Revised Nokia 2012 Market Share Projections, Revenues, Profits ASPs by Quarter

So I promised to do the update/revision (ie downgrade) of Nokia's smartphone market shares for the year 2012, based on the Nokia profit warning announcements and the Microsoft Windows 8 etc announcements. This is that blog. Yes, this is going to be painful.

TOMI HISTORY FORECASTING WITH NOKIA UNDER ELOP

For new readers - I was the most accurate forecaster for how badly Nokia's market share would fall after the Elop Effect last year February (the Burning Platforms memo which caused a Ratner Effect on Nokia sales, and the related Microsoft announcement also in February when Nokia had no phones to sell on Windows Phone, which caused an Osborne Effect. I call these two the Elop Effect, the most damaging management communication of all time). I predicted in February 2011, that as Nokia's new CEO Stephen Elop suddenly and very radically altered Nokia's long-standing strategy in smartphones, the smartphone sales would stall and Nokia's market share would crash to 12% by Q4 of 2011 (down from 29% at the time when the forecast was made - this is totally unprecedented in any industry, so there is no comparison to use, no analogy that could help with the forecast). Nobody else dared suggest that Nokia would be so badly damaged, some very cheerfully hoped that Nokia's market share would be more than twice that, some projected it as high as 28% for the end of the year. The reality was.. 12.6%.

I of course expected Nokia's CEO to pursue the most sensible and logical actions in Nokia's best interest during that difficult year of transition in 2011, so that now in 2012, Nokia could then powerfully shift from Symbian to the new Lumia series running Windows Phone. I had not anticipated how crazy Elop's management would mess up the year, and that Microsoft itself would throw a monkey-wrench into the game, by purchasing Skype and causing a carrier revolt against all Windows based smartphones. But by the time we had the first Profit Warning by Nokia and a lot of soul-searching of how badly the year was going, I made my first forecast for the next year, ie 2012 sales for Nokia smartphones. That projection had Nokia Q1 of 2012 sales hitting 11M smartphones (down from 24.2M as the latest published numbers by Nokia at the time, again the fall would be historical and record-setting if this happened in only 9 months). Nobody else projected such a low level of 11M Nokia smartphones to sell, using Lumia, Symbian smartphones and Nokia's new MeeGo OS based smartphones all combined. How was Q1 of 2012? Nokia sold 11.9 Million smartphones.

THE CURRENT (TO BE REPLACED) FORECAST

Based on that background, this is my still-current forecast for Nokia unit sales, revenues, market shares, profits. For context, you can also see the historical data for last year:

OLD AHONEN FORECAST BEFORE LATEST NEWS
2010 Q4 . . . 28.3 M units . . . 29% market share

2011 Q1 . . . 24.2 M units . . . 24%
2011 Q2 . . . 16.7 M units . . . 15%
2011 Q3 . . . 16.8 M units . . . 14%
2011 Q4 . . . 19.6 M units . . . 13% . . . Lumia 600,000 

2012 Q1 . . . 11.9 M units . . . 8% . . . . Lumia 2 M
2012 Q2*  . .   9.2 M units . . . 6% . . . . Lumia 4 M
2012 Q3*  . .   6.8 M units . . . 4% . . . . Lumia 6 M
2012 Q4*  . .   7.4 M units . . . 3% . . . . Lumia 7 M

* forecast, all others actual
Above data actual Nokia through Q1 2012, rest are forecast by TomiAhonen Consulting May 1, 2012
The above may be freely shared
 

For the full year, this is what the numbers would then translate into as annual numbers:

Full year 2010  . . 100.3 M units . . . 34%
Full year 2011  . .   77.3 M units . . . 16% . . Lumia 600,000 total 2011 shipments
Full year 2012* . . . 35.3 M units . . .   5% . . Lumia 19 M total 2012 shipments 
* forecast, all others actual
Above data actual Nokia through Q1 2012, rest are forecast by TomiAhonen Consulting May 1, 2012
The above may be freely shared

The above forecast is an unmitigated disaster. Please understand, it is a world record in management failure. Nokia had a profitable smartphone unit that was growing sales - yes growing that means increasing - sales when Elop took over, in Q4 of 2010. Elop inherited a market share of 29% in smartphones when Nokia was bigger than its nearest competitors - Apple's iPhone and Samsung's all smartphones - combined. That is far bigger market domination than General Motors or Toyota, bigger than Boeing or Airbus, bigger than Coca Cola etc. And that 29% market share Elop destroyed with world record speed, as it is 8% today, one year later. I had projected it to fall even further to just 3% by Q4 of this year 2012, and for the full year for Nokia to end with 5% of all smartphones sold this year. Lumia based smartphones sold have sold 7 million units in the fourth quarter and 19 million overall this year. This would have been a world record failure for any market share leader. Unfortunately, the situation will be worse still.

