Tiny South korea defeat mighty Finnish Nokia without using cheap labour

[singveld]

Tiny South korea using their own native staff, defeat mighty Nokia even when they used cheap labor of India.

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Samsung overtakes Nokia in mobile phone shipments
Lucy Williamson reports from Seoul on Samsung's success

Samsung Electronics has overtaken Nokia to become the world's largest maker of mobile phones, according to research firm Strategy Analytics.

Nokia took the top spot in 1998 from Motorola, but in the first quarter of 2012 Samsung shipped 93m phones compared to almost 83m by Nokia.

Samsung also reported its highest quarterly profit since 2008.

Net profit was 5.05tn won ($4.5bn; £2.8bn) in the quarter ending 31 March, up 81% from 2.78tn won last year.

Samsung is also the world's biggest TV and flat screen maker.

"We cautiously expect our earnings momentum to continue going forward, as competitiveness in our major businesses is enhanced," said Robert Yi, head of investor relations at Samsung.
Bright future

The firm said its IT and mobile communications division, which manufactures the smartphones, made an operating profit of 4.27tn won during the period, as revenues in the division surged 86% from a year earlier.

Samsung will unveil the latest version of its Galaxy range of phones on 3 May.

The Galaxy range has been very popular and helped Samsung overtake Apple to become the world's biggest seller of smartphones.

"The smartphone market has almost only two players, Samsung and Apple," said Lee Sei-Cheol of Meritz Securities.

Global demand for smartphones is expected to increase further in coming years, with research firm IDC forecasting that global smart phone shipments will rise by a third to 659.8 million units in 2012.

Analysts said that given its robust growth and dominance in the sector, Samsung was well placed to benefit from this growth and boost its market share.

However, given the robust growth in the sector, other smartphone makers are also keen to introduce new products and tap into the fast-growing market.

Samsung is facing stiff competition from rivals such as US-based Apple, Finland's Nokia, and Taiwan's HTC.

Apple, which said earlier this week that it sold 35 million of its iPhones in the first quarter, is expected to launch a new version of its handset later this year.

Analysts said that as more models are launched, manufacturers may have to the cut price of their handsets in a bid to attract consumers, a move that may see profit margins shrink.

"Samsung's handset earnings may weaken in the latter half of this year, with the possible launch of Apple's iPhone 5," said Brian Park of Tong Yang Securities.
Chip troubles

Another area of concern for Samsung is likely to be its chip manufacturing unit, which has been hurt by slowing global demand for personal computers.
Models showing Samsung Galaxy phones The success of Galaxy range of handsets has helped Samsung offset falls in other units

The firm is one of the world's biggest makers of dynamic random-access memory (DRAM) chips, which are widely used in personal computers.

However, demand for these chips has been declining as consumers turn to tablet PCs, which mostly use flash memory chips.

At the same time, falling prices have also hurt profitability in the sector.

Samsung's memory-chip division saw its profits slide by 54% during the first quarter when compared with the same period a year earlier.

The company said it expected the demand for DRAM chips to rebound in the coming months, but warned that growing competition in the sector "will lead to a price decline".

Global mobile handset shipments (Q1)
Company Units (millions) Market share
Samsung 93.5 25.4%
Nokia 82.7 22.5%
Apple 35.1 9.5%
Other 156.7 42.6%

 

[singveld]

Cell-phone shipments: Samsung overtakes Nokia

Seoul (ip-192.com): Samsung could be on its way to become the world’s largest cell-phone manufacturer in 2012. In the first quarter, the company overtook Nokia, but remained in second place in the smartphone segment of the cell-phone market, behind Apple. With Samsung taking the leadership position, it will mark the first time since 1998 that Nokia has not been the number one brand in the global cell-phone market.

The South Korean electronics giant shipped 92 million cell-phones worldwide in the first three months of the year, compared to 83 million for longtime market leader Nokia. While Samsung’s shipments declined by 13 percent Cell-phone shipments: Samsung overtakes Nokiacompared to the fourth quarter of 2011, Nokia’s shipments dropped by 27 percent. This allowed Samsung to take the first place.

