Nokia finally see smartphone benefits

The N900, Nokia's popular smartphone

In October last year, we reported how Nokia had been hit hard by their slowness in getting on board the 'smartphone wagon' with net losses of over $1.4 billion over the Q3 of 2009. However, the release of phones like the N95 has seen their profits double with the last quarter of 2009 seeing the company's profits increase by 53 percent.

From October to December in 2009, the world's largest mobile phone maker saw its net profits total $1.2 billion. All this was accomplished by entering the smartphone market and as a result profits rose despite a 5 percent fall in sales.

Smartphone War

Nokia's 2009 failings have been attributed to the increasing popularity of smartphones such as Apple's iPhone and Research in Motion's Blackberry.

However, Nokia were quick not to attribute their fall in profits to this lack of foresight, instead saying that their financial hit has been due to the fall in value of their Nokia Siemens Networks division. Chief executive Olli-Pekka Kallasvuo said that sales "were constrained by component shortages".

Despite the fall in sales though, Nokia has maintained its overall global market share in mobile devices at 38 percent. Meanwhile, the smartphone market has grown exponentially, with prices falling and an explosion in choice of units.

Nokia, in a bid to capitalise on their success, released three models in their N-series in order to boost profits and it looks like their decision worked.

"We grew our market share in smartphones in the fourth quarter, driven by the successful launch of new touch and Qwerty models," said Nokia's chief executive Olli-Pekka Kallasvuo.

"Our performance in smartphones, combined with continuing success in the emerging markets, helped us increase sales in our devices & services unit, both quarter-on-quarter and year-on-year."

Of course, Nokia also has a back up plan - its patents. Its current lawsuit with Apple shows that when profits fall, it always has its exorbitant patent fees to fall back on - after all, they own the patent for wireless licensing fees.

The popularity of smartphones has also been attributed to the increase in social media such as Facebook and Twitter and desire for consumers to be online whilst mobile. However, whilst 2009 may have been the year of the smartphone many believe after the unveiling of the iPad yesterday, 2010 could be the year of the tablet.

Relevant articles:

Nokia to sue Apple over iPhone dispute | Nokia hit hard in 'Smartphone War' | Will Apple's new product dominate 2010?

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