Nokia released its first quarter earnings today, and as expected, the news isn’t good. Posting a $1.7 billion quarterly loss, on net sales that were down 30%, Nokia continues to struggle with “greater than expected competitive challenges”, and “mixed’ sales of its new Lumia Windows Phone devices:
We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging.
.. said Nokia CEO Stephen Elop in the earnings report. That “mixed” situation can’t have been helped any by the recent flurry surrounding whether or not current Windows Phones will be upgradeable to Windows Phone 8 (the evangelist who made the initial claim has now retracted claims that current phones would be upgradeable).
But a couple of points need to be made about Nokia’s situation. First, the reason that Nokia switched to Windows Phone in the first place was because the company was in such a mess. A sense of entitlement and lack of execution permeated the company, and that doesn’t go away just by jumping the burning platform. Elop and the company have been working hard to change the culture, but that takes time, even in a good economy without competitive “challenges”.
And secondly, and the no-upgrade-to-Apollo news highlights this, Nokia’s focus on Windows Phone has far less to do with the Lumia 900 (or the other current Lumia models), and far more to do with their upcoming Windows Phone 8 devices. If the 900 can establish a “beachhead” on US shores, getting the buzz going, establishing connections with AT&T and retail stores, and getting the word out that Nokia phones are beautiful and inexpensive, then it will have done its job.
If there isn’t an upgrade path to Apollo (and by now it’s pretty clear there isn’t), then at some point Nokia doesn’t even WANT to sell a lot of 900s, if it can use it as a springboard to push Apollo phones (and even Windows 8 tablets??) this holiday season, where the bulk of phone sales for the year will occur.
If Nokia can continue to create the buzz, and Stephen Elop can crank up the “clock speed” at which Nokia operates, and then hit the holiday market hard with NFC, PureView, Nokia Music, etc., things might not be so bleak at this time next year.