Nokia smells sweet - Motorola smells funny

WHILE NOKIA has been trumpeting the fact that it has cracked the entry-level mobile phone market, arch rival Motorola has been forced to announce yet more job cuts in a dash for profitability.

Nokia CFO, Rick Simonson, recently told a bunch of analysts that Nokia's gross margin for selling $40 handsets is above 25 per cent. He compared that result with Sony Ericsson which typically sells its handsets for around $180 and gets a 30 per cent gross margin.

But then Nokia is selling bucketloads of entry phones. Last year it shifted around 150 million of them which representing 42 per cent or nearly half of all the handsets it shifted.

Given that emerging markets are the new kingpins of the mobile handset sector, Nokia is obviously well placed to go with the flow. By contrast Motorola appears to have seriously lost its way.

On top of the cuts it has already announced, the US based manufacturer plans to lose an additional 4,000 jobs. That means during 2007 it will have cut its workforce by about 11 per cent or 7,500 jobs out of a total workforce of 66,000.

Jennifer Erickson, a Motorola spokeswoman, claimed the cuts were "happening in all businesses functions and regions." She added, however, that in "critical areas" the company would continue to recruit.

Presumably that includes good designers and engineers to provide Motorola with a product set that would once again grab market share.

Independent UK analyst, Jayker Shah, commented," Motorola don't seem to have anything that stands out from the crowd." He claims that Motorola has finally resolved its poor UI offering with the introduction of the Razr2.

However, the Razr's former USP - its thinness- has been supplanted by the likes of Samsung which now boasts a whole range of slim phones. "It's got the Q which plays in the high- end, hybrid PDA and phone niche," Shah added. "But, again, that's become a very crowded market."

Nokia's even doing better at the mobile infrastructure game. Rick Simonson said he was pleased with the atrgetted annual savings target of $2.01 billion for its infrastructure joint venture with Siemens. µ