1 Tech Stock Ready to Seize a Massive Opportunity

Nokia (NYSE: NOK  ) , the Finnish mobile phone company, is in position to be a winner in what one consulting firm has dubbed "the biggest growth opportunity in the history of capitalism."

Global consultants McKinsey & Co. recently published "Winning the $30 Trillion Decathlon," which reported on how consumption spending in emerging market countries should reach that massive title figure by 2025, composing half of all global consumer spending. McKinsey claims that this represents "the biggest growth opportunity in the history of capitalism." 

Global mobile phone sales look promising for Nokia
While emerging-market consumers obviously won't spend the entire $30 trillion on mobile phones, their growing purchasing power could leave Nokia in a position to profit. The Finnish phone maker is the No. 2 mobile phone seller in the world. It has a much better market position in selling feature phones such as the Asha. Nokia is very strong in this market segment, selling 9.3 million of the Asha feature phone in the fourth quarter of 2012. 

Feature phones, which do not have all the advanced components of smartphones, were about 70% of the global market for mobile phone sales in 2011. By 2013, feature phones are expected to be about half of all global mobile phone sales, as smartphones such as the Lumia series from Nokia and iPhones from Apple increase in market share from about 30% in 2011 to 50%.

Not every country has the infrastructure
Even with that decline in market share, sales of feature phones will still be huge. In 2016, over 2.3 billion mobile phones are expected to be sold: more than 1 billion should be feature phones. Even though that is a decline in market share for feature phones, it could be an increase in the number of units sold from the present amount due to the overall growth in the market.

Nokia is moving forward in India, Indonesia , and other emerging-market countries that are fertile for feature phone sales due to infrastructure deficiencies and handset costs that make the iPhone 5 and other smartphones unsuitable. No nation in Africa has a functional 4G network yet. Feature phones, however, can operate fine on 2G and 3G networks, and do not need the 4G networks that optimize smart phone usage.

Nokia smartphone sales are improving
Record demand was just reported for the Lumia smartphone last quarter, with sales particularly strong in China and India. The Lumia is a prominent example of Nokia's partnership with Microsoft, as it runs on the Windows operating system. The Lumia 920 smartphone is selling well in a venture with China Mobile, the world's biggest mobile phone company. According to a study by International Data Corporation, strong sales of the Lumia should continue.

As the chart below shows, International Data Corporation projects that the Windows operating system will expand in use globally more than any other platform. Towards that goal, Nokia sold 4.4 million Lumia smartphones for the most recent quarter, topping the previous record of 4 million for the second quarter of 2012 and besting the 2.9 million sold in the third quarter of 2012.  

Worldwide smartphone OS market data

Operating System

2012 Market Share

2016 Market Share

2012-2016 CAGR

Android (Samsung and Google)

61%

52.9%

9.5%

Windows Phone 7/Windows Mobile (Nokia and Microsoft)

5.2%

19.2%

46.2%

iOS (Apple)

20.5%

19%

10.9%

BlackBerry (Research In Motion)

6%

5.9%

12.1%

Others

7.2%

3%

(5.4%)

Total

100%

100%

12.7%

Source: International Data Corporation.

What a Fool should follow
Robust Lumia smartphone sales in emerging market nations are critical for Nokia to be a winner in the "$30 trillion decathlon." Nokia needs for Lumia sales to be strong in China, India, and other developing countries as feature phones are predicted to lose market share to the rising popularity of smartphones. If greater sales of the Lumia continue to better Nokia's financial position, that is a very bullish signal for Foolish investors.

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.


Read/Post Comments (4) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 17, 2013, at 2:43 AM, SUPERMANSTOCKS wrote:

    The Lumia is a far better phone than the Iphone and one reason is the camera.

  • Report this Comment On January 17, 2013, at 11:11 AM, jyates13 wrote:

    To Supermanstocks, I have heard many good things about the various features of the Lumia, too. The sales certainly confirm your view!

  • Report this Comment On January 17, 2013, at 11:14 AM, jyates13 wrote:

    As to Samantha28, your comments were very insighful. You are 100% correct about emerging market opportunities. It is a fascinating part of the world for investing purposes, that is for sure! Nokis is positioned well for that growth. I suspect that is why Apple is reported to be coming out with a lower cost iPhone. It will be interesting to see if that takes place. If note, Apple will be ceding a huge segment of total smartphones sales to Nokia and others in emerging markets.

  • Report this Comment On January 17, 2013, at 3:19 PM, susan94 wrote:

    The famous investment guru, Peter Lynch, once said the best way to pick stocks is to look around and see what's good. Go to amazon.com and read the reviews for Android and Apple phones, and compare them with Nokia Lumia 920 reviews. You will see that Lumia 920 is rated considerably higher than Android and Apple.What do you think people will buy in the future? If Android and Apple market share currently is over 80% and Nokia 5% just imagine how much room to grow Nokia has. It takes a while to bury the past negative suggess of Nokia but the word will get there eventually. Nokia and Microsoft are both very dynamic companies and will not take no for an answer. Do not under estimate their power. They will do it until they get it right and they have done so already on Lumia 920. Keep up the good work MSFT & NOK

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