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May 01, 2012

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Antoine RJ Wright

Sheesh, sales or shipments (not that it matters)?

How does installed base or replacement cycles for previous years w/Symbian (and MeeGo) devices factor into this? I remember you saying something about folks wanting Nokia but (a) carriers pointing them elsewhere or (b) returning Windows Phone at higher rates - of which are becoming mostly Nokia-branded devices, where they are being sold.

Not a good picture this post is. I wonder if there's some action from carriers that would cause this to reverse or slow?

PhoneBoy

Why would any other vendor but Nokia sell a Windows Phone handset at this point? Only one with any ability to differentiate is Nokia (given their "most favored nation status" with Microsoft). All other handsets are bland and too similar.

Then of course, the question is whether or not Nokia can actually sell some Windows Phone handsets, which, like you, I have my doubts as to whether that will happen or not.

Eurofan

Tomi has been very good so far in his Nokia predictions, but I wonder where these next Lumia sales can happen. It seems Europe is burned out on Lumia, Asia is indifferent, China is inhospitable. Minutes ago I checked Amazon. The black Lumia 900 is #9 in sales rank for phones sold with plans (subsidized phones) and cyan Lumia 900 is #47. If people were actually frustrated trying to get "sold out" Lumia 900's at their local AT&T dealers you'd think they'd turn to Amazon, where Lumia 900's are available with two day shipping. I see Nokia's WP line of phones being a total market flop even after WP8 comes out. It's going to have the same metro/live tile interface that has made so little stir with Lumia. Nokia needs a plan b.

Earlie

Thank you Tomi, you are such a great expert on Nokia! Think about the N9, it would have easily sold 100M units this year if only Nokia's Elop would allow it to happen. I hope you stand a chance if Nokia need a new leader for its sinking platform. You would make a great new Nokka CEO with your insight in the mobile market!

cycnus

@Antoine RJ Wright,

Sales or shipments doesn't really matter as most reseller now doesn't really want to stock nokia phone too much. So, do not think they will put a nokia phone on stock for 2-3 months.

@PhoneBoy

LOL...
all WP phone were the same, there were no differentiation at all.
That's why it's flop.

@Eurofan

I also admire that Tomi could predict lumia sales 10000% better than all other analyst. Tomi really prove that he's a leader not follower. I'm proud & honored reading his blog

cycnus

@Tomi

I was wondering about the nokia dumbphone/featurephone sales number.
I know that Asha line in Indonesia, India, Philippine, etc.... were taken a big hit by Cheap Android such as Samsung Galaxy Y (US$ 110-120) and Samsung Galaxy Pocket (US$ 95-100).

Could the diminishing nokia brand in Smartphone effect the dumbphone/featurephone?
or the lost in marketshare mainly because of it can't compete with android on that price level?

Thanks.

Poifan

I'm curious what factors are considered in the projection of Lumia phone growth slowing in Q4 of 2012? I'd think that the holiday season would give sales momentum with a refreshed product line based on Windows Phone 8, Pureview cameras, and coattail effects from Microsoft's upcoming massive Windows 8 marketing campaign. I'd also expect Verizon to be selling WP8 (as announced, though not necessarily Nokia) in Q4. I'm not saying WP is going to succeed in the long run, but the projection seems to fly in the face of the sales cycle.

Karlim

Well, this time your Nokia 2012 forecast seems reasonable, at least for Q2-Q3. I'd say it even may be optimistic.

However I can not understand what is your reasoning for only 1 million Lumia increase from Q3 to Q4. This is a Christmas quarter where (barring major economic meltdown) all phone and electronics vendors significantly boost sales compared to previous quarter. Furthermore, Nokia will announce the next generation Windows Phone 8 smartphones on September 25th at Nokia World conference. Hopefully start shipping them within 2-3 weeks like they did last year. And there will be a major marketing push from both Nokia and Microsoft, probably much bigger then the one in 2011. During Q2 and Q3 Nokia's old Lumias will have to compete with the new Samsung Galaxy S3 flagship and reduced prices for older Samsung smartphones. In Q4 Nokia will have a new generation flagships to put against Samsung Galaxy S3. The "only" new smartphone launching in Q4 will be iPhone 5. It will be huge, but I don't think it'll be that huge to slow Lumia growth from 2 million a quarter to 1 million.

