In order to remain competitive in the high-end smartphone market, Nokia Corp. (NOK), the largest mobile phone manufacturer of the world, has decided to offer free music downloading services in several emerging markets. The company has decided to offer its “Comes with Music” service in China, which will allow users to download free music to their computers and to 8 different series of Nokia cell phones.
Nokia is gradually losing its market share in China, the largest emerging market of the world. This country generates around 16% of Nokia’s total sales. In 2009, Nokia’s revenue from China was $8.6 billion, remaining flat year-over-year. However, its market share in China reduced to 35% in 2009 compared to 40% in 2008.
Losing its market share in China may prove costly for Nokia’s future growth. This country constitutes the largest market in the world with around 750 million of mobile subscribers, a figure that can go up to 1.22 billion by 2014. Nokia is getting marginalized by Research In Motion’s (RIMM) BlackBerry and Apple Inc’s (AAPL) iPhone in the high-end handset segment. Similarly, in the low-to-mid range handset segment, the company is facing increasing competitive pressure from Samsung Electronics, Motorola Inc. (MOT) and other low-cost Chinese manufacturers.
Nokia has decided to provide more value-added services to maintain its leadership position in various emerging markets. For this, the company is offering the Comes with Music and other applications such as navigation and its Ovi online portal to differentiate its products from competitors. The “Comes with Music” service has already been launched in Brazil, Russia and Indonesia and is likely to be launched in India very soon.