Brutal Truth about Lumia - cannot sustain even 1 to 1 replacement of Symbian: Windows Phone strategy doomed for Nokia

The facts get ever worse about the Microsoft Windows Phone strategy for Nokia and its Lumia line of smartphones. We have just seen the brand new market share numbers from the UK by Kantar Worldpanel. And first, here is the 'logic' of the Windows Phone strategy for Nokia. The assumption was, that while Symbian sales saw a gradual erosion of market share (a couple of points of market share per year lost), if new CEO Stephen Elop stepped in while Nokia was still on top, and quickly changed the operating system away from the declining Symbian to another (could have been Nokia's own Linux based and open source MeeGo or Google's also Linux based and also open source Android or the proprietary and very closed Microsoft Windows Phone), he could stop the bleeding and stabilize the Nokia smartphone market share.


NOTE THREE UPDATES TO THIS STORY on 21 & 22 March (at end)


The very early and ridiculously optimistic projections from early 2011 were that Nokia and Microsoft might get over 20% market share in a few years. Those were abandoned once the evidence came in. Now the best case hopefuls are looking at the low teens, and others have Nokia and Microsoft in the high single digits. To understand, just before Nokia announced its shift away from Symbian to Windows Phone last year in February, the combined market shares of all Nokia smartphones on all Nokia operating systems (Symbian and Maemo), combined with all smartphones by all manufacturers on all Microsoft based operating systems - Windows Mobile and Windows Phone, by HTC, Samsung, LG, SonyEricsson, Motorola etc - was 39%. So yes, just before Elop announced the switch, the 'partnership' when both parts were added together, had a global market share of 39%.

Remeber that joke about when you add two turkeys, you do not get an eagle? By Q4 of 2011, when we add all Nokia branded smartphones on its 3 operating systems now (Symbian, MeeGo and Windows Phone) plus all other Microsoft smartphone makers on both Windows Mobile and Windows Phone - have a guess how much the partnership controlled the global market around Christmas? So this was after Nokia had introduced already two of its Lumia phones for sale in many of Nokia's best and most affluent markets in Europe and Asia? Have a guess. The two turkeys alone had 39% just before Elop announced this partnership. What was it in Q4 less than 11 months later? 14%.

Yes. When you add all the power of Nokia with all the power of Microsoft, and toss in the smartphone brilliance also of Samsung, HTC, LG etc - you go from 39% separately, to 14% when combined. Two turkeys make a... what? a turtle that is what this looks like. That is a big ouch indeed. A total waste of more than 6 out of every 10 of their combined customer base ran away to iPhones and Androids and Blackberries and bada and other devices.

CAN THERE BE A COME-BACK IN 2012 WITH LUMIA?

Ok. Now for today's news. Maybe there is hope? Maybe the bleeding happened in 2011 but now for 2012, maybe this will be the year of the comeback? Maybe now that there are several Nokia Lumia phones selling, and even the US market is available, maybe now we get to see that majestic return of this Eagle of Nokisoft Microkia? Maybe... not.

The facts are in. Kantar Worldpanel has just reported on its half yearly reports from the UK market shares. The nice thing is that we have this info from the same source nicely just before the Nokia Microsoft partnership was announced, and along the way. We have four excellent points in time. In late 2010, there was no partnership. In February of last year, the partnership was announced. By September of 2011, it was just before the first Nokia Lumia phones would start to ship, and now we have seen five months of Lumia sales, so we are starting to see the early patterns. All conveniently in the UK, one of Nokia's best European markets, and nicely, a country where there is no domestic handset rival nor any domestic operating system maker rival to muddy up the picture. And UK is one of those countries which is nicely a mix of roughly half prepaid and half postpaid contract customers, and phones are sold partly with subsidy and partly without subsidy. A good test laboratory for any industrialized world market with a lot of relevance for the rest of European sales for example. How did Lumia do?

NOKIA IN FOUR STAGES BY KANTAR (UK MARKET SHARES)

September 2010 before Microsoft . . . . . . . 23.1% market share in UK (Symbian + Maemo)
February 2011 after Elop announcement . . 12.4% market share in UK (Symbian)
September 2011 just before Lumia launch . . 6.7% market share in UK (Symbian)
February 2012 after Lumia sold 4 months . . 4.6% market share in UK (Symbian + Windows Phone)

First. From just before Elop announcing his suicidal Microsoft strategy with the Elop Effect, Nokia sold almost one in every four smartphones in the UK according to Kantar. One year later, Nokia has lost four out of five customers it had and sells only one out of every 20 smartphones sold in the same country. This has been a comprehensively destructive strategy for Nokia the former smartphone giant which used to dominate the UK market.

Secondly, look at the last two periods. Just before Lumia launched, in September 2011, Nokia only selling Symbian smartphones, had 6.7% of the UK market. Now that Lumia has launched, after Nokia's most expensive launch campaign ever, combined with massive Microsoft marketing push including giving away free Xbox 360 gaming consoles for buyers of Lumia 800 smartphones, Nokia did not manage to convert the existing Symbian market share 1 for 1 to the share now with Lumia devices. From September, after Lumia launched for Christmas, Nokia has now lost another third - another THIRD - of its existing customer base, going from 6.7% just on Symbian, to 4.6% market share when the Microsoft Windows Phone based Lumia smartphones are 'added'.

NOKIA LOSES A THIRD WITH LUMIA

This is disasterous, and honestly, I DID NOT SEE this coming. I wrote on this blog a year ago, that I expect year 2012 to see a 1 to 1 conversion, as Symbian declines, the Windows Phone (ie Lumia) smartphones by Nokia will replace them. For every Symbian lost there will be 1 for 1 a Windows Phone gain by Nokia. That was a reasonable assumption. That is now proven not to be true. Nokia lost one third of its last remaining loyal customer base, when trying to force them to take Lumia smartphones over the past five months.

