I am doing my catch-up reading after some heavy travel and found a truly bizarre stat from mid November. Microsoft proudly announced they had just passed 50 million cumulative Lumia activations. Yeah, that may sound like a big number until you remember Lumia has now existed as a product available for sale for 37 months and has achieved 76 million cumulative shipments through mid November. Yeah. I know. Thats a massive 26 million missing smartphones. Where the hell are they? What has happened. This was a true WTF moment for me on Twitter when I noticed that number and I had to go back and double-check my numbers through every Nokia and Microsoft quarterly release to verify my numbers. But yeah. 76 million cumulative shipments through mid-November (I have added the half-quarter sales estimate obviously, as we only have the quarterly data through end of September. The cumulative sales were at 70 million at the end of Q3).
So lets first check on the math. This is the table of total Lumia shipments from the dawn of this Eloppian disaster in Q4 of 2011.
LUMIA QUARTERLY SHIPMENT NUMBERS
Q4 2011 . . . 0.6 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q1 2012 . . . 2.0 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2012 . . . 4.0 million (official Nokia number)
Q3 2012 . . . 2.9 million (official Nokia number)
Q4 2012 . . . 4.4 million (official Nokia number)
Q1 2013 . . . 5.6 million (official Nokia number)
Q2 2013 . . . 7.4 million (official Nokia number)
Q3 2013 . . . 8.8 million (official Nokia number)
Q4 2013 . . . 8.3 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q1 2014 . . . 8.1 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2014 . . . 8.7 million (TomiAhonen Consulting estimate based on Microsoft numbers)
Q3 2014 . . . 9.3 million (official Microsoft number)
Q4 2014 . . . 6.0 million (TomiAhonen Consulting projection through mid November based on Q3 numbers and historical Christmas sales bump)
TOTAL SHIPPED . . . . 76.0 million
TOTAL ACTIVATED . . 50.0 million
Estimated in channel . . 3.1 million (4 week inventory based on Q3 numbers)
Shipped not activated . 22.9 million (is 30% of total shipped)
Above data by TomiAhonen Consulting 6 Dec 2014, based on Nokia and Microsoft quarterly results and industry data
The above data may be freely shared
So wow. Even if we allow for a generous 4 week inventory build-up (Nokia historically reported about 3-4 weeks of inventory, this is at the high end of that historical pattern) it still means nearly 1 in 3 Lumia smartphones that shipped from Nokia/Microsoft was never activated !!!
how is that possible? A few scenarios. So some were given to various potential users as samples or as gifts - that were never then even used. And others - probably the majority - were just shipped to stores that were never sold. Some would be returned in later periods and thrown away by Nokia as unsellable obsolete inventory. Others would remain in the stores in disocunt bins until discarded as trash as unsold. Note a significant number would be in that Q3 2012 time period (when Ballmer 'osborned' the Windows 7.x series not allowing an upgrade to Windows 8) and in the Q2 2014 time period when Nokia introduced the X Series. And some may have been given out as cheap kids' toys from those discount bins, never activated but used as a child's toy, unconnected phone. Totally meaningless in the 'ecosystem' that Microsoft attempted to build for Windows Phone. So yes. 30% of all Windows Phone based Lumia smartphones shipped have not been activated. That must be an industry record for futility.
Remember, first of all, that this was a new smartphone series replacing the world's bestselling smartphone for which Elop boldly promised 1-to-1 transition. Not allowing any growth while the market has more than doubled, even at 2010 sales levels Lumia should have sold 338 million smartphones. For every one conversion Nokia then gave away 4 loyal customers to the competition (most of them went to Samsug as we've seen). But those numbers were based on the reasonable assumption that every Nokia Lumia that actually shipped from Nokia factories was then sold by retail. Not that another third of what shipped were not ever sold. So the rejection rate of loyal Nokia existing (Symbian) smartphone owners was more like 5 out of 6 rejected.
We know of course now what were causes to the comprehensive Lumia market failure. There was the carrier/retail boycott that even CEO Stephen Elop openly admitted to the Nokia shareholder meeting. This had started just before the first Lumia handsets started to be sold in 2011 Then there were the infamous 101 faults (later upgraded to 121 faults) that caused the series to produce Nokia record level return rates and huge dissatisfaction by loyal Nokia users and severely bad word-of-mouth in 2012. This was to the degree that even the new Asha series outsold Lumia for the full period that the two were sold side-by-side from 2012 to 2014. And various consumer surveys found that the early buyers of Lumias (and other Windows Phone smartphones) rated them as the worst things they'd seen and would not buy another again, etc from 2012 on. And then no upgrade path to Windows Phone 8 in 2013. And pigheaded refussal to give Nokia loyal customers what they wanted (like good cameras, big screens, QWERTY keypads etc) until Elop was no longer calling the shots and the first good cameras and big screens came too late in 2013 to stop the handset unit collapse. Nokia even launched Android based smartphones in early 2014 as the ultimate proof that the Windows Phone based Lumia series was a dead duck. Even Asha series outsold Lumia in the periods when both were sold side-by-side while all the marketing push went to Lumia. Total utter comprehensive market failure if you sell your phones at a loss and still one third are never even activated!
While Elop's propaganda machine was churning out lies about how iPhone users n England were fed up with Apple and how Lumia was a big success in America and outselling the iPhone in China (all later found to be totally unfounded lies) the reality was that the product line was a sales disaster. The Lumia line never once even broke even any quarter. Even now through two quarters of Microsoft ownership the Lumia series is sitll generating a loss. Not one quarter of a profit.
So now we know. Nokia shipped its 50 millionth Lumia smartphone to its retail channel in the first week of March 2014. Since then Nokia/Microsoft has shipped another 26 million more Lumia smartphones running Windows Phone. But they didn't achieve 50 million activations of Lumia until after the third week of November 2014. Thats pathetic. Lumia is the most disasterous smartphone series of all time. It is a dead phone shipping. Even those who receive it as a gift or as a freebie are apparently not bothered to activate it. Yes, even if we allow for large inventory buildup, an unprecedented 26 million smartphones running that hated Windows OS, yes a massive 30% of the Lumia branded devices have never been activated. What happened to them? Most probably were just thrown away by the retail channel as unsellable junk.
Notice by the way, that my previous estimate of the installed base of Windows Phone smartphones is clearly far too big. If the 50 millionth Lumia had been activated mid-November then Lumia installed base was only about 41 million and the total Windows Phone ecosystem installed base would then be only about 44 million rather than the 59 million I have reported on the blog about Q3 smartphone market shares. And that 44 million for Windows Phone would mean 2% market share of installed base not 3%. I will go correct that blog.