand Krishnamoorthy, Kenneth Wong.

To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net; Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net


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