(For those who may be a bit confused, there is some strange reporting about the Kantar story from the UK, please read carefully what they said. Nokia's Symbian sales had fallen to 2.4% market share. All Microsoft Windows Phone based smartphones achieved 2.5% market share, including HTC, Samsung, Nokia, LG etc. Of that, Kantar reports that Lumia had 87% of the Windows Phone share, so Nokia did 2.175% of the total UK smartphone sales, and all other Windows Phone partners, HTC, LG, Samsung etc - did a combined 0.375%. That is where we get the above market share. Nokia total smartphones in the UK in February 2012 were 2.4% Symbian based and 2.2% on Windows Phone, giving 4.6% total Nokia smartphone market share).

MICROSOFT SO DEEPLY IN TROUBLE, NEEDED NOKIA DESPERATELY

So also, we have very interesting views to Microsoft. Its not that Nokia somehow needed Microsoft to survive, clearly the Microsoft strategy is suffocating Nokia and killing its customer relationship. But look at Microsoft in the past year and a half, according to the Kantar numbers. Look how massively Microsoft is collapsing without Nokia. It really is true, that Nokia is Microsoft's last gasp in mobile and without Nokia Microsoft would have been eliminated from the game by now:

MICROSOFT IN FOUR STAGES BY KANTAR (UK MARKET SHARES)

September 2010 before Nokia . . . . . . . . . 1.0% market share in UK 
February 2011 after Nokia announcement . 0.5% market share in UK 
September 2011 just before Lumia launch . 0.5% market share in UK
February 2012 after Lumia sold 4 months  . 0.4% market share in UK (excluding Nokia)

COMPARE TO NOW WITH NOKIA

February 2012 after Lumia sold 4 months  . 2.5% market share in UK (including Nokia)

Microsoft was totally doomed and its 'awesome' Windows Phone operating system was doing a death-dance globally, from a Microsoft Windows Mobile peak market share globally of over 12% just five years ago, to 5% in year 2010 when Windows Phone launched, to a paltry 1% for Q4 of 2011 (which includes Nokia Lumia sales) - Microsoft was totally dead in the water. Bear in mind, even if Windows Phone had 2.5% in Europe that is barely over 0.5% globally for Microsoft. When you add its weak US market share and its nearly non-existent rest-of-the-world market share, Microsoft is still only at about 1% or maybe just maybe reaches 2% for Q1 of 2012. Microsoft was a dead man walking last year. Its only hope was to convert some - any - Nokia sales to get some life back into the utterly dead OS. This is not a 'third ecosystem' not now, not ever. Microsoft's CEO Steve Ballmer has expressed his disgust in how poorly the Windows Phone is doing. The departed Microsoft President of Windows Phone sales has admitted that Microsoft was hated by the carrier community, and to solve that problem, in 2011, Microsoft just made matters worse with the carriers. 

I have reported here on this blog many times, about the resellers hating Microsoft Windows Phone and also punishing Nokia. I have then explained why Microsoft's Skype purchase was the final nail in the coffin which sealed Microsoft's fate in mobile last year. There is no coming back for Microsoft, not with or without Nokia. Meanwhile, Nokia's CEO Stephen Elop has admitted that the retail channel is not supporting Lumia sales. I reported here just last week that in Nokia's home country, Finland, the retail channel so hates Nokia Lumia, they will not show the device even when asked by name, and will sell Androids instead - all this while the stores have the biggest Lumia sales displays. The launch and market reception of Lumia is a disaster. I have reported that press reviews range from the UK's Guardian saying customers should return their Lumias like the reviewer did his; to German newsweekly Der Stern writing that its buyers should take the trouble to drive to Switzerland or Austria to buy the better N9 instead of the Lumia, to reviewers from Australia to India recommending consumers buy Androids instead of the Lumia or that the N9 is indeed a better phone (not sold in India again, haha, so that was not what they wrote in India). And now, Kantar tells us that the early sales of Lumia in the USA are also disappointing.

I have explained why the Lumia is a dog of a phone and will not succeed. I have explained why the new Lumia 900 and the added info we have about the phone and the operating system guarantees it will not succeed. I have then added the reporting that the reseller channel is steering customers away from Lumia. Now we have the facts.

NOKIA BLEEDS A THIRD IN FUTILE TRANSITION

Now we know. From just before the Lumia launch last Autumn, Nokia's UK market share was 6.7% in smartphones. That was six months ago. Those were all Symbian. Now about half of Nokia's UK smartphone sales are already Lumia smartphones and how is Nokia doing? It did not grow Nokia's market share back to the 23.1% it had just before Elop flipped his mind and destroyed Nokia's market share. No. It did not jump to 23.1%. It did not jump at all. Nokia did not even manage to hold onto its 6.7% market share. No. When Nokia shifted from 'the obsolete' Symbian to 'the awesome' Windows Phone, Nokia lost a third of its customers! In just one quarter! Yes. That is how toxic the 'magnificent' Windows Phone is. It cannot restore Nokia. After all the damage done by Elop last year, now with what little hard-core loyal Nokia fanatics are left, even out of those loyalists, Lumia expells a third!

Compared to the weeks just before Lumia, Nokia traded away, for every 3 customers it had, to get 2 customers today. After Lumia 800 and 710 launched in the UK, today Nokia's market share is down to 4.6%. Nokia is bleeding a third of its market share as it forces customers to migrate to the unloved Windows Phone Lumia smartphones. This is a certain recipe for doom for Nokia. Any fool can see this strategy is a road to definite ruin.