NOKIA REVISED (DOWNGRADED) FORECAST BY TOMI AHONEN IN JUNE 2012:

2010 Q4 . . . 28.3 M units . . . 29% market share

2011 Q1 . . . 24.2 M units . . . 24%
2011 Q2 . . . 16.7 M units . . . 15%
2011 Q3 . . . 16.8 M units . . . 14%
2011 Q4 . . . 19.6 M units . . . 13% . . . Lumia 600,000 

2012 Q1 . . . 11.9 M units . . . 8% . . . . Lumia 2.0 M
2012 Q2*  . .   8.4 M units . . . 5% . . . . Lumia 4.0 M
2012 Q3*  . .   5.2 M units . . . 3% . . . . Lumia 3.1 M
2012 Q4** . .   5.3 M units . . . 2% . . . . Lumia 5.0 M**

* forecast, all others actual
** Nokia Q4 2012 forecast for Lumia sales increase assumes at least 2 new Lumia smartphones released by November that run on Windows Phone 8
Above data actual Nokia through Q1 2012, rest are forecast by TomiAhonen Consulting June 27, 2012
The above may be freely shared

This is now my revised forecast, based on the latest news that Nokia is not finding market traction currently (as Elop told us in his Profit Warning two weeks ago) and then that the Lumia series is now Osborned by Microsoft - and we find that some operators have quit selling Lumia totally like T-Mobile the biggest operator of Germany and in markets where Lumia sells, it is now discounted as low as the flagship Lumia 900 that launched less than 3 months ago, is slashed to a price of 1 US Cent ($0.01) as on Amazon in the USA.

So I project Nokia smartphones to fall from the current 8% market share to 5% in Q2, then 3% by Q3 and down to 2% by Q4. I am assuming that Nokia will launch at least two Windows 8 based Lumia smartphones for Christmas, and release them by November, else this 2% level in Q4 cannot be met. The transition from Symbian (and MeeGo) will be almost complete by Q4 and total Lumia sales peak by Q4 will be 5.0 million units only as increasingly carriers/operators refuse Windows 8 because of Skype integration and others punish Nokia for the Lumia, Symbian and MeeGo fiascos and prefer to sell Androids (and soon Tizen) based smartphones by other manufacturers. Nokia's 'comeback' with Windows Phone 8 can only start from that modest 2% market share and 5 million unit sales level into year 2013. Nokia sold over 28 million smartphones per quarter when Elop took over (and did this profitably, with growing sales).

For the full year, the revised forecast now looks like this:

Full year 2010  . . 100.3 M units . . . 34%
Full year 2011  . .   77.3 M units . . . 16% . . Lumia 600,000 total 2011 shipments
Full year 2012* . . . 30.8 M units . . .   4% . . Lumia 14.1 M total 2012 shipments 
* forecast, all others actual
Above data actual Nokia through Q1 2012, rest are forecast by TomiAhonen Consulting June 27, 2012
The above may be freely shared 

The fall is far FAR worse than that rapid collapse which killed Siemens, and that which killed Palm, and that which killed Motorola in mobile phones. This level of disaster will result far more layoffs at Nokia still to come. Nokia has already shut down many factories and started to retreat from markets and reduce sales. Those all will accelerate as these problems add up.

As to Nokia revenues, average sales prices and profits, here is my revised ASP and revenue projection for Nokia smartphones (excluding Microsoft's marketing contribution).

2010 Q4 . . . 28.3 M units . . . 155 euro ASP . . . . 4.4 B Euro revenues

2011 Q1 . . . 24.2 M units . . . 146 euro ASP . . . . 3.5 B Euro revenues
2011 Q2 . . . 16.7 M units . . . 141 euro ASP . . . . 2.4 B Euro revenues
2011 Q3 . . . 16.8 M units . . . 131 euro ASP . . . . 2.2 B Euro revenues
2011 Q4 . . . 19.6 M units . . . 131 euro ASP*** . . 2.6 B Euro revenues

2012 Q1 . . . 11.9 M units . . . 127 euro ASP*** . . 1.5 B Euro revenues
2012 Q2*  . .   8.4 M units . . . 136 euro ASP*** . . 1.3 B Euro revenues
2012 Q3*  . .   5.2 M units . . . 152 euro ASP*** . . 1.0 B Euro revenues
2012 Q4** . .   5.3 M units . . . 140 euro ASP*** . . 1.0 B Euro revenues

