In the face of the looming global credit crunch and declining demand for higher-end phones in the US and Europe, Nokia, the world"s largest cellphone maker, cut prices across its portfolio in July to gain an edge on the competition. According to industry sources, the company reduced prices by as much as 10%, with the 5310, 5610, and N81 8GB models benefitting the most. Smaller rivals, like Sony Ericsson, who are already in financial trouble, are now even more hard-pressed to compete in an increasingly cutthroat market. Nokia increased its market share to 41% in Q2, mainly helped by surging demand in India and other developing markets.
"This is basically a way to run away from competition. You"re putting a lot of pressure on your less competitive peers," said David Hallden, analyst at Cheuvreux, who called Nokia"s price cuts a "crazy ivan," referring to a naval maneuver when a submarine makes a sudden sharp turn.