There is absolutely no evidence in any market anywhere, that the Lumia sales would be anything like a success. Even the unloved and unsupported N9 running on MeeGo and exiled to such distant lands as New Zealand and Kazakhstan and South Africa where it is sold, countries of tiny smartphone markets and low income levels - yet in Q4 of 2011, when it was the launch quarter both for the Lumia 800 and 710 smarpthones on Microsoft Windows Phone, and the lone N9 running on MeeGo - the N9 outsold the Lumia series by 3 to 1. Yes! by 3 to 1. 

The Nokia N9 on MeeGo is a highly rated, highly desired, superior flagship phone, winning reviews even compared favorably against the king of the hill, the iPhone 4S. The N9 has even a sister product, the N950 already being produced by Nokia (but inexplicably, not sold by Nokia). The N9 and N950 are running on Nokia components, made in Nokia factories, and could be sold everywhere today. The N9 and N950 are more expensive than the Lumia 800 and yet are consistently recommended as the preferred buy. Because they are made in Nokia factories on Nokia components at high prices, the N9 (and N950) have high profit margins.

Then there is the Lumia series. The Lumia 800, the most 'flagship-like' phone on a Nokia brand currently made, is not a true flagship, it is a severe compromise, and it is not made in a Nokia factory, it is subcontracted out of Compal of Taiwan. It is not using standard Nokia components for which Nokia would get bulk discount prices. And it is sold with severe price cuts and marketing push budgets cutting its profitability severely.

Only a fool of a CEO would refuse to sell the N9 and N950 today globally. And also, after the Nokia 808 PureView won the award as the handset of the show at the biggest telecoms event of the year, the Mobile World Congress in Barcelona as the hottest phone on the planet right now, even as it runs 'the obsolete' Symbian, only a fool of a CEO would refuse to sell this in the USA, the market where Nokia wants to make a come-back and where the reviews of the 808 PureView have been incredibly positive.

A year ago Nokia's global smartphone market share was 34% and Nokia grew smartphone sales by 48%. After Stephen Elop took over at Nokia, in the final quarter of 2010, Nokia, using 'the obsolete' Symbian, Nokia grew smartphone unit sales, grew average sales prices, grew revenues and achieved the point where more than half of Nokia's handset revenues came from smartphones. Nokia's smartphone profitabilty has a record jump. A record jump in profits yes, in the first Quarter that Elop was in charge, and this was all with 'the obsolete' Symbian. Nokia's shareholders so appreciated it, that Nokia's share price climbed by 11% in only 5 months, a very good performance.

Since Elop announced his Microsoft strategy, Nokia market share crashed to 12% its sales declined by 31% all while the industry had an explosive year of growth of 71%. Nokia's average sales prices tumbled, Nokia revenues collapsed to almost half what they were. The Nokia profit engine of its smartphone unit is now a loss-maker, switching from a quarterly profit of 510 million Euros (2 Billion Euros annual profit ie 2.6 Billion US Dollars of annual profit) to a loss of 190 million Euros (760 million Euros or 1 Billion US dollars of an annual loss). The Nokia share price has fallen since Elop's mad strategy was announced, by about 60% from its peak just before the Elop Effect of February 2011. 

There was hope that once the Windows Phone handsets come out, they can restore Nokia to its former glory. There is no way Nokia gets back to 34% it was just before Elop's madness. There is no way Nokia and Microsoft have any hope of recovering to the above 20% market share some optimists hoped for in early 2011 after this was announced. It was a realistic view to hope for something like 12% late last year, as the data came in, hoping once Lumia launches, the market share might stabilize. Now we have the facts and it will not happen. Nokia will continue to bleed market share even after it tries to push unloved Lumia phones at customers, who will escape to Android and the iPhone. The Lumia strategy is now clearly going to fail. The longer Nokia continues on this path, the more damage it does to itself, and has to sell its assets just to survive. Nokia is on a path to become a slave of Microsoft

(And let me comment on the idiotic plans to now invest in a tablet PC are only going to make matters far worse. The short version is this: any PC maker would be wise to consider tablet PCs, as they have hardware synergies, distribution channel synergies, marketing, pricing and brand synergies. Like PC makers Apple and Samsung. Any mobile phone maker would be an idiot to consider tablet PCs as they have NO hardware synergies, distribution channel synergies, marketing, pricing nor brand synergies. Its a sure way to go from profits to loss-making, witness Motorola and RIM. Nokia is a fool to waste development efforts to try to battle Apple's iPad at its game.But this would - of course - be to Microsoft's advantage, getting Nokia to waste its efforts in this futile battle. And any Nokia CEO who would authorize such development waste would have to be a Microsoft Muppet. Read the full story at the link)

And this is all before we even consider the majority of Nokia's market now, the Emerging World where the average price of phones is about 50 US dollars and most smartphones sold cost under 100 dollars (without subsidy, remember the iPhone 4S real price without subsidy is about 650 US dollars, not the 179 dollar nominal 'price' you might get with a US carrier who forces you to a 2 year contract where the rest of the price is hidden). Microsoft has admitted the Windows Phone OS is not suited for low cost smartphones. Nokia has admitted Windows Phone is not suited for the low-cost smartphones (but 'the obsolete' Symbian is perfectly suited for low cost smartphones, haha). Even the newest lowest cost Lumia 610 costs about 250 US dollars without subsidy, FAR too much for the typical buyer in the Emerging World. Deloitte just reported in February that this year will see the sales of about 300 million smartphones under the price of 100 dollars (without subsidy) or about 41% of all smartphones sold this year. And obviously these will be predominantly in the Emerging World where Nokia's current Symbian market share is usually over 50% and as high as 80% in some countries. And Elop tries to push a 250 dollar Lumia 610 at those markets? And this crazy smartphone that does not have a QWERTY keyboard and is so US centric and not suited for the Emerging World need being horribly bad value not supporting Bluetooth file transfers or microSD cards etc. If the Lumia fails in the UK, it will totally tank in the Emerging World markets.