* forecast, all others actual
** Nokia Q4 2012 forecast for Lumia sales increase assumes at least 2 new Lumia smartphones released by November that run on Windows Phone 8
*** ASP in Euro, excluding Microsoft marketing contribution of 250 million US dollars per quarter
Above data actual Nokia through Q1 2012, rest are forecast by TomiAhonen Consulting June 27, 2012
The above may be freely shared

The Nokia smartphone unit was generating about 18 Billion Euros (23 Billion US dollars) of revenues on an annual basis when Elop took over. They generated a profit of about 2 Billion Euros (2.6 Billion US Dollars) on an annual level. This year 2012 the Nokia smartphone unit will generate revenues only of about 4.8 Billion Euros (6 Billion US Dollars) so Elop's 'strategy' has wiped out 74% of Nokia smartphone revenues already. This happened while the smartphone handset industry grew at 60% per year!!!!

The Nokia smartphone unit went from profits to losses last summer and has not recovered since. We just heard in Nokia's latest profit warning that the smartphone unit will generate losses at least through Q3. I am certain with these numbers that the losses in the smartphone unit continue through Q4 (and that all of Nokia corporation cannot recover to zero profitability for Christmas either).

THE COMEBACK STARTS FROM 2%

There were utterly ridiculous forecasts that promised over 20% markets shares for the Nokia-Microsoft partenship in Windows Phone from spring of 2011. There were completely baseless projections that somehow Nokia and Microsoft would pass the iPhone and become second biggest smartphone providers. And both Nokia and Microsoft have been pushing the fantasy of Windows Phone somehow being able to become 'the third ecosystem'. No. That won't happen. If there is a Nokia still alive by the end of this year (and I don't think that is likely) then the market share 'comeback' does not start from 12% or 8% or even 5% market shares. It starts from 2% for Nokia, running on Windows Phone with the severely damaged Lumia brand.

And for the 'other' Windows 8 so-called 'partners' - Samsung will be pushing its Tizen out this year plus selling its smartphones primarly on Android and bada, not Windows Phone. HTC will not prioritize Windows Phone over Android and neither will Huawei. All current Windows 7.5 based smartphones became obsolete this past week, so their sales are tumbling. If these three other manufacturers are really nice to Microsoft, they might release one Windows 8 based smartphone this year. Maybe. More likely not. But even if they do, their total combined sales will not make a difference, and Microsoft's total combined market share in Q4 will still be only 2%, with Nokia Lumia and Samsung, HTC and Huawei all added together. Samsung's bada alone will outsell them all as per usual, not to mention Samsung and Intel's new Tizen OS that launches also this Autumn. How strong is this position for Microsoft? Well, when it last Osborned its smartphone platform, Windows Mobile, and Windows Phone finally launched, Microsoft walked into that situation with nearly a dozen Windows Phone handset partners and a 3% market share. Twelve months later, when half the partners had quit and Microsoft's Ballmer said Windows Phone was selling at 'below expectation' levels, just before Nokia started selling Lumia smartphones - Windows combined market share globally of Windows Mobile and Windows Phone was down to .. 1.3%. Don't hold your breath that Micrsosoft has some magic that wins in smartphones.

If you are an optimist, perhaps Microsoft and Nokia can grow by half their market share in one year, 2013. That would bring them up from 2% market share to.. 3%. Maybe you are a super-optimist and think they can double their sales, inspite of all the reluctance of carriers, the damaged carrier relationships, the depleted sales and marketing forces, the spent and wasted Lumia marketing (I mean, how many Xboxes can you give out, if the original Lumia launch with free Xbox 360s thrown in did not produce market success?), this partnership is not exactly loved by the industry and retail. So yeah, if you really REALLY want to believe in fairy tales, maybe in 2013 they might hit 4% market share doubling their performance from the end of this year. I don't see that happening. Far more likely is that Nokia is sold, split, and the new owners of Nokia end the silly Microsoft misadventure and bring Nokia's smartphone unit to the Android family. The Windows 8 platform sells well on the PC side but Microsoft quietly shuts down the Windows Phone experiment as another failure along the lines of the Zune music player and the Micrsosoft Kin phone series. But don't ever think this can be salvaged into a 'third ecosystem'. That won't happen.