“With cell-phones now accounting for more than 40 percent of Samsung’s overall revenue, it’s clear that the company’s continued investments in smartphone hardware and software R&D are paying off,” said Wayne Lam, senior analyst, wireless communications at IHS. “The company is not only cashing in on the market’s shift to smartphones, but is also succeeding in other cell-phone product categories, allowing it to capture the overall market lead. What makes Samsung’s performance even more impressive is that the company’s latest Galaxy S III handset has yet to be launched, with shipments set to start in May. This indicates Samsung is likely to make further progress in market share in 2012.”

In the smartphone segment, Apple shipped 35 million units in the first quarter. This compares to 32 million units shipped by Samsung. Apple’s smartphone shipments declined 5 percent, compared to 11 percent for Samsung. Sequential declines in the shipments of smartphones as well as cell-phones reflect normal seasonal patterns in which sales decrease following the peak holiday period in the fourth quarter.

“Samsung’s surpassing of Nokia for cell-phone market leadership represents not only a changing of the guard among handset brands but also a fundamental shift in the structure of the wireless market,” said Ian Fogg, senior principal analyst, mobile for IHS. “Cell-phone market growth is now being generated exclusively by the smartphone segment, and not by the feature phones, entry-level cell-phones and ultra-low-cost handsets (ULCH) that had fueled the industry’s expansion over the previous decade. Samsung has successfully ridden the wave of smartphone adoption to attain market leadership. Meanwhile, Nokia is in the midst of transitioning its smartphone strategy, resulting in declining shipments for the company.”

Smartphones are the only segment of the global cell-phone business expected to expand in 2012. Global smartphone shipments are set to rise by 35 percent this year, while those for feature phones, entry-level phones and ULCHs will all decline. As a result, the smartphone segment will be single-handedly responsible for the overall cell-phone business expansion of 7.4 percent in 2012. Next year, smartphone shipments will rise again to account for more than half of all cell-phones for the first time, at 52 percent, up from 43.5 percent in 2012. Smartphones represented 34 percent of Samsung's handset shipments in the first quarter. In contrast, smartphones accounted for just 14 percent of Nokia’s shipments.

“Samsung is reaping the rewards of strong execution in product design, distribution and marketing,” Fogg said. “The company has been bold and innovative with handset form factors, featuring differentiated handsets such as the Galaxy Note with its sizable 5-inch display, and a wide range of handsets in every other conceivable screen size.”

Samsung offers handsets on multiple smartphone operating system platforms, including Google’s Android, Microsoft’s Windows Phone and Samsung’s own bada. Meanwhile, Nokia has placed all its smartphone eggs into one basket: Windows Phone. To make Nokia’s Windows phone strategy pay off, Nokia must convince the leading carriers to visibly back Windows Phone as well as convince consumers of a valuable and differentiated experience.

The Samsung-Apple battle represents the front line in the war between Android and iOS. For its part, Apple had sold approximately 19 million iPhones in the first quarter of 2011. One year later, the company dramatically increased shipments by 88 percent to 35 million. With the share of iPhone shipments shifting away from the United States toward a more international audience, Nokia could be hurt in its core regional markets in Europe and Asia.

Another smartphone player, Research in Motion, is staking its future performance on the new-generation BlackBerry 10 operating system, set to launch later in 2012. RIM’s smartphone shipments declined to 11 million in the first quarter, down 21 percent from 14 million in the fourth quarter 2011.

 

[singveld]

[video=youtube_share;59cNFkMOb4M]http://youtu.be/59cNFkMOb4M[/video]

 

[singveld]

http://www.bbc.co.uk/news/business-17865117

 

[Borat]

Population

S. Korea - about 48 million

Finland - 5+ million (Same as Singapore)

So S. Korea is tiny?

 

[singveld]

Population

S. Korea - about 48 million

Finland - 5+ million (Same as Singapore)

So S. Korea is tiny?

