Saturday, August 2, 2008

Consumers in for a real treat with Nokia cutting phone prices

Nokia had started cutting prices for many of its handsets in July, according to market data and industry sources, putting further pressure on its rivals' already thin profits.

Manufacturers are facing an increasingly intense battle for market share as demand for pricey phones has started to slow in the United States and Europe, where economies are under pressure from the global credit crunch.

Nokia made the steepest price reductions of up to 10 percent for selected music and media phones, while it made smaller cuts across the portfolio, a European telecom industry source said.

Market data from its home country Finland showed the sharpest falls were in the average retail price of the 5310 and 5610 music phones and the multimedia N81 8GB. This is basically a way to run away from competition by putting a lot of pressure on the less competitive players.

Nokia has always been extremely tactical with its pricing, pinpointing sweet spots in different segments of the market and making adjustments to wrongfoot competitors.

Samsung and LG are better placed than Sony Ericsson and Motorola for a price battle with Nokia as both reported operating profit margins of more than 14 percent in the quarter. It doesn't really matter who will win at the end, the real beneficiary will be consumers like you and me who will have a lot more mobile phones to choose from at great prices.

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