That is my revised forecast now, that we have heard from Elop in Nokia's latest profit warning, that his retail problems continue, that the Lumia sales are lackluster and the profits struggling. Then that we heard Micrsosoft won't let the current Windows Phone 7.5 based smartphones - including all Lumia series - to be upgraded to Windows Phone 8. So all existing Lumias are now Osborned. The Nokia brand is rubbish, the Nokia smartphones are facing retail problems. The Micrsoft Windows Phone based Lumia smartphones were already under sales boycott and many carriers refused selling them altogether from China's biggest carrier China Mobile to USA's biggest carrier Verizon. And while the biggest carrier of Europe's biggest country, T-Mobile in Germany had committed to selling the Lumia 900, they now ended that commitment when the Lumia became Osborned. If Nokia can produce rapidly new Windows Phone 8 based smartphones, and release at least 2 such smartphones for Christmas, selling them across their major markets by November, then - and only then - Nokia can hit 5 million Lumia sales by Q4 and 2% market share for Christmas. Else this year will end even worse than that. Remember when Elop took over, Nokia's smartphones unit was growing sales strongly, had 29% market share, the average prices were growing, the revenues were growing and the smartphone unit profits jumped a Nokia record level. Those were the days. And that was reality only 476 short days ago..

I will of course return to report by Quarter as the numbers come in, to see how close (or not) we hit the forecast(s). Everything in this blog may be openly referenced.

If you are interested in the mobile industry, there is a nice free statistical resource for you. I publish an annual statistical volume called the TomiAhonen Almanac. The 2010 edition is available for free at Lulu.com with still very recent stats and facts. Over 90 tables and charts all on a pdf file that fits on your smartphone or iPad or laptop so you can have the mobile industry stats with you. Download your free Almanac now.

If you need specific mobile phone handset stats, including smartphone stats (there are 2 chapters in the Almanac) of more detail, then please consider the TomiAhonen Phone Book. It only costs 9.99 Euros and there is a special offer to get both the 2010 and 2012 editions for one low price. See more including the table of contents etc at this link TomiAhonen Phone Book

And if you are serious about the industry and need to plan for it, then you may need some forecasts. Why not use the forecasts of the most accurate forecaster of the mobile industry? See my TomiAhonen Mobile Forecast 2012-2015 for the most relevant data points and projections into the near future to help you plan. See table of contents and full listing of all forecasts with over 400 data points and several scenarios at TomiAhonen Mobile Forecast 2012-2015

Comments

[Cana Da]

Nokia has no plan B, and with Flop the only soul on the moon WP would have a market share of 100% over night. On the moon that is.

[Jet]

A golden retriever would do a better job than Elop, I guess. It knows how to beg for forgiveness when scolded, unlike elop.

[Esa]

Personal background of chairman Siilasmaa explains a lot.

He is the founder and main owner of the successful anti-virus software company F-Secure. That means that Microsoft and its badly written software has been a great blessing for him. Microsoft made it possible for him to create a fortune. He should be grateful and he seems to be.

Of course Microsoft appreciates that kind of partners that support Windows sales.

Both Siilasmaa and MS knows that world is going more mobile and they have to work together to keep their position.

Relation between an anti-virus maker and Windows maker is quite contradictory but they seem to have a happy marriage.

[UbiMobi]

Esa, I think that is right on the money. That crossed my mind too a while ago.

So basically they have rigged the scene so that MS support cannot collapse in Nokia BOD. And.. a board member would stand against the chairman..? That is not going to happen! Why anybody would want to do that..it is much more convenient to cash the fat paycheck!

[Tomi T Ahonen]

Hi Lasko, Burnt, Tomo, khim, don, Tona and Zachariach

Lasko - I ignore the trolls, you better do so too. They want attention and traffic to their blogs so just let them be. I remove their self-serving comments here. But thanks. You don't have to agree with me, I welcome debate and discourse, just be civil about it and factual. The trolls are deleted always.. And I guess I have reached some level of 'celebrity status' haha, if I have personalized trolls too. I guess I should be happy :-)

Burnt - yes. Fishy!!

Tomo - just about to happen now, Nokia was again down by 4% today in Helsinki and closing on 1.60 Euros (am responding on Friday)

khim - thanks! As to the Android forecast, I did say I was wrong about it when the numbers came out..

Lasko (To Ex Nokian) - totally correct. Those were Elop's own management decision and his own communications, they were not the fault of Nokia's organization or Nokia's Board and the fault therefore falls directly on Elop on those points. He himself for example admits his Burning Platforms memo caused damage to Nokia sales.

don - yeah, it really is stunning. Why is Elop allowed to remain as CEO?

