Apple iPhone Sales Won't Profit from Nokia's Q1 Profit Decline - Page 2

Similarly, Nokia should see a rebound in the second half, from restocking, particularly as the company brings new handsets to market, such as the highly anticipated touch-screen N97 and the N86, which packs an 8-megapixel camera.

As for iPhone competition, the numbers are much better for Nokia than Apple. Nokia's first response to the iPhone is the touch-screen 5800 XpressMusic. On April 16, the company revealed shipments of 2.5 million units in the first quarter and 3 million since the consumer smartphone's November launch. By comparison, Piper Jaffray analyst Gene Munster predicts Apple shipped 3.7 million iPhones during the first quarter. Broader Wall Street consensus is closer to Kaufman Bros. analyst Shaw Wu's estimate of 3.2 million units. Apple will reveal iPhone shipments during its April 22 earnings announcement.

Nokia's first response to the iPhone is selling quite well. Nokia's so-called iPhone killer, the N97, is expected by the end of June. There is more punch yet to come.

Nokia has market reach that Apple could only dream of. According to Gartner, Nokia has 37 percent market share in China-the world's largest cell phone market-where the iPhone has no carrier distribution whatsoever. For perspective on size, one carrier, China Mobile, ended 2008 with more than 630 million subscribers. That number is more than twice the entire U.S. population.

There's a strange blindness that obscures U.S. blog and news coverage of the iPhone. If the measure was mindshare, the iPhone would be the world's most important handset. But based on market share, the iPhone is a tiny fish in a pond of larger, wiser fish. Nokia is biggest of them all. Market share matters-and it will matter more as Nokia launches its Ovi Store rival to Apple's App Store.

On April 6, Barclays Capital's Ben Reitzes raised his iPhone shipment estimate to 17.4 million for 2009. Even with quarter-on-quarter and year-over-year declines, Nokia shipped more than five times as many handsets in a single quarter than Apple expected to ship for all of 2009. Perhaps the iPhone is more water bug than tiny fish in that big pond.

Joe Wilcox is editor of Microsoft Watch.