Nokia bets on CDMA biz, localization
By Li Weitao (China Business Weekly)
Updated: 2004-04-13 10:05

Finnish cellphone giant Nokia is counting on the nascent CDMA handset business and its increasing localization in China to expand its share of the world's largest mobile phone market in terms of subscriber number.

The world's top handset maker expects to launch 15 new handset models in China this year, Colin Giles, senior vice-president in charge of Nokia's customer and marketing operations in greater China, said last week.

Globally, Nokia expects to launch about 40 models this year, company chief executive officer Jorma Ollila said last month.

Giles would not specify the number of models based on the competing standards CDMA and GSM, but emphasized Nokia will introduce "more and more" CDMA models.

GSM, or global system for mobile communications, is the world's dominant wireless standard. CDMA, or code division multiple access, is the second most popular.

Nokia had shied away from the CDMA market prior to last June, when it secured a much-needed licence from the Chinese Government to make and sell CDMA phones in the country.

The firm is optimistic about the prospects of its CDMA business, offered by China Unicom, the country's No 2 cellular operator, Giles said.

"China Unicom has focused on CDMA. We believe it should be successful in the long term," he said.

"We have faith in CDMA. That's the reason why we entered the (CDMA) market."

The number of CDMA subscribers in China grew substantially last year, even though consumers were slow to accept the standard at the very start.

Nokia introduced two CDMA models in China last year, in September and December, which have been selling "quite well," Giles said.

Two external data tracking firms last month ranked Nokia as No 1 in both the GSM and CDMA handset markets, in terms of retail sales, he noted.

He did not elaborate.

Statistics from the Ministry of Information Industry (MII) and CCID Consulting, under the ministry, indicated China's Ningbo Bird and TCL are the top two handset vendors in the country.

However, many industry watchers doubt the figures. They suggest the numbers are based on production volume rather than retail sales.

Motorola and Nokia remain the top two cellphone makers in China, even though they have been losing market to hard-charging Chinese rivals in recent years.

Nokia is counting on its nascent CDMA business for a turnaround in China.

Motorola, which has both GSM and CDMA licences, has been staying ahead of Nokia, even though Nokia sells twice as many handsets globally.

However, in the third quarter of last year, Nokia claimed it had wrestled the GSM crown from Motorola in China.

For this year, Motorola is reportedly planning to introduce about 40 models into the Chinese market. That move is expected to intensify the firm's head-to-head competition with Nokia.

Giles said Nokia will focus on ways to effectively and efficiently market new models, rather than on the number of new models.

"I think 15 is the right number (for Nokia)," he said, adding an excessive number might confuse consumers and destabilize prices.

China's mobile phone market will remain buoyant this year, he added.

New markets are emerging from second- and third-tier cities, or small cities where consumers are buying handsets for the first time while "replacements continue to look strong in big cities like Beijing and Shanghai," he said.

Ollila last month said India, China, Russia, Indonesia and Brazil are the new markets that will be key drivers for the global mobile phone industry.

To ride on the continuing boom of China's cellphone market, Nokia is also beefing up its localization efforts by launching more clamshell models, Giles said.

The firm last week introduced its fold-away model, the Nokia 7200, to the Chinese market.

The model was initially designed for Chinese and Asian consumers' tastes, but has become a global product, Giles said.

"We are trying to have a full range of products to fulfil all needs from consumers," he said.

Asian makers, especially South Korea's Samsung, has seen their handset businesses thrive in recent years, due in part to their focus on the fold-away models, which have been extremely popular in Asia.

In contrast, European makers -- such as Alcatel and Siemens -- which mainly sell candy-bar-like models, have been rapidly losing their shares of the market.

Eyeing the gap in its portfolio, Sony Ericsson last year launched its first clamshell phone in China.

The firm now has two such models in China, and expects to launch more this year, a company official said.

He did not elaborate.

Close