So why do you think Nokia will grow Lumia sales by 2 million in Q2, another 2 million in Q3 and only 1 million in Q4?


Red


From my own research Tomi might well be right but all his comments are seriously not going to change anything. Nokia will long be pass saving by the time Elop gets fired. Tomi should think seriously about getting a life since his comments can only hasten the decline, but then I suppose he can get the immense satisfaction of saying I told you so. Hitlink’s browser market share numbers, which are updated monthly shows in April 2012 Windows Phone increased from 0.42% worldwide to 0.49% worldwide, a false flickering glimmer of hope for the desperate who want to cling onto a last fragment of hope.

cycnus

@Red

I like Tomi compared to other analyst.
The other analyst that were bluffing about WP7 number could reach 20% by now if not countered by Tomi would only create a false positive. Which is the number will be big, but the reality is the user will hate the WP7.

So, Tomi honesty will bring a balanced review for all user.

Earlie

Tomi should really aim for the Nokia CEO chair! I'm sure all owners will support him by now, as he has revealed the truth here on his blog. Windows Phone is the worst mobile OS ever!

PlatformWarrior

I think MS might have a better chance to get into the embedded market through Windows on ARM running on laptop and tablet devices. If those devices become successful and create a strong MS based application ecosystem, it is possible that the ecosystem will spread to the smart phone market. But even in the best case it will take a long time, which can be fatal for Nokia, which is relying on MS success in smart phones.

Earlie

@PlatformWarrior

MS will sink as fast as Nokia. Perhaps Tomi can give us some insight on this one. There is not a sole on earth, who would use MShit voluntarily!

Tomi T Ahonen

Hi Antoine, PhoneBoy, Eurofan, Earlie and cygnus

Antoine - good points and questions. The returning loyal customer problem is now shifting downwards as the first customers of the Elop Effect return to stores later this year. It only makes matters worse, when ever less of the installed base of mobile phone owners, even own a current Nokia. The carrier support is critical. If Nokia were able to lift the 'boycott' against it, the sales decline would end. I can't promise sales growth by that action, but at least the carnage would end. And as I've written elsewhere on this blog, the cause of the carrier revolt is now Elop and Microsoft. Both have to be gone, before carriers return to supporting Nokia sales

PhoneBoy - yeah, we totally agree. I said something similar last year when Microsoft announced its special relationship with Nokia. Since then Samsung also got itself a special deal with Microsoft but Samsung is clearly using it only to pry some money and attention, they have no desire to push Windows Phone smarthpones beyond lip service

Eurofan - yep. Makes a lot of sense. I did my best to think of the down-ramp of Symbian, the end of Meego and the upramp of Lumia (plus some transition from dumbphones). I didn't do a regional split of where Lumia would sell, but China is pretty dead apart from the smallest carrier, China Telecom. Europe will have some Lumia sales simply because its Nokia. USA will do a million, two down the line, nothing like iPhone but similar to what Nokia did before Elop killed Nokia USA Symbian sales. Other parts, it will be small wins in some markets.

Earlie - your comment seems to be sarcastic, but on the off chance you were serious - the 100 million N9 sales level is utterly impossible. Nokia did 100 million Symbian smartphone sales in 2010, with an average sales price of about 200 US dollars. The N9 has an average sales price twice that. So probably the scale of N9 market potential, if Elop had marketed it broadly, would be in the scale of 20-25 million per year, 5-6 million units per quarter - roughly in line what the N8 (and E7) did before the Elop Effect of February 11, 2011.

cygnus - great point about inventory. Yes, looking at Nokia price slashing and horrid return rates, you are totally correct. The retail channel does not want to be caught holding Lumia in inventory. PS thanks on kind words

Keep the discussion going, I will return with more comments

Tomi Ahonen :-)

space cowboy

Omg... this forum should be called the frustrated and bashing Nokia club. I have a lumia 800 and I really love. Even over my (dual core, but traditional) Samsung Galaxy II. If u dont believe me, read some reviews about the Lumia's. Even Steve Wozniak likes WP7 and the Lumia 900 over Android and on some aspects even over i-phone. Taking numbers from the past (Nokia's Lumia 900 is only on sale for one month in the US only), and forecasting the rest of 2012 and even 2013 with them is quite silly. I's say, give Nokia and Microsoft some time to proof they are on there way up again.

