Nokia’s prices drop, profits grow

Now, this story gives us pause to consider the markup on handsets. Nokia, the worlds No. 1 maker of handsets, announced a flurry of good news yesterday. Among it was that they now control 39 percent of the mobile market, up from 36 percent last year. The big news, to us anyway, is that their profit margin for their phones jumped to 22.6 percent, from 13 percent a year ago. That’s pretty damn significant. And they’re doing it with lower phone prices.

The average selling price of a Nokia pone fell from $132 in the second quarter to $116 in the third quarter. So they’re making greater profits from lowering their prices? Hmm…sounds fishy to us.

The data is skewed, though, and we’d be remiss to omit this caveat: There have been increases in shipments to China, where phones sell for much cheaper than they do here. That, to us, signals a lower quality of phone being shipped to China, rather than rates for the same phones being cheaper there.

The company has been making some big moves. On Oct. 1, Nokia said it would buy Navteq (NYSE:NVT) , the world’s top seller of mapping software for GPS and other devices, for $8.1 billion. In late August, Nokia said it would launch a Web site where its cell phone users could download music, maps, games and photos as it seeks to expand revenue sources. The moves pushes Nokia into the Web services field against a host of new rivals.

We appreciate the progress, Nokia. Problem is, over here in the U.S. a lot of those acquisitions don’t do us much good. Software is locked and blocked by the carriers, so downloading music to a Nokia handset through Verizon can only be done through Verizon’s “Get It Now” service. It’s a shame, really, because the choice would be nice. Such is the wireless industry in America, though.

All that said, we’re fans of the N95.

[CNN Money]

Related Posts

Leave a Reply