Finland total area 338424 km2
Skorea total area 100210 km2

 

[Borat]

Finland total area 338424 km2
Skorea total area 100210 km2

What has area got to do with total population and workforce? S. Korea has always been an electronic giant from way back when. Not much can be said about Singapore compared to Finland with similar population.

 

[singveld]

What has area got to do with total population and workforce? S. Korea has always been an electronic giant from way back when. Not much can be said about Singapore compared to Finland with similar population.

samsung is big, because they build everything, but for mobile phone, nokia is the giant of mobile phone, i am just referring to the mobile phone market.

 

[Char_Azn]

Dear Singveld
I think you are greatly mistaken, Samsung have plants in China. In fact the are one of foxconn customer. Nokia on the other hand only recently announced choosing the plants in Finland and moving them to China

 

[The_Hypocrite]

To me,,I kenna saboed by Nokia products for many times but I still support them as the phone was good to use. Than I got the N97 and it was the last straw,,Nokia admitted they ship a crap product in the N97. I got a Samsung Galaxy S last year and have never looked back,,looking forward to getting the Note next,,,good riddance to Nokia

 

[singveld]

Dear Singveld
I think you are greatly mistaken, Samsung have plants in China. In fact the are one of foxconn customer. Nokia on the other hand only recently announced choosing the plants in Finland and moving them to China

How Nokia became India's largest MNC

In its quest for constant innovation, Nokia unwittingly created a whole new 'fast moving consumer durable' (FMCD) category by ramping up the brand and its reach, and hiring largely from the FMCG sector . Even Shivakumar is a product of FMCG behemoth Hindustan Unilever. Bimal Rath, the head of human resources at Nokia India, compares the hiring at Nokia to stepping on a treadmill, where despite upping the speed, there's really no letting up.

"We recruited people largely from the FMCG sector (in the first half of the millennium) since we were building the brand and our distribution and needed them to build capacity, fit into the management culture and also looked at the level of their flexibility and adaptability," says Rath.

The FMCG sector came close to the desired skill sets. In 2004, when Rath joined Nokia from Tata Sons, the company had less than 100 people on its rolls. Today, with a manufacturing facility off of Chennai, it boasts of 9,500 people with the headcount poised to grow by 5-10 % next year. Even the hiring pattern is bound to change as the company is moving from brand-building to the solutions space. "We're becoming a more front-facing company and would in future require people from businesses that interface directly with consumers, like insurance and retail," claims Rath.

According to Jaideep Ghosh, Director & Head-ICE , KPMG Advisory, Nokia succeeded because it was quick to get its act together in India, much before the rivals could take notice. "Apart from a massive product range that allowed Nokia to straddle all consumer segments, the company swiftly ramped up a strong after-sales network," he says.

As Nokia gradually moves away from the plainvanilla devices market into the solutions space, the company is adopting a collaborative approach with developers, operators and content providers. Today, Nokia Care is the mainstay of the company's aftersales network with about 900 touch-points countrywide . According to Sudhir Kohli, head of Nokia Care, 60% of the customers today get their repair and delivery of handsets within 60 minutes flat.

Even rivals do not cry shy of saying that Nokia was first off the block. "Nokia has entered many global markets with only one business (handsets), but none has been as vibrant a success as in India," says a country head at a large rival firm. For one, the Finnish major saw that India was a distribution-led market and not operator-led .

"In a market like India , if you did that, you'd have a big advantage," says a senior executive in another competitor firm. So Nokia invested heavily in black & white monochrome handsets even as rivals moved away to the higher-end colour phones. This assured Nokia a formidable presence in the lowerend high-volume market in the long run. It certainly doesn't come as a surprise that many rivals have taken a leaf out of Nokia's growth chapter in India even though they may not openly admit it. They, however , contend that the Finnish company has been slow on the uptake as far as the CDMA space goes, which however, is a much smaller market than the GSM platform.

