Nokia is betting on phone replacements to gain market share

Red Herring:

Nokia, the world’s largest cell phone maker, expects replacement sales of cell phones to continue gaining share of the total market in 2007, it said in its filing with U.S. officials on Monday.

Nokia said it expects consumers replacing their old cell phones to represent more than 65 percent of the device industry volumes in 2007, compared with more than 60 percent in 2006. Demand for color screens, cameras, music players, and 3G will drive the sales.

Nokia said it does not expect major demand for much-hyped mobile television this year.

“We also expect that push email, mobile TV, and navigation services will be significant drivers of the replacement market in the future, but not in 2007,” it said in its annual 20-F report filed with the U.S. Securities and Exchange Commission.

Nokia also said replacement volumes in the emerging markets—its stronghold against closest rivals Motorola and Samsung Electronics—are having an increasingly significant impact on the global market.

“In emerging markets, replacements accounted for approximately 60 percent of total mobile device volumes in 2006, up from approximately 50 percent in 2005,” it said.

You wonder why Nokia pours all their money into emerging markets. The more exposure their brand receives, the wealthier they’ll be in the future.

What happens to all those old phones?