Nokia finally had a profitable quarter (Q4 2012), but its smartphone market share is still falling

Right on time, Nokia published its earnings report for the fourth quarter of 2012 and that year as a whole. In terms of sales numbers, there are absolutely no surprises here, since the company already gave us the highlights a couple of weeks ago.

The Finns managed to sell 4.4 million Lumia Windows Phones, and 2.2 million Symbian devices, this being the first quarter ever in which the former outsold the latter.

This was Nokia’s first profitable quarter in a long while, as overall the company managed to rake in €439 million. Sales were €8.04 billion. For the full 2012 though, Nokia reported a loss of €2.3 billion on sales of €30.1 billion.

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The mobile devices arm itself contributed €3.85 billion in sales and €276 million in profits to the Q4 results. This is also the first quarter since the famous February 11, 2011 announcement (dropping focus on its homegrown Symbian and Meego platforms and focusing solely on Windows Phone for smartphones) in which Nokia’s smartphone sales have grown compared to the previous three-month period.

Nokia’s smartphone sales were at 6.3 million in Q3, so that’s a 300,000 unit growth. Not much, but it may be a decent start.

Oh, and Symbian is officially dead. Again. Nokia has said that the 808 PureView announced almost a year ago will be the last Symbian smartphone ever to be released. Since Lumias finally started outselling Symbian phones, this announcement was well timed (not something you can say often about anything Nokia does).

For the first time in over a hundred years, Nokia decided not to pay dividend to its shareholders. That should help it keep some money for possible investments throughout this year, hopefully.

In the fourth quarter of last year, Nokia sold 79.6 million featurephones alongside the aforementioned smartphones. For the whole year 2012, the numbers are as follows: 35.1 million smartphones (55% less than in 2011), and 300.5 million featurephones (down 12% from 2011). Keep in mind that during 2011 and 2012, the smartphone market grew around 130%, and you’ll see that Nokia still has a lot of work to do to convince people to buy its new products.

Estimates put Nokia’s smartphone market share for Q4 2012 at 3%. That’s down 1% from Q3, and down a lot compared to the 12% it managed in the year-ago quarter. Nokia will, at best, grab the No.10 spot in the Top of the world’s biggest smartphone makers. And unlike its sales numbers, Nokia’s market share in smartphones still hasn’t grown sequentially since February 2011 – not once. In fact, it has never even held steady quarter-on-quarter – it just keeps on dropping.

For the whole year, Nokia’s probably around 5% smartphone market share. Which is nowhere near what most ‘analysts’ predicted would happen by now back in 2011. So, after almost two years, is it time to finally call Nokia’s adoption of Windows Phone a failure? Or should we wait until that market share reaches 1%? No? 0.5% then? What’s the limit?

Joking aside, at this rate of ‘success’ Nokia will only exist in its current form as long as it manages to hold on to some cash reserves. For now it’s safe with billions in the bank. But from now on it will have to make some hefty payments to Microsoft for the WP platform, payments that may accelerate the depletion of those funds.

Of course, the easiest way for Nokia to get out of this mess is make desirable products. So let’s let it try and do that. It might succeed, or it might die trying. Either way, this will be interesting to watch.

Some statistics sourced from Communities Dominate Brands

Nokia’s full earnings report (PDF)

Author: Vlad Bobleanta

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