Nokia yesterday announced its Q1 results for 2009. All the financial parameters are witnessing a decrease year on year and sequentially. There is only one major reason to this and that is the recessionary market conditions. The consumer faith is all time low and every penny (whatever left) is being spent judiciously, if at all. Right now, most of the mobile markets were seeing upgrading of mobile handsets by the consumers and that was pushing the sales. But as the financial conditions began to get tougher, consumers preferred to keep their existing handsets.

There are many inferences one can draw after seeing the results of Nokia for this quarter. But, I could find one of them that will surely make some people happy. People who plan to buy or replace a mobile handset should wait for a while to get best out of their money.

In 2008, Q2 saw the maximum decline for ASP (Average Selling Price) of a mobile handset from Nokia. The decrease was 6.32%. For the year 2008, the A2SP (Average of Average Selling Price) for all the quarters was 3.81%. With the conditions prevalent towards the latter half of 2008, the decrease can be said as a modest one and such decrease in the ASP is something evident and explainable under normal circumstances as well.

But 2009, has not been a good year for mobile devices as well. For just one quarter, for which Nokia announced results, the decline in ASP is 8.5% valuing $85.7. Just a year ago, a Nokia handset would sell averaging $104.2. So in just four quarters the average selling price has fallen close to $20.

If the trend remains so, which is most likely to remain so, we could expect a further steeper decrease in the average selling price of mobile handsets, not only for Nokia but for other players as well. With things appearing to be remaining similar or worsening in Q2 right up to Q4, we could expect a similar rate decrease in the ASP per quarter. Considering the decrease of 8.5% in ASP per quarter, we should see the selling price of a Nokia handset averaging around $65.8, which would be decrease of one-third in the price in two years time. Surely the mobile handset manufacturers will have tough time ahead. Probably they need to rethink about the product lines they must focus on at present. It is expected there will be reduction in the rate of replacement of handsets, the key to success lies with the new markets of Asia where the basic sub $100 handset is the handset of masses. For the time being, handset manufacturers must focus on this segment till waters are calm.

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