Again, unlike most players, Nokia set up a manufacturing plant in India-in Sriperumbudur, off Chennai, in early 2006. With a 72% female workforce and the average age of the 210-acre factory sitting at 23 years, in many ways, the plant is revolutionary . With over $285 million in direct investment , the plant today exports to over 50 countries. If it produced 25 million phones in 2006, it came up with 75 million the subsequent year, and struck 100 million last year.

Besides, it is proving to be a harbinger of innovation. For instance, developing multiple-language software is difficult and leads to huge customer complaints. So the factory developed inhouse what it calls the Spin Wheel-which enables operators to quickly relate the keypad to the language . Today, the Spin Wheel is replicated across seven other Nokia facilities around the world. "It was developed in 2007 by half-a-dozen people in a kaizen competition to reduce customer complaints in less than a month," elaborates Sachin Saxena, head of Nokia's Sriperumbudur plant.

While the manufacturing facility is a relatively new addition to the Nokia family, it is the scorching pace of brand-building and distribution that has clearly metamorphosed the company from a seeker to a hunter, from a rank outsider to a towering gorilla . Suddenly, the nomenclature of the visitor rooms start making sense-metros and mountains-the company has certainly peaked in every location the rooms sport, and more. As it now looks at India's vast hinterland, it would be worth revisiting these rooms in 2012. There ought to be some new names.


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Phony Equality at Nokia

Apple has been replaced by Nokia. Not in the race to bring out the smartest phone, but because Nokia is taking Apple’s place as the latest electronics giant to be shown to use factories where workers are not treated fairly. A report published last week finds that precarious jobs and insufficient wages are depressingly common at four Indian factories where Nokia’s phones, or their parts, are produced.

Titled Phony Equality, the report has been published by SOMO, an independent NGO working on social, ecological and economic issues related to sustainable development, and it looked at industrial relations, wages and employment security at four factories belonging to Nokia and three of its suppliers. Why Nokia? The company is a leading player in the mobile sector in India. To give you an idea of the scale of its Indian operations, its Sriperumbudur plant is Nokia’s largest factory world-wide. As the report points out, “this makes industrial relations at Nokia in India of critical significance”. One of the suppliers named in the report is Foxconn – and it was the high suicide rates at Foxconn’s Chinese factories that shoved Apple into the spotlight in the first place.

The findings in brief
SOMO has discovered that around 50% of Nokia’s workforce in India (including those working for it’s Indian suppliers) are either on temporary contracts or are “trainees”. Neither status entitles them to the same wages, protections or career opportunities that permanent employees enjoy.

In its blog post about the report, SOMO says that “pay for Nokia’s trainees and contract workers is around 70-80 Euros per month … According to Asia Floor Wage, the minimum living wage in India would be 130 Euros per month. Only the most experienced permanent workers for Nokia and Foxconn had reached this level, thanks to union settlements.”

Permanent workers are protected by a union that both Nokia and Foxconn have recognized and negotiated with in recent years. And wages and benefits for this group of workers have improved as a result – Nokia’s operators have seen wage payments triple in just five years. But SOMO is also careful to point out that contract workers are excluded from negotiations, and that it’s not clear to what extent union members are representative of the total labour force.

What’s Nokia’s Rank a Brand ranking?
As soon as we read this report, we went to check where Nokia sits in our rankings. For the questions about climate change, it scores 4 out of 5. On our questions on environmental policy, it scores 6 out of 7. Very good. For our questions on labour conditions and fair trade? 2 out of 6.

In its supplier code of conduct, Nokia only includes the minimum standards we ask for: no child or slave labour, safe and hygienic working conditions, no discrimination of any kind. There is no mention of either maximum working hours or living wages. Plus, Nokia doesn’t fully report on whether its suppliers actually comply with the minimum standards it does ask for.

Interestingly, this is not the first time that SOMO has revealed unsafe or unfair practices at factories linked to Nokia’s supply chain. It’s 2006 report, the High Cost of Calling, “reveals abuses in Chinese, Thai, Philippine and Indian factories of the five largest mobile telephone companies: Nokia, Motorola, Samsung, Sony Ericsson and LG.”

