The real numbers for Nokia Q1 are hidden under China sugar-coating

I said in my Nokia Q1 analysis that Nokia numbers are suspect. I have now done my digging and tried to isolate the China numbers out from the total Q1 Nokia results. The reason China is an anomaly, is that Stephen Elop's announcement came Feb 11, after the Chinese New Year (gift-giving period) which Nokia already acknowledged last year for Q1, gives Nokia a big bounce in their smartphone sales in Q1.

So I used the average sales price of the smartphones and dumbphones, and made a rough estimate of how many of China's total Nokia mobile phones were smartphones and how many were dumbphones in both Q4 and Q1. I know this is not perfect but it gives a reasonably close approximation.

In Q1 China smartphones for Nokia grew 2.1 million units from 6.5 million to 8.6 million units.

That means that in Q1, the other 5 regions which did not have a 'China Christmas' period, where the Microsoft Muppet effect (Stephen Elop's silly timing of his Microsoft announcement one year before he has any phones to show) resulted in the following sales change

In Q1, the Rest of World Nokia sales in smartphones declined 6.0 million units from 21.6 million to 15.6 million units! This is a decline of 28% in just one quarter! This is now the world-record beating not just Motorola's famous post-Razr dive, and is worse decline than Palm's swan-dive after the iPhone arrived; this is even worse than Microsoft's Windows Mobile market share in 2010, after Microsoft bizarrely announced they will not provide a migration path for their developer community, into the new Phone 7 operating system.

So if you thought Nokia market share loss, in numbers which overall (including the China sugar-coating) of 14% decline in just 3 months was horrid, the reality was literally twice as bad!

We have heard from countless sources that Nokia Symbian phone sales have stalled. The retail channel has stopped Nokia Symbian sales, and are in effect boycotting Nokia sales now.

I am now ready to call Nokia's Q2 unit sales to be so low, that Nokia's market share will be below 15% for Q2. And no matter how well Apple does (some expect it to hit 18% again) or badly (the pessimists suggest Apple might do only 15% with the iPhone) and I think it'll be somewhere near 17% this Q2, I am ready to call it - Nokia has lost it. Apple is now the world's biggest smartphone manufacturer by market share! Congratulations Apple. And shame on you Nokia. Just a few months ago, Nokia was essentially twice as big as Apple in smartphone unit sales.

Pay attention. You are witnessing a world record of self-inflicted market share destruction by Nokia

Comments

[oz ozdil]

whats your problem dude, do you have shares in nokia.

[JukkaM]

One man CAN make a difference.

[Crowbar]

The China sugarcoating wasn't even real, it was channel stuffing. Like Apple in their worst days 1996-7.

[Harris]

the majority of potential customers were scared away by Elop's statement about the burning platform. that's why in China Stephen Elop made another statement about supporting symbian until 2016. however it really didn't matter that time, who the heck would believe him?

[Andy Lee]

Whats worse then channel stuffing is that Chinese Carriers especially China Mobile and Telecom heavily carrier brand their mobiles. This delays mobiles by months from being sold in china. Additionally Nokia will have to strip out TWITTER/FACEBOOK/PICASA/FLICKR/more as its banned completely in china. I imagine they can replace it with weibo/sina/ some other local crap that is of no interest to me and most people. but WE wont see a WP7 launched in china until SUMMER 2012 earliest I am sure. Oh and the Approval is slow here too at 4-6 months as well for hardware.
Good Luck Nokia you created a huge vacuum that you cant stuff with E6/lower end devices. E71 still huge here. yuck...

[Harris]

@Andy Lee actually twitter and facebook, picasa... are crap too ;)
I have a friend in China and he told me that you can upload any video (hollywood movies, music videos, etc) and any music to Chinese social networks. and nobody would sue you for stupid copyright infringement! So I think Chinese services are much better.)

[Napier]

Tomi, given that Elop's "Burning Platform" memo and the switch to WP7 was in the middle of the first quarter, isn't it unlikely that such a huge drop off, 28% by your estimate, could be caused by his deeds? It seems that Nokia sales would almost have had to stop completely for this to occur. I'm not sure how sales numbers are calculated, but given the logistical lines, and inventory in stock, that 28% seems extreme.

