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Analysts Not Surprised by Nokia’s Increased Growth Projections

5:00 am on April 3, 2006 | Category: Business, Mobile Devices

Shortly after Nokia increased its growth predictions for the worldwide mobile handset market, most analysts are saying that the move wasnâ€™t much of a surprise.

In recent years, Nokia has made a habit out of raising its forecasts, sometimes several times in a single year. In 2005, for example, Nokia started by forecasting a 10% sales growth, but ultimately raised this number to 24% as the year progressed. The handset makerâ€™s purpose in doing this is likely to avoid overestimating the market, while ramping up the numbers to improve investor confidence.

Even at this point, many alalysts believe that Nokia is being deliberately conservative with its 15% growth estimate.

“I think 15% is a baseline, a minimum forecast,” says Sanford Bernstein analyst, Paul Sagawa. “All our checks suggest strong growth.”

Much of this strong growth is expected to come from India and China, where Nokia soon hopes to launch three new low-cost handsets. China is already the Finnish handset makerâ€™s biggest market, while India is expected to displace the US as its second largest market by 2010.

Although still relatively cheap, the newly unveiled handsets are a step above the very basic Nokia 1100, which was introduced in 2003. Priced between $50 and $100, the new models will offer a sort of middle ground for customers in developing markets.

This decision to start offering some slightly more advanced units in emerging markets reflects Nokiaâ€™s desire to boost its average per handset selling price, and its profit margin, which has dropped due to the popularity of phones like the 1100.

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