Forcing existing Nokia smartphone owners to take Lumia smartphone will damage Nokia more this year. I said before I expect a 1 to 1 transition this year. That is no longer true. Now we have seen how badly Elop has poisoned the reseller chain and how badly the Lumia series is designed with so many failures and undesirable elements. I now expect Nokia to bleed about 30% of its existing base as it transitions. The previous projection I had for Nokia to end this year with about 8% market share will be revised downwards, closer to 6%, depending on how the other parts go with Symbian and MeeGo.

Last year, it was possible to see a path where the Nokia and Microsoft partnership might, against all odds, succeed in the long run. That was hoping against hope. But since then, Nokia and Microsoft have both torpedoed any conceivable path to success on this strategy. Now the facts are irrefutable, from the design, to the severe limitations of the operating system itself, to the badly destroyed carrier relationships and poisoned reseller channel, to now the facts and stats. The Microsoft strategy for Nokia is a certain road to death. The Lumia smartphones will doom Nokia. The Windows Phone OS is never going to be the third ecosystem. The sooner the Nokia Board see the facts, and make the right decision, the sooner Nokia can start onto the road to recovery. But before that - obviously - CEO Stephen Elop must be fired, now!


UPDATE (on 21 March) - I have been chronicling the problems that Nokia (and in parallel, unfortunately also Microsoft Windows Phone) have had with the retail channel, since the Elop Effect of last year. I just spotted a story at Finnish Talouselama where they did a survey of the major European markets where Lumia first launched. Right now in March, this is what Talouselama found (countries in order of smartphone market size):

Germany - at T-Mobile (Germany's largest mobile operator/carrier) Lumia 800 is ranked 9th bestselling smartphone. At Phonehouse (independent phone retailer) Lumia 800 is ranked 8th. Whereas on Amazon Germany, the Lumia 800 is not in the top 100 smartphones.

UK - at Vodafone (UK's largest operator/carrier) the Lumia 800 is not in the top 10. Amazon UK site lists Lumia 800 ranked 86th, behind Nokia dumbphone X1-01 ranked 20th bestselling phone.

France - at Orange (France's largest carrier/operator) the Lumia 800 is not listed among bestselling smartphones. With Phonehouse France, Lumia 800 is listed 9th bestselling smartphone. Amazon France does not find Lumia 800 among bestselling smartphones.

Netherlands - KPN (biggest operator/carrier) lists the Lumia 800 as the second bestselling smartphone.

First. If your phone model is consistently around 8th best or 10th best or so, across all sales channels of a country, your market share is about 2%-3%. Netherlands is one third the size of France and one fourth the size of Germany. The KPN news does not in any way balance the problems in Britain, Germany and France.

Secondly, Nokia Lumia had under 2% market share in Q4 of 2011 (the Christmas Quarter) in these countries. The survey now by Talouselama suggests, Nokia's Lumia 800 has been falling in sales from Q4 into Q1, not improving.

But there is the Lumia 710? Talouselama makes the point, that the alarming news is that in these countries where Lumia launched first, the Lumia 710 was the cheaper model - it should be selling more than the Lumia 800. In no case, did Talouselama find the Lumia 710 to be on any bestseller list. Not once. So it is selling even more poorly than its more expensive Lumia 800 brother.


UPDATE (on 22 March) - I have just posted the logical follow-up blog posting to this article. I think you will like it, it is .. how to fix Nokia of course. This is my advice (knowing that Nokia will of course ignore it). How to Fix Nokia.


ADDENDUM (on 21 March) - there are a lot of visitors to this blog on 21st March, most of whom are clearly first-time visitors. The story is gaining a lot of attention from Slashdot, Mac Daily News and Ars Technica forums to various investment sites from Sweden to Canada to even a legal matters forum now (?) and onto news sites from IT World to Talouselama of Finland to HW Upgrade in Italy. Welcome visitors!

So let me briefly say who I am, so you understand. I am an ex-Nokia executive. I was not fired haha. I left in 2001 to start my own consultancy. After I left, my first published book was accepted as an official Nokia book, sold on the Nokia website and given in large numbers to Nokia customers (network operators/carriers). Since then Nokia has used me and my consulting services countless times across the planet. There was no bad blood haha. And note, its not just Nokia, almost every major player in this industry has used my services - and said so in public, from Google to IBM to Hewlett-Packard to RIM to Vodafone to Ericsson to Telefonica to Orange to China Mobile to NTT DoCoMo to Telenor to Intel to LG to TeliaSonera to MTS to Axiata etc. Why is that? Because I am the world's most published author in mobile - yes, I have written 12 books - I am a bestseller many times over, and my books have been translated to several languages - which are so highly regarded, I am already quoted in over 120 books by my peers.

