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Nokia sells 1m Lumias; strike up the band

Posted By TelecomTV One , 24 January 2012 | 0 Comments | (2)
Tags: Nokia Microsoft Windows Phone OS Apple Android Samsung Bada elop Research Smartphones iOS Symbian LTE financial

It’s whoopy-do time again as analysts suggest that Nokia has sold over 1m units of its Windows handsets since launch in November, thereby saving the company’s fortunes and proving CEO Stephen Elop right. So can we all go home now? Guy Daniels reports.

Nokia – on the edge, fighting for survival, forming new alliances, haemorrhaging sales – what was its new CEO thinking when he jumped into bed with Microsoft? What’s that? Nokia has probably sold over one million units of its new Windows Phone-powered Lumia 710 and 800 smartphones since their November debut? Oh, that’s okay then. Tear up the obituary drafts, put the arsenic/champagne (depending on how you feel about Nokia) back on ice, it’s going to be alright after all.


Because even though Nokia hasn’t said a word about its sales figures, a report on Bloomberg claims to have the answers. The news agency surveyed 22 analysts and found that the average sales estimate was 1.3 million. Cue spontaneous outpourings of joy and “I told you so” in the blogosphere. Allow us to print a word or two of caution (well, you wouldn’t expect anything else from us, would you?).


Firstly, these estimates are sales to retailers, and not purchases by consumers – there can be a big difference (just ask HP). The Bloomberg piece cautions that; “Sales to consumers were probably less than Nokia’s shipments to stores, since the Lumia was not broadly sold out.” But just how much excess inventory is sitting on retailers’ shelves? We know that in the US both Costco and WalMart are practically giving away the lower-spec Lumia 710 with a two-year contract. Is that a sign of too much stock, or just a regular sales practice?


Secondly, Apple sold 30 million iPhones in the final quarter of last year (again, an estimate, although we should the actual figures by tomorrow, following the company’s results presentation). So don’t go thinking that Nokia is suddenly up there in the Top Five handset rankings – in fact, the Lumia didn’t make December’s top-10 handset list for influential UK price comparison website uSwitch (Samsung’s Galaxy S2 topped the chart).


It does appear to be a positive start. But we have to remind ourselves this isn’t a tiny OEM trying to break into the market; this is the once-mighty Nokia, the company that ruled mobile for over a decade. Even the word ‘Nokia’ was synonymous with the word ‘mobile’. We are talking about the world’s most successful mobile company – heck, they used to be able to sell a million phones before breakfast. So a little perspective, please. Yes, it’s a new operating system; yes, Nokia threw out MeeGo and re-engineered its phones for Windows; but it’s still Nokia – a highly innovative and resourceful company.


According to Gartner, sales of handsets supporting the Windows Phone platform have been slow since it was debuted in late 2010. The analyst firm reports that Q2 sales reached just 1.7 million units – outperformed even by Samsung’s low-cost operating system, Bada.

However, Bloomberg has Morgan Stanley as saying that full-year sales of Windows Phones will be as high as 37 million units.


Here’s another problem: Nokia’s sales came at a time when its competitors were keeping fairly quiet. For example, HTC is still struggling to come to terms with its legal battles and is arguably not the up-and-coming Android champion that it once was. That crown appears to have gone to Samsung, which is now securely ensconced in the ‘alternative to the iPhone’ position. Motorola tried and failed to excite the market, but is probably more concerned with its sale to Google. RIM delayed its new OS, and SonyEricsson… well, best not say anything really. What will happen when its competitors wake up?


Maybe the figures will ramp up once the Lumia 900 hits the market in March, with its US-friendly LTE support? Yes, it got a lot of attention at CES, but the proof will be in customer sales. Despite the gushing praise from some analysts (see yesterday’s story for an example), the fact remains that the Windows Phone platform isn’t yet competitive with Android or Apple’s iOS (for example, the range of apps available is lagging way behind those of two market leaders).


But being an LTE phone will restrict the 900’s geographic reach, surely? Mobile blog IntoMobile caught sight of a press release from leading UK retailer Carphone Warehouse that claims the Lumia 900 will indeed be coming to Europe, albeit without LTE support. However, the page has now been removed by Carphone Warehouse… So was it an honest mistake, or did they sneak out the news too early?


Staying in the UK, media and telecoms regulator Ofcom has just slapped Nokia and broadcaster Channel 5 for breaches of its advertising standards. In October, to coincide with the Lumia launch in the UK, Nokia sponsored “break flashes” on the channel. However, the short image sequences didn’t make clear to viewers that they were sponsored bumpers, and so they broke the rules. Nokia can expect a heavy fine in return – although obviously nowhere near the value it got out of the campaign.


Back to Bloomberg and its 22 analysts (or rather, 16 of them – it appears that 6 didn’t want to look ahead). It reports that Lumia sales may reach 3.2 million units this quarter as the handset sales start to increase in Asia, according to the average of 16 analyst estimates.


The industry needs Windows Phone to be successful. With Apple’s iOS a closed shop affair, OEMs want an alternative to Android – and preferably one not mired in costly patent and IPR disputes. So do consumers, who appear to be becoming tired of look-alike Android devices. Nokia is Microsoft’s best bet for mobile success; it needs to ramp up the reach and acceptance of Windows Phone, and fast. If consumers lose interest, if developers lose faith, and if OEMs don’t diversify from Android, then Windows Phone will wither and die. After its failure with Windows Mobile, Microsoft surely isn’t going to let that happen again?


As for Nokia, it’s bet everything it has on Windows Phone. But will it scale down to support much cheaper smartphones? Having lost interest in Symbian, which was the platform that propelled Nokia to greatness and brought its simple phones to all corners of the world, it desperately needs volume sales. One million sales of its Lumia smartphones is a good start, but where’s the volume growth coming from? What’s going to replace the rapidly declining sales of Symbian devices?


Nokia lost $19 billion in market value in 2011. The market will be keeping a very close eye on Lumia sales this year, and Elop must be hoping that they will be sufficient to stem the decline and enable him to start rebuilding the company. Nokia reports earnings this coming Thursday, although actual sell-through data will probably not be forthcoming.

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