Tona - thank you for the long comment and personal observations. About featurephones, I occasionally mention them but this blog is about Digital Convergence and Communities Dominate, so the smartphone ecosystems 'battle' is far more relevant to the readers, than the gradually to-be-replaced proprietary featurephone platforms of Nokia, Samsung, LG etc. That is why I don't much talk about them in this context and meanwhile the smartphone OS battle is at the very center of the digital convergence battle right now, even more so than tablet PCs (due to the enormous scale of smartphones vs the modest size of the market of tablets). I do visit emerging world stories regularly on this blog so there you have a good point and I try to do that. I was just in Sri Lanka a month ago and will be in India in a few weeks and Guatemala later in the month, so I try to stay in touch with and provide my consulting support to the markets of the Emerging World. And I write about them regularly in my books and on this blog.

As to your point, yes, Nokia 'owned' that part of the digital evolution, they were the bestselling handset brand of China, India, Africa, Latin America, Russia, Indonesia, the Middle East etc. And Nokia was the bestselling smartphone brand in those markets, and the bestselling app store, with local language apps and developers. All that was lost with the Windows Phone strategy which won't even be supportive of low-cost handsets.

Zachariah - yes, your puzzlement is as big as mine. The CEO made severe strategic mistakes throughout last year and this, and he has also made countless tactical and communication mistakes. He is unfit to run the company - and the sahreholders agree as the Nokia share price has lost 91% since the peak in early February 2011, just before Elop started on this madness. What Board allows the CEO to remain as he ruins the company comprehensively?

Thank you all, please keep the comments coming

Tomi Ahonen :-)

[Esa]

UbiMobi, Isn't it that simple.

Now we can forget all the conspiracy theories. It is all about anti-virus.

Risto Siilasmaa, chairman of the board of Nokia is an anti-virus man. So naturally he is wearing anti-virus glasses. What is the difference between anti-virus glasses and M$ glasses? Tell me. I don't know.

He was elected on board at 2008. I can imagine that he been talking to everyone on board about his godfather. Godfather that gave birth to his business and feeds his business.

Finally when Nokia's board had to make a decision, they were fed up with Risto's godfather and said, call your godfather.

Why Risto is the chairman now?

Most of the the board members were asked and they all said: Risto should eat his own shit.

[Michael]

We'll see how this one goes. Blackberry is trying to keep it's market share with failing and obsolete OS, while promising new OS somewhere in the future.

This is something that was advised to Nokia from the writer of this blog. If RIM fails, then there was no real hope for Nokia.

Windows 8 look nice. But I think that Nokia is somewhat of a tarnished brand. Nokia is just not perceived as hi-tech company anymore.

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[Lexmil]

It's nice to see another verb added to the English business failure lexicon after Osborned and Ratnered. Though Eloped sounds like another English verb that means something more positive for lovers.

[Lexmil]

In addition, MBA courses will have a new case study to analyze to death - the Burning Platform Memo or how to write business memos with monumental or catastrophic effects. Better yet, a new definition of 'Genius' will be studied - since it takes a real genius to bring a giant market leader down in a record 18 months.

[Stoli89]

Your "revised" 2Q2012 smart devices forecast was apparently off by 1.8 Mio. units, or approx. 21.4%. Any comment?

[Carol]

@KPOM Believe me, meego is far more better than that android and beats that crappy system, hands down. The problem wasn't the system, the problem was the management. Nokia killed it self by the year. But at least they still have the best phones in the world, that last more then 1 year, unlike all other plastic sqare something so called phones. Another problem is that all other aimed a market that nokia didn't though about. The market of 80% people that normaly wouldn't need a smartphone because they don't know how to use it. They made it simple with loads of apps and that's it, who needs to know how all work. Good strategy, but i'm proud i'm not a part of it. Just cause i use smartphones sience ever. At that time you could see people that know what a smart is and people that don't know and used normal phones. Now i see everywhere smartphones in the hands of people that have no clue how to use them, only blogging or facebook, or connecting to other lifeless sites. To make an easy to work with plastic for the mass, and promote it properly, would probably be a resurrecting strategy for Nokia. Loads of games and other utter rubbish apps. So people, can satisfy their needs of a "smartphone". People these days are so ignorant they would buy a Sophone IPhlok, Sypidipi, Chocomoco(and be proud of how "good" it is) chinese crapp because has an android system or ios (at least an ios interface). The rubbish industry is working, so that means that people realy like this tipe of buying. I recomand this for nokia. To sell their souls and make "smartphones" for the mass. Rubbish = selling...

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