My day job is consulting, this blog is a hobby - and please observe - no advertising on this blog! I am not here to make money from you, I am not asking you to register and I am not trying to sell your email address either. I do this blog purely as a hobby to connect with my readers. I also lecture at Oxford University's short courses in mobile. And Forbes just measured and rated me the world's number 1 most influential expert in mobile. Thats who I am. I am not writing this blog out of some vendetta about Nokia - I have been on this blog since 2005 and called out stupidity in this industry when I have seen it, from how SprintNextel tried to fire customers who were complaining too much, to the silliness Motorola went through that drove it to bankruptcy, to the problems Nokia had long before there was any Stephen Elop in charge. I call it as I see it, and I am known for telling the truth. If you want to follow me on Twitter, I am @tomiahonen

With that, please accept this blog as my honest evaluation of the chances of the Nokia-Microsoft partnership and the chances of Windows Phone based Nokia Lumia smartphones. The brutal truth is, that as Lumia cannot even convert the last die-hard Nokia loyalists, from Symbian to Windows Phone, then the Lumia Strategy for Nokia is doomed. The facts are clear. Nokia has to make some change to its strategy, and the fastest way Nokia can return to profits in its smartphones unit, is to capitalize on the luck it had with the N9 and MeeGo and the N950. Sell those magnificent top tier smartphones globally and Nokia would stop bleeding and start on a path to possible recovery. I am not in any way suggesting going back to Symbian, that was a strategy abandoned long before Elop came along - and I was fully supportive of the transition away from Symbian - except that it has to be done over time, not suddenly. Only this Windows Phone strategy is now clearly a dead end. It cannot succeed. The sooner Nokia ends it (and fires Elop who has lost all credibility as CEO) the sooner Nokia might return to strength.

Comments

[Titanium]

I hope Nokia is able to survive on just one leg (mobile phones) until Meltemi is ready to grow to a smartphone platform and replace WP. But propedeutic to this is to fire Elop, otherwise it will kill even it.

IMHO Nokia Meltemi organization should internally promote it to a smartphone OS but keep it on the lab till Elop is out. Nokia BoD must understand it and fire Elop before it's too late.

[karlim]

Tomi, aren't you ignoring one key data point in those Kantar reports.

As you say - in September 2010 Symbian market share was 23.1%. In February 2011 it was only 12.4%. Nokia/Symbian lost 46% of its market share between September 2010 and February 2011. Are you saying that this happened because of Elop effect?

How could it? Windows Phone strategy was announced on Friday Feb. 11th. Kantar surveys do not include the whole last month. This year's survey lasted 12 weeks and ended on Feb 19th. There is absolutely no way Elop effect/announcement/memo could have had any significant impact on last year's Kantar February survey. Not in 1-2 weeks before survey was completed. So isn't it way more logical - that last years' Nokia/Symbian September-February 46% drop in U.K market share happened because Symbian sales were crashing there anyway? Without any help of Elop effect.

Btw - between September and February, in 4 months, Nokia lost 46% of its market share.Without Elop Effect. In the next 7 months February-September 2011, with Elop effect in full swing - Nokia also lost ~46% of its previous market share. Seems that the rate of Nokia market share losses decreased during those 7 months after Feb 11th. Hardly an evidence of disastrous Elop effect.

And before you get to Q4 2010 Nokia Symbian sales numbers as an evidence of a big turnaround. There is absolutely no evidence of such turnaround in Kantar numbers, who measure actual end customers buyers.

You never mention that Q4 2010 5 million Symbian 3 devices shipped, are official Nokia numbers of smartphone shipments to wholesalers/carriers. And that there is absolutely no evidence Nokia N8/Symbian 3 sales to end customers/users were anywhere near as good. I did check - and there wasn't a single big analyst house (Gartner, Strattegy Analytics, IDC, others) or other reputable independent source, telling anything good about Nokia N8 or S3 end user sales in Q4 2010. At least in publicly released reports. For all intents and purposes, most of those 5 million S3 smartphones shipped could have been sitting on carrier shelves in January 2011 and were a big reason why Elop and Nokia Board decided to make such a radical change. We have no way to know yet, one way or the other.

The Kantar numbers from Feb 2011 are certainly no proof of anything - but they are another datapoint supporting my hypothesis, that Nokia’s Q4 2010 turnaround was based more on channel stuffing then the real end user sales, customer acceptance and demand for Symbian 3 smartphones. And it fizzled itself in Q1 2011, before Elop effect could cause any real damage.

[Tomi T Ahonen]

Hi Tomifan, Titanium and karlim

Tomifan - haha, ok. But you know AFTER those numbers were reported, MTV3 of Finland tested Finnish stores and found them reluctant to sell Lumia - EVEN to customers asking for it. That is clear evidence the sales have totally quit on Lumia between your numbers and MTV3's testing. And a top seller in Finland is not going to move the European market share one bit, far less the global share.

Titanium - haha, yes, on Twitter there is the 'FakeSelop' character who says that Elop's biggest delight is any platforms on fire. Meltemi is kindling waiting for the flame..

karlim - First on February. Yes. It is EXACTLY what I am saying. It was verified in many sources immediately that effective Feb 12, the sales collapsed. And we see it in the Q1 numbers, which were bad - but as you should remember, when I analyzed them here on this blog, when we remove China Q1 numbers (their gift-giving season ended before Feb 11) - the real Nokia Q1 was pure murder.

As to declining rate, that is also 100% consistent with the facts. The first to go are those not extremely loyal to Nokia, the early drop is rapid. The last falls will be more mild as the fiercely loyal are more hard to annoy. Still, even with that, Nokia lost another almost third in the past quarter or so.

As to the Symbian S^3 devices? That has nothing to do with this data. The S^3 sales reported by Nokia itself was global sales, not UK sales. We have never heard how many were in the UK and Kantar does not distinguish that way. So it had nothing to do with this analysis.

Thank you all for writing,

Tomi Ahonen :-)

[karlim]

I am sorry, I am not familiar with Kantar methodology. But from bits and pieces I was able to gather it includes "Using the same loyal respondents over long periods of time means we can identify what trends are affecting the market and forecast their future evolution." (From Kantar Website). And they claim that their sample size is higher then others usually use.

In today's press release Kantar says that this year's February panel survey lasted 12 weeks. This year the survey ended on February 19th. And it probably included all the smartphones their panel members recorded they bought over the period of those 12 weeks.

