Nokia seeks to retake China market share with Windows phones

By Terril Yue Jones and Tarmo Virki, Reuters

Posted at Mar 28 2012 06:13 PM | Updated as of Mar 29 2012 02:13 AM

BEIJING/HELSINKI - Nokia will start to sell a new range of smartphones using Microsoft software in China from April, seeking to claw back market share it has seen gobbled up by Apple and Samsung in the past year.

China has become one of the hottest growing markets for smartphone makers, with Apple Chief Executive Cook also visiting Beijing at the same time for talks with government officials amid problems for the firm ranging from labor issues to a contested iPad trademark.

Nokia's move will also be an important test for the Windows Phone, which has so far had limited appeal although Nokia, the world's largest cellphone maker by volume, has put all its eggs in the Microsoft basket, dumping its own smartphone software platforms last year.

Nokia Chief Executive Stephen Elop unveiled two models based on the Lumia 610 and Lumia 800 cellphones but designed for Chinese networks, which will go on sale through China Telecom, the nation's third largest carrier.

"This is an encouraging step into the burgeoning China market," said Geoff Blaber, analyst at CCS Insight in London.

Nokia said it would take its whole line-up of Windows phones to the Chinese market during the second quarter. Sales chief Colin Giles said Nokia planned to eventually sell its Windows phones through all of China's telecom carriers.

"Quite a lot will happen in China already in the second quarter," said Sami Sarkamies, analyst with Nordea in Helsinki.

Shares in Nokia rose 3.6% to 4.14 euros, also boosted after Sweden's Swedbank lifted its rating on the stock to "buy" from "neutral".

Nokia's share of the Chinese smartphone market - the largest market globally - fell to 30% last year from 70% in 2010 as it lost ground to Apple, Samsung and local players, according to researcher Strategy Analytics.

Microsoft has the full backing of Nokia for its Windows Phones, but is struggling to get equal support from other handset makers, such as Samsung, which are clearly focused on their Android offerings.

Microsoft's share of the smartphone market fell to just 2% last quarter, from 3% a year ago and 13% four years earlier, Strategy Analytics said.