Earlie

@ space cowboy

Listen to the pros, get rid of that phone and change it to N9!

observer

This is a horrible picture Tomi, absolutely awful. I hope that you are wrong, but your numbers look inescapably reasonable.

I do wonder about pulling out the $250M from the numbers - personally I think it should be excluded from ASP but included in divisional numbers, but Nokia includes it in ASPs so I think by not including it you are opening your figures up to additional noise. Would it be possible to have ASPs listed with and without?

Knowing you Tomi, I assume you have thought about this somewhat. Any ideas why Nokia might want to include it - it obviously masks the real numbers somewhat but are there any other reasons?

Giacomo Di Giacomo

So, you think that Lumia sales will increase sequentially in the next quarters? My personal feeling, as a user, is that they are going to peak maybe in the next quarter and then fall, due to the decline of the momentum of the launch and to people realizing that WP is not that good (as you can see when you search for used Lumias on ebay). Also, you seem to estimate that the 808 PureView will sell no more than about one million units in 2012, while I think it is going to sell several millions (mainly to former N8 users awaiting for a decent successor). This is only what I feel from a user's point of view anyway (but I felt that Lumia would have failed miserably and that's what happened, so let's wait and see).

Baron95

I have no problem with this forecast, other than the Q3-Q4 sequential drop in growth rate makes no sense.

I think the reason for the decline has nothing to do with Elop, but has to do with the fact that it will become plainly apparent that Nokia does not have great HW design skills. For all those that think that putting a huge camera sensor and lens by creating a hump on the back of a brick-sized phone is leadership, you will have a nasty surprise.

Samsung and HTC will out execute Nokia on WP models and continue to take share. And if a low cost OEM (e.g. ZTE) jumps in, then even more losses.

Nokia is an emperor with no clothes. Their SW efforts suck in comparison to Apple, google et al. Their HW designs suck compared to Apple, Samsung, HTC, Moto et al. Their supply chain management is one of the worst in the world compared to Apple, Moto, etc. Who in this day and age ships phones from Asia to Europe to be "customized" in an European factory prior to final shipment? It is lunacy.

Nokia is easily the most bloated corporation in Mobile. Easily. Revenue per employee is disastrously low.

Nokia has a low performance culture and is being killed for it.

The bad part, is that now, they can't even compete in rubber boots anymore.

Time to start selling the assets, and return cash to shareholders. Each day that passes for RIM and Nokia the more they lose value.

That is Elop's true fault. The diagnosis on Feb 11 memo was correct. The action should have been to dismantle and sell the assets back then, before all value was lost.

Giacomo Di Giacomo

Baron95,
Nokia is (was?) incredibly bloated indeed. I cannot understand what all those people are working upon. Heck, I designed all the hardware of a VHF radio transponder myself, alone, in about six months. Add two people working on the software and some days of my colleagues working on the mechanics. The same holds for Microsoft, by the way.

But on the other hand, they do design good hardware. Even if we look only at their recent products, when they introduced high-spec phones they succeeded: look at the N8 and the N9. They are unanimously considered good pieces of hardware. The problem is that the phones that sell the most are the highest-spec phones, such as the iPhone and the Galaxy Sn, with n = 1, 2, ... .

What is currently Nokia offering in this range? Nothing, except maybe the N9, that is sold nearly nowhere and anyway is beginning to lag behind others in terms of performance. Symbian phones are all alike and all mid-range, also the upcoming 808 (not that they are not good, I own a 603 and it's amazing, especially for its price, but people look after super-specced devices even if they will never use the features for which they are paying a premium). WP phones do not match the best in class either, also because they cannot use higher resolution (they are stuck at 800x480) nor multicore CPUs (that are only useful on multitasking machines, such as Android and, ironically, Symbian).