If we assume the same methods were used last year. And we assume survey ended at about the same time - around February 19th, there is only one week of recorded panel member purchases that could have been affected by Feb 11th. I can not see how a single week could have accounted for 46% drop in market share.

In the worst case scenario, if not a single panel member bought a Nokia smart phone after Feb. 11th and before the survey ended - it is still impossible to account for 46% drop. Let's assume a sample size of 1000. At 23.4% market share that will mean a total of 234 Nokia smartphones bought in 12 weeks, or 19 panel members buying Nokia smartphone a week. In 11 weeks before Feb 11th - they would have bought 209 Nokia smartphones. If not a single one of them bought Nokia phone after Feb. 11th - that will still leave Nokia with 209 recorded smartphones and 21% market share in Kantar survey. If we assume that last year 12 week Kantar survey ended on Feb. 28th - that still leaves Nokia with 19% market share in the end. Not 12.4% Kantar actually recorded.

Looking at how Kantar measures things, even if Nokia sales completely stalled after Feb 11th - that would have affected Nokia market share in total by no more then 20%. The rest of 26% of market must had come from before Feb. 11th. And that’s in the worst case - if Nokia sales completely stalled and Kantar survey ended much later then it did this year.

And the math does not change much whether we use a sample of 100 or 10000.

[karlim]

PS. Found the dates for last year's Kanatar February report. Panel survey ended on Feb. 20th - 9 days after Feb. 11th. And lasted for 12 weeks too. Or 84 days: http://www.3g.co.uk/PR/March2011/android-dominates-the-uk-smartphone-market.html

And Kantar panel actually includes 30 000 households. Which would mean that at a steady 23.4% market share - there should have been 7020 recorded Nokia smartphone purchases in 12 weeks. Or 83 Nokia smartphones bought a day. Subtracting the 9 days after Feb 11th, will leave Nokia with 6273 smartphones recorded, or - again - 21% market share.

[Sovatar]

My take is that Nokia had big troubles before 2/11/2011:
- Very bad execution with products coming to market 6 months or more late, and buggy as hell.

Elop & the board had to change something, and I then believed that concentrating on execution but maintaining Qt strategy would do the trick (Qt as unifier for Maemo/Meego (high end) and S3 ff (middle and low end smartphones)).

Instead Nokia changed strategy, abandoned Maemo/Meego and Symbian replacing it with Qt incompatible WP7.

The fallout becomes clearer day by day:
- Symbian is dying fast, with aging designs and no Nokia push (808 not offered in US).
- maemo/Meego is abandoned and the beautiful N9 is a dead end device without future (not offered in major markets)
- WP7 is in no way able to stem the downfall of the other platforms.

I do not see Nokia's execution improving, Lumia 900 is still not available and not really a phone to wait for anyway.

Elop and the board have failed, there is no way of sugarcoating. The longer the same figures are in command, the more damage will be done to Nokia. Nokia is not a thriving company anymore, Nokia needs a real turnaround fast if they hope to survive in any meaningful manner. This isn't even about WP anymore, WP won't get successful with or without Nokia. But Nokia won't get anywhere near to become successful with a single minded WP stratgy.

Elop and the board have to go.

[Peter]

Sovatar ,

well said. That's why I voted against the whole board inclduing Steven Elop days ago.

if I can do it, why you cannot ? ask your broker how to do it over internet.

Regards,
Peter

[Matthew Artero]

Did Elop Lie when he said success depends on the ecosystem? Couldn't the money used advetising Lumia have been used to create the required ecosystem? Now Nokia has neither the comparable ecosystem or comparable phone.

[Kenny]

Lumia will certainly tank in emerging markets including India and China. The price of Lumia itself is high including the 610. You need a PC capable of running Zune and capable of going online. You need a Windows Live account and hotmail account. Non-user replaceable battery and no micro-SD card are obstacles in emerging markets. Free cloud services doesn't impress in countries where data charges are high.

For existing Symbian users (which is the main platform in emerging markets) WP7.5 is not an upgrade, it is a downgrade. In Symbian you can customize to your heart's content, in WP7.5 you can customize almost nothing. No widgets, no homescreens, no themes, no mass storage mode, no bluetooth file transfer, no 3rd party apps, no Java apps, no wifi hotspot, no internet tethering, no video calls, no call recording, etc. You even have to buy ringtones from Microsoft while for Symbian you can use any MP3 file as ringtone.

So I agree with Tomi, Nokia trying to force WP down the throats of its existing customers will not work. If it doesn't work in a developed country like UK it's not going to work in developing countries.

[cycnus]

@Kenny

"So I agree with Tomi, Nokia trying to force WP down the throats of its existing customers will not work. If it doesn't work in a developed country like UK it's not going to work in developing countries."

This is a very bold statement. :)

Actually it won't work in developing market mainly because of the extensive need of the computer and partial bluetooth capability and no micro SD.

In developing country, people still exchange photo and also video (vacation video, pretty_girl/cool_guy you saw on street) with traditional method. which is infra red, bluetooth, and swamping memory card.

and we also have thousands of AUTOMATIC (or non automatic) PHOTO PRINTING booth (or store) that need infra red, bluettooth, or just plain USB to transfer the photo to the machine.

WP7 would fail (miss 80% of it's target market) on developing country because it need zune... period.

[cycnus]

and.. yes...
the ringtone problem...

it would be the BIGGEST decision factor AGAINST WP7.5 in a country like india, indonesia, china, vietnam, philipine, thailand.

[xizzhu]

@Tomifan Please Google "lumia best selling uk", etc. So many good news already, but what's the number now? You should never trust any such reports as long as they don't provide a number.

