It’s appropriate that Nokia’s mobile-handset products are featured prominently in the new film Cloverfield, in which a giant monster flattens New York while gobbling up cast members along the way. That’s because in the real world, Nokia has emerged as the Godzilla of the global mobile-handset business, devastating the competition and dining on their market share on its way to dominance.

In the fourth quarter of 2007, Nokia’s global mobile-handset shipments amounted to 133.5 million units, up 19.5 percent from 111.7 million in the third quarter of the year, giving the Finnish wireless behemoth a 39.5 percent share of the market.

Putting Nokia’s performance into perspective:

• No.-1 ranked Nokia achieved the highest rate of sequential growth among the Top-5 mobile-handset suppliers in the fourth quarter of 2007, even beating the impressive 18.9 percent rise by No.-4 supplier Sony Ericsson.
• Nokia’s unit shipments rose by 21.8 million sequentially in the fourth quarter, 1.6 times the combined increase of 14.1 million units for the other Top-5 mobile-handset brands.
• With a 19.5 percent sequential increase in unit shipments in the fourth quarter, Nokia outgrew the global mobile-handset market’s rise of 15.4 percent by 4.2 percentage points, when accounting for rounding.
• Nokia’s 39.5 percent market share in the fourth quarter almost equaled the 41.9 percent combined shares of the four other Top-5 mobile-phone makers.

“With its mammoth market share and gargantuan growth, Nokia truly is the monster of the mobile-handset business,” said Tina Teng, analyst, wireless communications, for iSuppli.

For the full year of 2007, Nokia shipped 437.1 million mobile phones and attained a commanding 38 percent market share. This was nearly three times the 14 percent share of Nokia’s closest competitor for the year: Samsung Electronics Co. Ltd. of South Korea. The Finnish company outperformed the mobile-handset industry in 2007 with 26.5 percent annual growth, compared to 16.5 percent for the entire industry.

To explain Nokia’s success, Teng cited the company’s sales leadership in most global regions and its dominant position in shipments of mobile handsets using 3G W-CDMA technology.

American exceptionalism

While Nokia appears to be invincible, the mobile-phone goliath still faces some challenges. “Nokia has acknowledged its relatively weak position in CDMA technology—and the fact it doesn’t dominate the North American market,” Teng said. “However, the company is planning on introducing new appealing models for the U.S. market and is engaging in a more active marketing campaign in North America in 2008, which was kicked off by the ubiquitous product placement in the movie Cloverfield.”

Battle of the gargantuan companies

Much of Nokia’s gains came at the expense of its two closest competitors: Samsung and Motorola Inc.

No. 2 Samsung achieved sequential fourth-quarter growth of only 8.7 percent, falling short of the industry’s 15.4 percent growth rate. Company market share declined to 13.7 percent in the fourth quarter of 2007, down from 15.1 percent in the third.

However, Samsung’s unit shipments in the fourth quarter rose by a whopping 45.1 percent from 31.9 million in the fourth quarter of 2006, the highest rate among the Top-5 players. For the entire year of 2007, Samsung sold 161.1 million mobile phones and attained a market share of 14 percent, up from 11.9 percent in 2006. Samsung in 2007 benefitted from its strong sales in Europe, where nearly 40 percent of its mobile-handset shipments went in the fourth quarter.

Motorola’s muddle

No.-3 Motorola continued to suffer declining market share in the fourth quarter—despite a nearly double-digit percentage sequential increase in shipments.

The U.S.-based firm shipped 40.9 million mobile handsets in the fourth quarter of 2007, up 9.9 percent from 37.2 million in the third quarter. However, the company’s shipments were down 37.7 percent compared to 65.7 million in the fourth quarter of 2006.

Motorola’s market share declined to 12.1 percent in the fourth quarter, down from 12.7 percent in the third quarter, and a major drop from 22.6 percent in the fourth quarter of 2006. For all of 2007, Motorola shipped 159 million mobile handsets, giving it a 13.8 percent share of global shipments. This is down 26.8 percent from 217.4 million shipments in 2006 and about an 8 percentage point drop from its market share of 22 percent in 2006. Motorola throughout 2007 struggled with slowing demand for its existing mobile handsets, delays in new product introductions, declining market share and falling profitability.

However, Motorola appears to be taking steps toward a turnaround. The company already has begun executing on its plan to revive its mobile-handset business by improving profitability and shipment volume.

“While Motorola’s recovery has proceeded at a slower-than-expected rate, iSuppli believes that Motorola is putting the right pieces into place to pull off a rebound,” Teng said.

The return of Sony Ericsson

Sony Ericsson in the fourth quarter of 2007 shipped 30.8 million units, up 18.9 percent from 25.9 million in the third quarter, making it the only Top-5 mobile-phone maker besides Nokia to exceed the industry average growth rate. The company is leveraging its strong brand equity in the Walkman and Cybershot lines to bolster its growth.

Beyond its unit shipment gains, Sony Ericsson is benefitting from the fact that it has the highest Average Selling Prices (ASPs) in the mobile-handset industry among the Top-5 players.

LG’s troubles

LG Electronics of South Korea posted the lowest sequential growth of all the Top-5 mobile-handset makers in the fourth quarter, with an 8.2 percent increase, despite its year-over-year rise of 40.2 percent. The company’s market share slid to 7 percent, down from 7.7 percent in the third quarter.