Nokia CEO Olli-Pekka Kallasvuo said he is paranoid about competitors. We need to beat, not match, the competition, he said.

The company’s ambition to crush the upstarts in the mobile device markets comes at the end of a quarter when it has not only made progress at the high end of the market but also in sub-30 euros ($42.62) phones for developing countries. The result is that it increased net income in its third quarter by 85% to 1.56bn euros ($2.2bn) on revenue that rose 22.7% to 12.89bn euros ($18.3bn).

Helped by disarray in Motorola’s handset division, Nokia increased its market share from 36% a year ago to 38% last quarter and this now has risen to 39%. In addition to its traditional strength at the high end of the market, it has a growing share in low-end devices, a sector that Kallasvuo said competitors have tended to avoid. He said it is part of the market that Nokia is delighted to serve because it plays to the company’s strengths in the scale of its output and its R&D budget.

Nokia sold 111.7 million devices in the quarter, 26.2% up on last year and a sequential rise of 10.8%. Average selling prices continue to fall, and were down 11.8% sequentially at 82 euros ($116.5), though the operating margin increased from 13.1% to 22.6%.

When it comes to converged devices, it estimated that total industry volumes in the quarter were 31.7 million, which puts its share of this lucrative sector of the market at 50.5%.

Asia-Pacific was the company’s biggest market in volume terms, with sales up 41.4% to 29.5 million, while China saw sales increase by 37% to 18.9 million. Nokia said there are hopeful signs in North America, traditionally a weak area for the company, though sales of 5.4 million were down 1.7%.

A continuing worry for the company is it 50-50 venture Nokia Siemens Networks (NSN), which has spent its first year trying to cut costs and cope with difficult conditions, which have even hit market leader Ericsson. NSN produced a third-quarter operating loss of 120m euros ($170.5m) on revenue up 6.9% sequentially at 3.67bn euros ($5.2bn).

NSN has already cut its workforce by 2,300 and Nokia signaled its determination for the company to reach profitable operation by raising to merger synergies by 500m euros ($710.4m) to 2bn euros ($2.8bn).

Nokia said it is sticking with the industry consensus that total device sales this year will rise 12.5% to 1.1 billion and, despite the fall in ASPs, it expects it to achieve some value growth. Conservatively, it predicted it will maintain market share during the current, most buoyant market, for the industry.

Our View

Olli-Pekka Kallasvuo likes to talk tough and clearly all the traditional device manufacturers have been rattled by the success of the BlackBerry and the iPhone that provided functionality and design that was not present on existing devices. Part of the reason for their success was they were different. Ironically, the more dominant Nokia’s market share becomes, so will pressure grow for a device that makes them stand out from the crowd.