[Sander van der Wal]

I am seconding Karlim. It it impossible for Nokia's share in newly sold phones to collapse in a week or so. It is much more likely that people stopped buying Nokia phones over the period at the same rate as the next period, or even the period before, which is not shown.

This doesn't mean that sales collapsed after the announcement, but that was the channel not buying anymore, not the consumer households being interviewed in this research.

For a hypothesis, people with Nokia's saw the iPhone delivering everything Nokia was promising about the smartphone as the new computer but not delivering with the N95 and N97. So they waited for their contract to end and immediately went or an iPhone, or an Android. One way to test this hypothesis is to compare iPhone and Android adoption rates with Symbian adoption rates two years (the contract duration) earlier.

[Michael]

With Jokers like these, you don't really need Elop. They are literally lost in translation.

- Marko Ahtisaari (and his team) is working on their next breakthrough that will revolutionize your phone’s user experience

- When the new phone is ready, the user does not need to bend down and push their finger on the screen. (Remember Nokia and their Augmentet reality glasses concept?)

- Apple’s iPhone, Ahtisaari characterized as five years old innovation. The iPhone and iPad are, in his opinion, like a poorly designed home. The road from the kitchen into the dining room is always going through the front door

- Android and Symbian, he says, are like dollhouses. You can pick your own favourite furniture, and use only them.

- He says Windows Phone’s user experience is more natural

[JRBrown]

There is one more yet not considered factor: security of all Lumias as well as all the others WP mobiles.

Lumia is exposed with Windows Phone bug, which allows to disable any software on any WP device, Lumia 800 in this number and all the others. The particular string of characters, when displayed, causes Windows Phone to restart, and after restart the application which has processed this secret string stops running, even after several attempts to reboot. Hence a hard reset by an authorized service center is the only solution. The proper character combination triggers the problem when it is displayed in any application which includes a danger of receiving (and subsequently processing) it via SMS, MMS, Facebook, Messenger, www site content in browser or typed it in any application by user. If a user has pinned a friend as a live tile on their device and the friend posts a particular message on Facebook then the live tile will update and inadvertently cause the device to lock up.
SMS with that string sent to a Windows Phone device will reboot it and the messaging hub will not open despite repeated attempts. If a user sends a Facebook chat message or Windows Live Messenger message to a recipient effect is visible. See how it works here: http://www.youtube.com/watch?v=vnhzuKcDo6A .
Problem exists on any Lumia and it is not device specific but appears to be an issue with Windows Phone kernel, and it can be used to a denial-of-service attack that allows attackers to disable a functionality on a device or even the whole device. There are unconfirmed rumors that the bug in fact is a tool for ACTA and SOPA execution. They have not confirmed this? How extra ordinary! The bug has been reported to Microsoft. And report was not answered even! At this stage, it appears that the only way to fix it is by hard resetting and wiping the whole device, resulting in permanent loss of all user data. As the string that triggers the bug is kept in secret, there is no way for a user to check on his own if problem persists on his own device. It is unknown how many such strings exist which trigger the bug.
The problem was confirmed on devices running the 7740 version of Windows Phone 7.5 while others were on Mango RTM build 7720 devices eg.: http://www.windowsfordevices.com/c/a/News/Killer-text-crashes-Windows-Phone-other-Microsoft-apps/ (Killer text crashes Windows Phone, other Microsoft apps), http://www.infosecisland.com/blogview/18710-Windows-Phone-Denial-of-Service-Attack-Vulnerability.html (Windows Phone Denial of Service Attack Vulnerability), http://mobile.eweek.com/c/a/Security/Windows-Phone-Vulnerable-to-Malicious-SMS-Messages-Facebook-Chats-777208/ (Windows Phone Vulnerable to Malicious SMS Messages, Facebook Chats), According to the bug discoverer, in spite of upgrades, it is still effective on build 8107.

Still suppose customers will love Lumia with WP? It is good phone. Only with some surprises. I need phone security and safety, and also community and devs supporting my needs. My needs, not only 3rd party company marketing and incomes, or treating me like an addition to marketing plan. And for this reason I have chosen Linux MeeGo and definitely Nokia N9 for business in my company. And now we are safe: from surprises and from malware/viruses thanks to MeeGo Linux built-in mechanisms and behavior and Symbian good practices included by Symbian developers working over MeeGo – yes, users note and cares for such things.

For me as a user WP can exist in Nokia mobiles or not – we just ignore it by default. I have seen during marketing events Lumia 800 and the second one (I don't remember number), have played with this for longer time and my opinion is even more certain in this subject: no WP in any of my mobiles, neither work nor priv, and it will not be allowed to professional use by any employee, and they will obey or will be fired. I was under “marketing process” have seen adverts, read comments, seen optimistic videos, and all I can say: this is very professional marketing, but still this does not make Lumia better phone, nor a bit of friction better even.

This is a pity Nokia N9 had not even a friction of this support – from my point of view having hot product like N9 and not use it to make money it is a kind of cancer for business in common sense and meaning of this word. Nokia can play this strange WP game, but meanwhile can also sell what people want to buy, so MeeGo an N9 and successors, IMHO. For sure customers will not buy what they don't want to buy, and normally customers like to have possibility to choose, by themselves, all we know this. Hmmm, really all? Also all consultants I hire from time to time would say the same, as they are repeating this to me again and again. And again. And again. And all of them. So perhaps there is a bit of truth and experience behind?

Without evaluating opinions or number interpretations etc etc – I don't have enough time to go through them deeply enough – I'd like to know what Board will answer shareholders on following questions like: “There is visible and known market and demand for Nokia N9 and MeeGo products and software, so why we do not earn money from this? How our interests and business are in this area? How much money we have from this? What money we will have when users demand more products like Nokia N9? How about demanded and asked tablet with MeeGo? Who is taking care of this and who is responsible for?” Could you provide me some simple answers on above questions?

