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Late last year, shares of the world's top cell-phone maker, Nokia (NYSE: NOK ) , were soaring to new heights as its global market share topped a long-sought and breathtaking goal of 40%. But even as the Finnish powerhouse was dominating the globe, it was nearly falling off the map in one very important market -- the United States.
Nokia's shares have now fallen by around 40% from their highs at the end of 2007 -- despite incredible margins for its products -- and its share of the North American market has plummeted from 20% roughly two years ago to around 7%.
There are a number of reasons for the continued souring of consumer favor toward Nokia's products on this side of the pond. The company blames the bleeding dollar and the poor U.S. economy. Analysts, however, are more blunt; they point to the Finnish manufacturer's lack of CDMA-based phone lineup -- that Qualcomm (Nasdaq: QCOM ) technology that has vexed Nokia for years and is used by major carriers Verizon (NYSE: VZ ) and Sprint Nextel in the U.S.
Each quarter that passes, Nokia acknowledges its struggles in the U.S. and puts forth renewed commitments to enlarge its presence here. In its latest move, the company is launching several new versions of its popular-everywhere-else-but-here N-series smartphones -- communicators that sport high-end features such as GPS capability, high-resolution cameras, and gobs of memory.
But the phones all lack one major feature -- distribution agreements from a U.S. carrier. All the devices will be sold unlocked here, which guarantees a lofty price tag expected to be in the $500 to $800 range. Instead of AT&T (NYSE: T ) stores, the phones will be available from major retailers such as Best Buy (Nasdaq: BBY ) and Amazon.com (Nasdaq: AMZN ) .
Pushing high-end phones without carrier support will certainly help Nokia maintain its margins, but it will also relegate sales of its smartphones to a niche of tech-savvy consumers in the U.S. -- similar to the niche that Nokia's CEO Olli-Pekka Kallasvuo already dismissed as a non-threatening home for the Apple (Nasdaq: AAPL ) iPhone.
The way I see it, even though AT&T may be killing the iPhone's chances of mass-market euphoria, Nokia's approach will do even less to help its own North American market share.
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