logo_nokia_china.gifChina is currently the only growth market for Nokia, which has just reported a 15% year-on-year drop in worldwide mobile phone sales in Q2 2009.

Tumbling average prices turned that into a 25% fall in Q2 revenues while Q2 profits slumped to €380m compared to €1.47bn a year ago.

The disappointing results were hardly unexpected, but they show just how rapidly the mobile phone market has come off the boil due to the combination of cut-throat competition and the global recession, which has caused consumers to postpone replacing their existing phone.

China was the only region where Nokia sold more phones this quarter than in the same quarter last year. Its Q2 sales in China rose 5% to 18.6m units.

In Europe, unit sales fell 14% to 23.3m while in Asia-Pac, unit sales dropped 17% to 30.3m.

The average selling price of a Nokia phone slipped inexorably from €74 in Q2 2008 to €65 in Q1 2009 and to just €62 in the quarter that has just closed.

Remember when Nokia was the European hi-tech growth stock par excellence? Well, it looks like Nokia's core business has just gone ex-growth.

Nokia said it expected the global handset market to decline some 10% for 2009, echoing a similar downbeat forecast by rival Sony Ericsson.

While China has managed to save the day for Nokia, I suspect it won't be long before that market too starts to cause real problems for Nokia and other western manufacturers like Sony Ericsson and Motorola. Chinese manufacturers are adept at toughing it out in markets characterised by relentless competition and tumbling average prices.

But for western tech companies that have only boom conditions, the adaptation could be more traumatic.


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