There is community developing software for "unloved" or "incorrect" N9. Seems they are making money on this - just like with Android and iOS. So business model seems to be working, as customers pays money. Business is business.

WP is used by many mobile manufacturers. None of them and nowhere has reached significant success. All they care about their own mobile systems in parallel activities. Why Nokia do not learn from those examples? I hope they don't think they make business in somehow different world? Who ignores customers and markets must suffer, by own request. This is how this is working.

One more aspect. I've read that Elop's next idea is the Nokia to produce computers and tablets with Windows. I am wonder if he is aware there are plenty computers, laptops and tablets manufacturers including such as Lenovo. Asus, Dell and perhaps few more hundreds of others. And all they now sell those products, have established services network, some shape of servicing customers. So Nokia from superior mobile producer is going to become one among many other computers supporting companies? Why? What can be marketing core making me to buy one of this future Nokia computers? Does Nokia remember why does not sale “made by Nokia” TV sets already? And when I have quite well working computer/software suppliers who sell to me mentioned Lenovos or Assus laptops and tablets – then why I would to decide to change? I think I will not have any good will to such big amount of time as I have devoted to my Nokia mobile, even to consider Nokia's computers offer. And Nokia is not a brand I recognize in area of any computer staff, but expected MeeGo tablet to work fluently with already used N9s mobiles. This could be an opportunity to present new offer. But I suppose I will take much cheaper windows tablets/computers from diffident then Nokia supplier/manufacturer – they have fluent working chain of supply, services and IT services. Nokia can beat it, because Elop has told so? I really doubt that. First they ought to solve their internal problems with identifying what customers says and what request sends to Nokia, good example of this is Nokia N9 but also PureView 808 or MeeGo and Meltemi together with requests to upgrade and to renew Symbian to actual standards. And only then we could talk about computers I think. From even three turkey will not be one eagle indeed, even innovative genetically modified one, and frankly speaking: I personally prefer natural eagles then any artificial hybrids.

I even don't try to ask about social safety of Nokia employee, now and in near future. Oncoming next phase of Elop effect? Just in every case I will buy a few more Nokia N9 to have them for own and company use as well as for spare parts. Just in every case.

[anobserver]

The single most important information I take from this post simultaneously confirms and disproves earlier statements in this forum: 87% of the WP market in the UK belongs to Nokia.

Hence

a) It is Microsoft which really depends upon Nokia for its success, not vice-versa.

b) If WP succeeds and reaches that future 30% smartphone market share often talked about, then Nokia has a good chance to climb back to 25% market share, not necessarily remain in the dumps.

[vladkr]

vladkr

@Tomifan:
Where did you see that Finland is the only country where Lumis and N9 are sold side by side?
I know for sure that both devices are sold side by side also in Russia, in Australia, New-Zealand, Switzerland and certainly other places I don't know about.

I also can tell for sure that even now, Symbian devices (500,600 and 700 series) outsell WP ones in Russia.

Then, there is something I don't understand about Meego. Nokia spent a lot of money on N9(50) and Meego. A lot of development is made on this platform (dual-boot, Android-porting, Mozilla apps, etc.) for FREE... The OS is maintained alive by developers for free and Nokia don't sell it widely ? What's the point? Maybe the same point as putting a FM transmitter - without an antenna - and a front-facing camera that are unusable (except for the 2nd camera that can be used with Gtalk)

[JRBrown]

@vladkr
Good point. Customers and developers trust is something that can't be bought. Nokia used to treat a normal situation when customers trust Nokia. But it is really uncertain when WP devices are on the table, as in fact inside 3rd party is hidding. I trust opensource developers cause I have years of positive experiences from Symbian, hence I have good feelings for MeeGo both Harmattan and Meltemi. But it does not mean I will appreciate Microsoft practices from Windows in my mobile phone - this is entirely different matter!!

[JRBrown]

@ anobserver

Ehh, still those 87% are 87% of 0,4% of whole share in market! This is very very far from 30% share in market IMHO. Count on yourself exact numbers! And compare them to eg. to Symbina numbers and share in market, even decreasing.
To many "ifs". This is like to say: if I will have sex with this girl we will have baby, but now she don't want even to speak with me. Dreams don't bring us closer to what we are dreaming about. Lets focus on reality not on fantasy.

[Chris D]

The interesting part about these numbers is how positively they are portrayed in much of the media - e.g., the Verge with "Windows Phone outpaces Symbian". Yes.... but at a VERY low level. It's like being the fastest snail in a race with other animals! And let's keep in mind - this is with MS trying to push sales by giving away xboxes for free with sold Lumias! You can now buy those Lumias for GBP 200 from ebay, basically brand new.

I agree with some of the other commenters that Nokia was in trouble before the Elop announcement in the UK... but keep in mind that overall smartphone market was (and still is) exploding, growing at 60-70% per year. Thus even stagnation or slight growth would lead to significant loss in market share. At this point, I have to also criticize the numbers a bit... if smartphone market is growing, and 1/3 of market share in sales is lost, it probably means losing more than 1 out of every 3 customers.

A note about the Finland sales numbers... as noted in the other article, the Lumia being top of the charts in a country where 9 out of 10 people owned Nokia means nothing. Even if they lost 2/3 of their customers, they would still end up top of the charts!

And a final thing... it is often being portrayed as a good thing that Nokia (after one quarter!) has the majority share of Windows Phone sales. Given the lackluster performance of that OS in terms of sales, that only means that the remaining vendors share a sliver of the tiny pie. I would not be surprised if one or more of them decide to abandon this sinking ship. Selling a few thousand phones worldwide would just not be worth the investment of producing those phones.