[xizzhu]

@Harris well, whether a service is good or not, is not decided by what you can upload, right ;)

[Tomi T Ahonen]

Hi All

I am working to respond to a huge overload of replies to the series of blogs about Nokia. I will respond to each of you individually and you can see on Saturday I started with the first several dozen comments. I will return soon to respond here too

Tomi Ahonen :-)

[Tomi T Ahonen]

Ok now will start with replies

Hi oz, Jukka, Crowbar, Harris, Staska and Andy

oz - no, I don't own Nokia shares and this blog is not a wall street related or stock price analysis blog. This blog is about digital convergence, new media, social networking, smartphones and mobile. With an emphasis on mobile due to my background, and recently an added emphasis on smartphones as it is where the digital convergence battle has shifted since the iPhone. I report what I see, I celebrate success and I condemn foolishness, as I see it..

Jukka - thanks! I hope so. It is time for Elop to go, and if my blogs have helped convince some who were not sure, then I have helped..

Crowbar - maybe that was the case, but even so, the numbers for China are not accurate to reflect on Nokia's real performance.

Harris - haha, yeah, Elop is now not trusted by anyone and if he promises Symbian to 2016, that is pretty much irrelevant. The only way anyone will return to believe in Symbian (and it won't be many of those who used to buy Symbian) would be, if Nokia fired Elop, and Jorma Ollila himself would commit Nokia fully to Symbian. Even that would only act as a 'band-aid' solution, not a permanent answer. Elop has destroyed Symbian permanently.

Staska - Good point yes about China numbers. So we agree, that the China numbers are not relevant to consider how Nokia did in Q1. The reality as I explain in this blog is far worse for Nokia already in Q1, and this was before the 'sudden' discovery by Elop and Nokia HQ, that Q2 is a disaster.

But yeah, on the Elop Feb 11 announcement. We agree that Nokia was on a downward trajectory and I had written on January what Nokia should do to reverse the trajectory, and obviously most of the issues were basic marketing and basic execution issues. It is not that the world doesn't want Nokia phones, they do love them. But Nokia was losing little wars on all fronts, typical of the market leader, they fight a multi-front war. So Nokia was losing the top end vs iPhone, they were losing the enterprise end vs Blackberry, they were losing the smartphone platform war vs Android, they were losing the Africaphones low-cost phone war vs the Chinese etc makers, and so forth. Everywhere blood, everywhere losses. What Nokia needed, and I believe you Staska mostly agree with my January blog about what Nokia should be doing, it was not a question of switching away from Nokia's strategy of Symbian-to-MeeGo, in the middle of that transition (weeks before first MeeGo phone was to be sold) and it was not a question of 'West Coast design' for Nokia phones. Even the USA market was coming back, if you remember, Nokia had landed its first subsidised premium Nokia smartphone contract which was to be celebrated at Barcelona, which Nokia - not the US client - pulled out of at the last moment (because of Elop's silly Microsoft switch). Nokia was on the come-back trajectory. Not winning - I am not saying they were better now than Android or iPhone - but Nokia was turning the corner. And then Elop did this nonsense that destroyed it all.

Andy - Excellent points about China market, thanks! Yes, clearly for one of Nokia's biggest markets, the Microsoft WP7 phones will not make an impact until months later. Also for China Mobile 3G, Nokia will have to do the TD-SCDMA version technically, again further delaying the new Microsoft phones, which gives all that time to Samsung, ZTE, Huawei, Motorola etc..

Thank you all, I will return with more comments

Tomi Ahonen :-)

[konut projeleri]

40 bets. The total value of the betting was 26 Euros. Again, not 26 thousand or 26 million. Over three months, the service that cost 33,000 Euros to develop, had total betting activity worth 26 Euros, out of which Tipos would earn its betting commission as a tiny fraction of that

[traverten eskitme]

and any music to Chinese social networks. and nobody would sue you for stupid copyright infringement! So I think Chinese services are much better

[beats by dre store]

and nobody would sue you for stupid copyright infringement! So I think Chinese services are much better

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