June 18, 2024

1 Billion Euro Loss and a Silver Lining for Nokia

Nokia said it lost almost €1.1 billion, or $1.4 billion, in the fourth quarter, compared with a €745 million profit a year earlier. Sales at Nokia, based in Espoo, Finland, fell 21 percent to €10 billion from €12.65 billion a year earlier. Operating profit shrank by more than half during the period to €478 million from €1.1 billion a year earlier.

But shares of Nokia rose sharply in Helsinki trading after the company reported that it had already sold more than a million Lumia phones, the first using the Windows operating system, since October. Nokia is currently selling two Windows models, the Lumia 800 in Europe and parts of Asia, and the Lumia 710 in the United States.

“The results suggest a good start for the Nokia Windows Phones,” said Franciso Jeronimo, an analyst in London at International Data Corp. He said that other makers of Windows phones, like Samsung and HTC, were also benefiting from Nokia’s promotion of the operating system. “The massive marketing investment to promote the Nokia Lumia 800 contributed to ship better-than-expected volumes.”

Stephen Elop, the former Microsoft executive who is directing Nokia’s transition from its own Symbian operating system to Windows, said the company planned to widen its aggressive selling of Windows devices, which I.D.C. estimates had only a 1 percent share of the global operating system market in the fourth quarter, far behind the leading operating systems, Android, made by Google, and iOS, made by Apple.

“From this beachhead of more than one million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful,” Mr. Elop said. The company announced planned to sell a third Windows phone, the Lumia 900, through ATT Mobility in the United States.

Mr. Elop said Nokia would also start selling Lumia devices in China and Latin America by June. He said the Windows operating system and its associated services, which he refers to as a software-hardware “ecosystem,” are being embraced by operators who want a credible rival to Apple and Android, which together had more than three quarters of the global smartphone operating system market in the fourth quarter, according to I.D.C.

“In the war of ecosystems, clearly there are some strong contenders already on the field,” Mr. Elop said. “With Lumia, we have demonstrated that we belong on the field. Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing.”

But as Nokia navigates the transition to Windows, it is suffering financially, as operators abandon or demand price cuts on Symbian models, which still make up the vast majority of the 113.5 million phones Nokia sold in the fourth quarter. In the fourth quarter, the number sold declined by 8 percent from 123.7 million a year earlier. The average selling price of a Symbian phone slid 23 percent to €53 in the quarter from €69 one year earlier.

Sales fell 38 percent in Europe, Nokia’s largest market, and 40 percent in China, its third-largest market, during the quarter. In North America, Symbian sales dived 77 percent to 53 million units from 233 million a year earlier.

Mr. Elop said that Symbian devices were being undercut by lower-priced smartphones. Chinese rivals Huawei and ZTE sell basic smartphones for less than $100.

“In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian’s traditional strengths.”

Mr. Elop said Nokia expected to sell fewer Symbian devices than originally anticipated when he announced the decision to adopt Windows in February 2011. At the time, Mr. Elop predicted Nokia would sell 150 million Symbian devices as Nokia ramped up production and made the transition to Windows phones.

On Thursday, he said Nokia would sell fewer, without being more precise.

Nokia began selling its first Windows model, the Lumia 800, in October in selected markets in Europe and Asia. This month, it began selling Lumia 710 through T-Mobile U.S.A

Analysts are expecting Nokia to rapidly reassert its relevance in the smartphone market, which it had largely to itself before the 2007 introduction of Apple’s first iPhone. Over the next 12 months, Nokia will grow its smartphone market share more than sixfold, to 12.2 percent, overtaking Research In Motion, the makers of the Blackberry, according to I.D.C.

By 2015, Windows and Nokia will be the second-largest smartphone operating system in the world, I.D.C. estimates, with 21 percent, trailing Google’s Android with 47 percent but ahead of Apple, with 19 percent.

“What people are underestimating is how much operators in Europe and elsewhere are beginning to support and push Windows phones,” Mr. Jeronimo said in an interview. “Operators are very afraid of becoming dependent on the Android-Apple duopoly and as a result, they are pushing Nokia devices aggressively on the public.”

Article source: http://feeds.nytimes.com/click.phdo?i=408b54a2139c6e1639728ded26373b65

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