Nokia's popularity among teenagers is fading, as the world's top handset maker has failed to introduce attractive mass-market models, according to a survey by networking site Habbo Hotel.
In the survey of 112,000 teenagers in 30 countries, 21 percent of respondents named Nokia as their favorite cellphone brand, down from 29 percent last year and dealing a blow to the ambition of Nokia to become the best-loved brand.
I think the drop in the ranking reflects the fact that Nokia does not have really cool phones at the moment, said Gartner analyst Carolina Milanesi.
Tero Kuittinen, analyst with GC Research, attributed the drop in Nokia's popularity to the delay in coming out with touch screen phones, which allowed South Korea's Samsung Electronics Co Ltd and LG Electronics Inc to win share.
Koreans are now rapidly moving downmarket and targeting the youth segment with cheap touch-screen phones like the LG Cookie. This is why it's crucial Nokia picks up speed and gets cheap touch devices out as soon as possible, Kuittinen said.
Nokia sold 2.6 million of its first touch-screen phone, the 5800 model, in the January-March quarter -- but has yet to introduce more touch-screen phones for the mass market.
The 5800 was a great start for Nokia in addressing this global youth market, but it needs sibling models and spin-offs right now; the Koreans are churning out new touch devices on a monthly basis, Kuittinen said.
Nokia sells the most mobile handsets in the world, but Chief Executive Olli-Pekka Kallasvuo has repeatedly stated the company's ambition to win the global popularity contest as well, contending with such well-known brands as Coca-Cola.
In the latest annual Interbrand rankings, Nokia was the highest-rated non-U.S. brand but stood fifth globally, with its $35.9 billion value just behind General Electric.
It is a sign that competition for the hearts and minds of young mobile users has intensified over the past year, said Neil Mawston from Strategy Analytics.
Younger users are important because they can be opinion leaders and trend leaders. Nokia will need to discover why its heartshare has been slipping, and take actions to ensure it does not translate into lost market share, Mawston said.
Nokia's global market share fell slightly to 36 percent in the first quarter of 2009, with Samsung and LG gaining ground and controlling 19 and 10 percent of the market, respectively.
The Habbo survey numbers exclude some key emerging markets, including India and China, where Nokia is the market leader. The average age of respondents varied between 13 and 16 years in different countries.
The Sony Ericsson joint venture of Japan's Sony Corp and Sweden's, which has a stronger position in developed markets, was the second most favored mobile phone brand among teens. However, its support also slipped from last year, to 18 percent from 21 percent.
Motorola Inc dropped to sixth place from third last year, bypassed by Samsung, LG Electronics and Apple Inc.
Amazing to see the resilience of Sony Ericsson and the collapse of Motorola ... Perhaps Sony Ericsson has better chances than I think, said Bernstein analyst Pierre Ferragu.
Motorola's market share fell to 6 percent in the first quarter, while Sony Ericsson controlled 5 percent of the market.
All handset vendors are suffering this year from plunging demand, with the overall mobile phone market expected to shrink 10 percent in 2009 as consumers rein in spending and handset sellers try to clear out unsold phones.
(Reporting by Tarmo Virki; editing by Rupert Winchester and Gerald E. McCormick)