So, how can Nokia sell, if it does not offer devices that people want? Add to this the Elop effect and you're done. The only way out I see is a) kicking Elop off (and the board with him, if this is what is needed) and b) offer some really powerful phones, as the N8 was when it came out, based on OSs that allow Nokia to do something really outstanding (ie Symbian and Meego), obviously with some marketing, not like the hype that surrounded the Lumia launch, but rather highlighting the real strengths of the devices.

Rob-o-bob

Tomi is wrong about Windows Phone only getting 3% market share in 2012.

The real analysts (iHS Suppli) say Windows Phone will get 9%.

http://www.isuppli.com/Mobile-and-Wireless-Communications/News/Pages/Lumia-900-Introduction-to-Trigger-Smartphone-Renaissance-for-Nokia-and-Microsoft.aspx

Eurofan

@Rob-o-bob: Your cited analysis is out of date. It's from January 2012. Here's the most recent assessment posted by iHS Suppli on April 17, 2012:

http://www.isuppli.com/Mobile-and-Wireless-Communications/MarketWatch/Pages/Nokia's-Windows-Phone-Strategy-is-on-the-Brink-of-Failure.aspx

Two pithy paragraphs:

"Nokia's poor results with Windows Phone are not due to Nokia's failures. The Lumia devices have attractive and differentiated industrial design, in a smartphone market where every handset maker is struggling to stand out. Nokia shipped the launch devices on time and at attractive prices. Nokia's problem is that Microsoft appears to have stood still. A year and a half after Windows Phone 7's debut, it has changed little. In effect, the gap in features between Windows Phone and Android or the iPhone has widened and not shrunk as Nokia needed it to."

and

"When CEO Stephen Elop made the brave move to embrace Windows Phone, he said there was no plan B. Given the results to date, IHS Screen Digest believes that now is the time for Nokia to create a back up strategy to the current Windows Phone endeavor."

I think we can fairly consider this latest iHS Suppli statement a retraction of its earlier January optimism for Windows Phone.

Earendil Star

It's amazing how entrenched in some people the MS propaganda is.

Despite all facts indicating how bad the situation is.

And the iSuppli comment from April is interesting.

The responsibility, as Eurofan highlights, is clearly placed upon WP, still lagging the competition, and the lack of a Plan B from THT Elop.
Not on Nokia, who's hardware, albeit underwhelming, is nicely designed.

The huge lie, i.e. that MS was good at phone software and this was the only solution for Nokia, is finally being revealed.

Nokia is dead because it chose the wrong strategy (WP, the smallest OS in the wild), and put all its eggs in the wrong basket.

Bravo, THT Elop. Mission accomplished. Time to wrap things up and make Nokia officially the MS captive OEM it was supposed to become since inception.

Good night and good luck.

Baron95

WP7 is nothing more than a kludged stopgap on the way to the real OS - Windows 8.

Just like N9-"Meego" is an incomplete kludge of cobbled together Maemo OS with Meego UI.

Just like BB7, Playbook OS with incomplete cobbled together OS on the way to BB10.

There is one complete mobile OS in existence in the world - iOS - running on tablets, phones, music players, TV set top boxes, and highly compatible with a desktop/laptop OS, all cloud integrated.

There is one half way done mobile OS - Android ICS. Still missing quite a bit.

There is one on the drawing board - Windows 8.

All else is junk. Bada, Anything from Meego/Tizen, anything from DoCoMo OEMs, anything from RIM, just that plain, uncompetitive junk.

Microsoft is using WP7 to line up relationships (e.g. operators, developers, content providers, OEMs. The main course is Windows 8. It may succeed or it may flop. But WP7 is nothing more than a way to play with a nice UI and warming up the engines.

Nokia's problem is that it needs a blockbuster. Not a plaything on the way to a real OS. It has no time.

Nokia has no good options. And for crying out loud - 130,000 employees!!!!!!!! Please!!!! What kind of board tolerate this level of bloating???

I think Nokia is an employment agency for Finland a few other countries. That must be its mission in life.

Nokia - Hiring People. (new moto)

Jagdish Chandra

Hei Tomi,

Join Nokia....save the company!! for Finland's sake!

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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