Nokia was one of the few companies to respond to this report (read SOMO’s response to the response here). So we should hear what they think about this latest report pretty soon…

 

[Char_Azn]

See article below.

Nokia is the last Handphone manufacturer to move from Europe to Asia. Samsung on the other hand have been assembling most of it's stuff in China. And in terms of wages, Korean wages just overtook Taiwan. SG which is by far the highest income earner among the 4 Asian Tigers, average Taiwanese and Korean graduates earn about 1/2 that of SG, still lags EU pay, so relatively speaking saying Nokia is loss even though they are using cheap manufacturing is not very accurate.

The cuts of 8 percent of the phone business workforce bring total planned job cuts at the group since Stephen Elop took over as Chief Executive in September 2010 to more than 30,000.

Nokia said in a statement the job cuts would take place in phases through this year. It has been reviewing the operations since unveiling the closure of its Romania plant last September.

"This was inevitable. It was a surprise it took so long for the decision to be made," said Steve Brazier, chief executive of technology research firm Canalys. "Stephen Elop may be a polarizing figure, but he is proving effective at driving the change and he should be credited for that."

Nokia's recent business results have underscored the need for drastic cuts. Late last month it reported a 73 percent fall in quarterly earnings as sales of new Windows Phones failed to dent the dominance of Apple Inc's iPhone or compensate for diving sales of its own old smartphones.

Its fourth-quarter smartphone sales shrank 31 percent from a year ago and the business made a steep loss for the quarter.

NO MORE PHONES BUILT IN EUROPE

Nokia said it would cut 2,300 jobs in Hungary, where it is a major exporter, some 1,000 in Finland and 700 in Mexico. It will continue to tailor models for specific operators at all sites.

Its Finnish factory in Salo, which was the cornerstone for its success in 1990s, has been the last remaining major phone assembly plant in the Western Europe for some time. Most rivals have moved their production to Asia.

The Hungarian government said it regretted Nokia's decision.

Analyst Gergely Suppan at Takarekbank in Budapest noted the highest value-added activities would stay in Hungary.

The move comes only months after Nokia closed its plant in neighboring Romania, laying off some 2,200 people there.

Finnish unions demanded hefty cash payments to laid-off staff and Antti Rinne, chief of union Pro, said the announcement was damaging for Finland's employment outlook.

"Raising the employment level and prolonging working careers is impossible if there are no jobs in Finland," Rinne said in a statement.

Finland has pushed for years to prolong working careers as the Nordic country struggles with a shrinking work force and sluggish economic growth.

Nokia announced in April last year it would cut 7,000 jobs and unveiled a further 3,500 job losses in September. Its network arm Nokia Siemens announced cuts of 17,000 in November.

The group had 130,000 staff at the end of 2011, including Nokia Siemens.

Shares in Nokia were 1.2 percent higher at 3.93 euros, slightly outperforming the technology share index which rose 0.3 percent, by 5:53 a.m. ET.

http://www.reuters.com/article/2012/02/08/us-nokia-idUSTRE8170I920120208

 

[Borat]

The title of the thread that says S. Korea Vs Nokia is wrong if you actually mean to say Samsung Vs Nokia. And to say Samsung is tiny is also wrong as Samsung is a Chaebol (Korean term for a conglomerate of many companies clustered around one parent company).

Nokia is by no means a small Finnish company, but it's from one of the countries with very small population, yet has 4 Nobel Peace laureates, whereas S. Korea only has 1. Nokia was once the largest mobile phone manufacturers and that in itself is a big achievement when up against many larger and more established brands such as Motorola, Samsung, Sony Ericcson and LG. It is sad to see it being displaced but that happens to many other companies too. One day the time will come when Samsung too will be toppled off from being the top mobile phone manufacturer. It remains to be seen how long Samsung is able to hold their position as No. 1. Will they last there as long as Nokia?

 

[singveld]

See article below.

