Nokia has previewed the Q1 2012 results today. And they are a disaster.
I did expect Nokia’s first quarter to be bad. But nowhere as bad as this. In Q4 2011 Nokia sold 19.6 million smartphones. 18 to 19 million of them were Symbian devices. This quarter they have shipped 12 million smartphones. 2 million Lumias among them. Which means that Symbian sales dropped by 8 or 9 million (about 45%) – in just 3 months.
But that makes the whole thing of monitoring Nokia transition so much easier.
For all intents and purposes, Symbian is dead now. For real. With low-end Android phones finally becoming good enough, nobody is interested in Symbian. And even the price dumping is not helping anymore. The pithy number of devices Nokia was able to push this year, came at a significant loss. With Symbian gross margins even below the 16% the smartphone unit was able to show, and the main culprit behind the 4% decline from the last quarter.
If Nokia stopped making and selling Symbian phones today – I don’t think it will make any difference on whether Nokia survives, is sold, or goes under. Symbian is an anchor and not a cushion from now on.
And all those market share numbers Nokia had in 2010, or even in 2011 – are nothing more but a fond memories of good times past, with no relevance to the present or future. For all intents and purposes, Nokia started 2012 with 0.4% of global smartphone market share (600K Lumias sold vs a total of 150M smartphones). And the only thing that matters now – is whether they are able to ramp up Windows Phones fast enough to challenge iPhone and Android.
Nokia either makes Windows Phone strategy work, or there will be no Nokia by the end of 2013. And there really is no plan B.
Looked at from this perspective, there was a silver lining to today’s profit warning, in the form of 2 million Lumias shipped. But it is a very thin lining.
Depending on how the final tally of smartphones shipped come in – Nokia has increased it’s share of the market from 0.4 to something like 1.2-1.5%. An impressive 300+% growth in 3 months – but from a ridiculously low base of 600K. And what’s worse – this growth comes at some significant cost. In the conference call Nokia execs said that while Lumia gross margins were higher than the 16% of the overall smartphone unit margin, but they were not significantly higher. Which means that it’s somewhere at 17 or 18%. Wwhen you add all the operating costs – Nokia is selling every new Lumia device at a loss. Which is not sustainable in the long run.
On the other hand – all that growth was achieved with just two models – Lumia 800 and 710 – available in less than half of Nokia markets. And on a still rather limited Windows Phone 7.5 OS. With Nokia 900 as AT&T hero device for the next few months and rolling out worldwide, China and other new Lumia markets coming online, the cheaper Lumia 610 almost ready to ship – the momentum for growth is there.
We’ll just have to wait and see whether it is enough to keep Nokia afloat through the summer and beyond. And whether Microsoft and Nokia were able to make Windows Phone 8/Apollo into a savior OS, they hope it is.
If you liked the post, you might find these interesting too:
- Nokia reports Q2 2012 results. 4 million Lumia Windows Phones sold
- Nokia’s Q3 results: 2.9 million Windows Phones sold, 3.4 million Symbian devices, still losing money
- Nokia’s 2011 results are out. Less than 2 million Lumia Windows Phone handsets sold to date
- Nokia finally had a profitable quarter (Q4 2012), but its smartphone market share is still falling
- WP8 launch on Oct. 29th. New Lumias announced on Sept. 5th. Nokia, is there some method to this madness?