Nokia cuts own market share forecast to 34%
New estimates include grey market
Forecasts and market share estimates in the handset industry are increasingly skewed by the rising importance of counterfeit and grey market devices. Such products find their main markets in emerging economies, which are accounting for an increasing proportion of total shipments.
Now Nokia has broken the conspiracy of silence among OEMs and revised its own forecasts to include shipments of fake or unlicensed handsets. This increases the global total by 120 million units, but depresses Nokia's own share of that figure from 38 per cent to 34 per cent.
In a filing with the US SEC, Nokia forecast shipments of 1.26 billion cellphones this year, up from its previous estimate of 1.14 billion. It said its adjustment had been prompted by improvements in its measurement processes, which have given it better market visibility. Since its massive market lead makes Nokia's forecasts the most listened-to in the industry, its revisions will change the outlook for all its rivals too.
"Beginning in 2010, Nokia is revising its definition of the industry mobile device market that it uses to estimate industry volumes," said the filing with the US financial watchdog. In particular, it will recognize devices shipped by certain "new entrants", including "vendors of legitimate, as well as unlicensed and counterfeit, products with manufacturing facilities primarily centered around certain locations in Asia and other emerging markets".
Its view of the unlicensed market is still somewhat more optimistic than that of some analysts - while Nokia thinks it will account for almost 10 per cent of the total this year, iSuppli thinks the figure was already 13 per cent in 2009, with two-thirds of the models finding their way outside China, eating into legitimate market share all round the world. According to iSuppli, grey shipments rose almost 44 per cent year-on-year last year, at a time when shipments of legitimate phones fell by about 6 per cent.
Obviously, this new outlook affects Nokia's key metric, market share - or at least, how this is perceived by the outside world. Its share figures in the economies where counterfeit handsets are most important will be impacted more dramatically - China and India in particular, but also many south east Asian and Latin American bases. Other exposed suppliers will include Samsung, Motorola and the 'legitimate' Chinese manufacturers, notably ZTE.
The biggest source of the unofficial phones is China, and the country is also the largest market for these devices, but it is also increasingly an export industry, threatening Nokia's overwhelming share of low-end products in territories like India. Grey market phones are made in China but not recognized or licensed by the government and so do not pay value added taxes. They use fake international mobile equipment identity numbers.
The Indian government, however, has recently initiated a crackdown on illegal handsets, ordering operators to disable devices without valid International Mobile Equipment Identity (IMEI) numbers. This is likely to affect 25 million phones, about 5 per cent of the national total.
Nokia reiterated that it expects the handset industry to grow by 10 per cent in 2010 compared with 2009, and that it expects its own market share to be flat in real terms compared with last year.
In a separate report, iSuppli found that Nokia had an operating margin of 12.3 per cent in 2009, well above the average of 0.7 per cent for the world's top five phonemakers.
Copyright © 2010, Wireless Watch 
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