Nokia is the last Handphone manufacturer to move from Europe to Asia. Samsung on the other hand have been assembling most of it's stuff in China. And in terms of wages, Korean wages just overtook Taiwan. SG which is by far the highest income earner among the 4 Asian Tigers, average Taiwanese and Korean graduates earn about 1/2 that of SG, still lags EU pay, so relatively speaking saying Nokia is loss even though they are using cheap manufacturing is not very accurate.

Nokia manufacture almost entirely in india, and samsung still made in south korea, and sub-contract some low end phones to china. I do not know why you want to dispute the fact. Do you have any information to prove otherwise.

 

[Borat]

Nokia manufacture almost entirely in india, and samsung still made in south korea, and sub-contract some low end phones to china. I do not know why you want to dispute the fact. Do you have any information to prove otherwise.

Samsung Electronics, a leading mobile phone provider, today announced the strengthening of its mobile manufacturing operations in India by stepping up its investments in the mobile manufacturing facility at Noida.

The Company has brought in investments of over US$ 70 million towards tripling the manufacturing capacity of its mobile manufacturing unit at Noida (UP, India).

Samsung India is operating two R&D Centers at Noida and Bangalore to support its business operations in the country. Samsung India Software Operations , the Bangalore R&D Center develops Protocol and Platform software for Mobiles.

Indian R&D Engineers work with their global counter parts to develop leading edge solutions and products for Samsung, in areas such as 4G and LTE. In fact , this R&D Center is Samsung’s largest overseas R&D Center for mobiles. As the Indian market grows, the Samsung India R&D is developing localized solutions for handsets that are customized to the Indian market requirements.

Samsung’s handset portfolio in the country includes multimedia phones comprising of the Hero and Metro series, dual sim handsets , touchscreen mobiles and Smartphones including the ‘bada’ based Wave series and the Android based Galaxy series of handsets . Samsung also offers a portfolio of two tablets, the Galaxy tab (P1000) and the recently introduced GALAXY Tab 750.

The Samsung mobile manufacturing unit at Noida is Samsung’s sixth overseas manufacturing unit in the world. The Company is manufacturing multimedia, dual sim and touchcreen models at the Noida facility.

Mr J S Shin, President & CEO , Samsung South West Asia stated, “India is one of the top 3 mobile markets for Samsung in the world and we stand committed to this market and our Indian consumers. Given the strong potential of this market, we are working on consistently strengthening our presence in the country through a very innovative mobile portfolio as well as enhanced manufacturing and R&D operations.”

http://telecomtalk.info/samsung-india-to-triple-mobile-phone-capacity-at-noida-unit/76841/

 

[singveld]

look samsung build low end phone in third world countries, but at least they still made the high end phone in south korea, while nokia move everything to india.

 

[Borat]

look samsung build low end phone in third world countries, but at least they still made the high end phone in south korea, while nokia move everything to india.

I am in a hurry and will rebut you later. Just think and tell me the following:

5 million population : 2011 world's largest mobile phone manufacturer

48 million population : 2012 -------------ditto -------------------------

Please explain how Nokia can manufacture so many in Finland without the cheap labour???

 

[Borat]

look samsung build low end phone in third world countries, but at least they still made the high end phone in south korea, while nokia move everything to india.

How is it you are too dense to understand that a small country with 5+ million has a company which is Nokia, a world class manufacturer of mobile phones, that will find it impossible to manufacture enough for the world market. It definitely has to outsourced most of it's manufacturing outside of Finland in order to take advantage of cheap labour. Look at Singapore as an example of a country that manufactures products for foreign companies seeking avenues where production is cheaper than their home country. We have to import many foreign workers to be able to do that.

I also pointed out that Samsung is not "little Korea" but a chaebol and is in fact No. 2 just before taking the top spot. THEY ARE NOT LITTLE KOREA!

You belittle a company like Nokia just because they were toppled to 2nd place, when in fact you ought to admire them for their past achievements. Compare Finland to Singapore, your country, if you think Nokia is bad.