Previewing Nokia Q3 Results later this month? Kantar confirms disasterous smartphone collapse - REVISED & CORRECTED

Kantar Worldpanel surveys new smartphone sales in many countries, and releases their data on selected countries and at irregular intervals. It is always insightful to dig through their numbers when we get some. And they have just released their September numbers for a series of countries.

Please note, this blog entry has been revised and corrected, the EU5 numbers for Windows sales according to Kantar did not decline 28% as I first reported, they rather increased by 8% in the EU5 region (they did fall in the other parts). This was my mistake in taking the wrong number from my table. The math error was luckily caught by a person 'chainsmoker' in the comments. I have corrected and updated the table with the correct numbers and adjusted the totals and the commentary accordingly. The other numbers are as originally reported as before, where Windows sales did decline in USA and Australia, and by population-weighted average, Windows sales also did fall globally; and there was no error in the Symbian sales, those declined in in all regions, EU5, USA and Australia. I apologize for the mistake in the early version of this story. The numbers below have been corrected.

This time Kantar includes the EU5 (Germany, France, UK, Italy and Spain the biggest 5 EU nations by population, GDP and smartphone sales) plus the USA, Australia, Brazil and Mexico. They give for comparison also the September numbers also for 2011, but that is not really the numbers we want to compare to. Because we know how Nokia Lumia and Symbian did in Q2, we really want to compare Kantar numbers to the end of Q2. September is the last month of Q3, so we want the last month of Q2, June, which is also when Microsoft Osborned the Nokia Lumia series, crashing their sales. For that, we do have numbers from a previous Kantar release, for the EU5 and USA and Australia, for June 2012. I'd have loved to also have Brazil and Mexico for that period, but alas.. (Thanks for correction, CN)

However, as Europe forms nearly half of Nokia's total smartphone sales, and over half of Lumia sales in Q2, as per my analysis of the Nokia Q2 results; and the USA is the big target market explicitly for the Lumia series with AT&T and its biggest new phone launch ever with Nokia Lumia 900, and we now have Microsoft who Osborned the whole 4-handset Lumia line from Q3, lets see if that Osborning suggests Nokia sales have suffered at all. What does Kantar tell us about current sales in Europe, the US and Australia, compared to 3 months ago?

Today, from September 2012 sales, compared to June 2012 sales measured by Kantar, total Windows (in June Kantar still separated Windows Mobile and Windows Phone, now it counts both as one) sales for the two of the EU5 - Germany and Italy, plus USA and Australia have fallen, while sales for Windows smartphones in UK, France and Italy have risen. Meanwhile Symbian smartphones have fallen in all 7 countries. It gives us the following data:

WINDOWS SMARTPHONE SALES JUNE 2012 VS SEPTEMBER 2012 BY KANTAR:
REGION . . . . . . . . JUNE SHARE . . . AUGUST SHARE . . . DECLINE IN CHANGE PERCENT
EU5 . . . . . . . . . . . . 4.6 . . . . . . . . . . . 5.0 . . . . . . . . . . . . . 8% increase
USA  . . . . . . . . . . . 3.6 . . . . . . . . . . . 2.7  . . . . . . . . . . . . . 25% decline
Australia  . . . . . . . . 5.8 . . . . . . . . . . . 3.8  . . . . . . . . . . . . . 34% decline
Weighted Average . . 4.2 . . . . . . . . . . . 3.8 . . . . . . . . . . . . . 9% decline

SYMBIAN SMARTPHONE SALES JUNE 2012 VS SEPTEMBER 2012 BY KANTAR:
REGION . . . . . . . . JUNE SHARE . . . AUGUST SHARE . . . DECLINE IN CHANGE PERCENT
EU5 . . . . . . . . . . . . 6.1 . . . . . . . . . . . 3.7 . . . . . . . . . . . . . 39% decline
USA  . . . . . . . . . . . 0.5 . . . . . . . . . . . 0.2  . . . . . . . . . . . . . 60% decline
Australia  . . . . . . . . 3.8 . . . . . . . . . . . 1.9  . . . . . . . . . . . . . 50% decline
Weighted Average . . 3.3 . . . . . . . . . . . 2.0 . . . . . . . . . . . . . 41% decline

Source: TomiAhonen Consulting Analysis October 2, 2012 on Kantar Worldpanel data from June and September 2012
This data and these tables may be freely shared

Note, these are all countries of the industrialized world and half of the smartphone market is now in Asia which is not measured in the above, so these are not necessarily the full picture of how bad it is for Nokia. China is the second biggest smartphone market and could well bring some good news for Nokia, but not in the area of Lumia obivously as only the smallest of the Chinese operators/carriers is even selling the Lumia, among the other Nokia smartphones it sells.

What do these numbers tell us? In Q2 Nokia sold 10.2 million smartphones. 4.0 million were on Windows Phone, the Lumia series and the remainder were mostly Symbian with some MeeGo sales still lingering. If we take the weighted average of the 7 countries, USA, UK, Germany, France, Italy, Spain and Australia - with a combined population of about 680 million, and which count for 49% of all Nokia smartphone sales, and 73% of all Lumia sales in Q2, we can get a reasonable early warning estimate of what Nokia smartphone sales look like now, in Q3 of 2012.

If that ratio holds true for all of Nokia Lumia sales, as we saw in those 7 countries, then for Q3, Nokia Lumia sales will fall from 4.0 million to 3.7 million units.

If that ratio holds true for the rest of Nokia sales ie mostly Symbian, then Nokia other smartphone sales would fall from 6.2 million to 3.6 million units in Q3.

The total Nokia smartphone sales in units would fall from 10.2 million to 7.3 million units (falling 29% in one quarter) and Nokia's global market share would fall from 6.7% in Q2 to 4.3% in Q3. Note that exactly one year ago, at Q3 of 2011, Nokia's global smartphone market share was 14% and two years ago, when Elop took charge of Nokia as CEO, before his idiotic Elop Effect, Nokia's global smartphone market share was.. 33%. Nokia would have destroyed nearly 9 out of every 10 loyal customer relationships it had, in a period of 24 months, by far the most comprehensive market destruction by any market leader in such a short time, of any industry, ever.

Lets see what else Kantar numbers foretell. If Lumia still accounts for about 87% of all Windows Phone smartphones sold globally as they did in Q2 - and there is little to lead us to believe any other handset makers have suddenly released obsolete Windows Phone 7.5 handsets that would have become big hits - so if we say these 3.7 million Lumia sales are 87% of all Windows Phone sales in Q3, then Microsoft can celebrate its total sales in Q3 projecting from these Kantar sales numbers, as a whopping.. 4.3 million smartphones in total. That is .. a 2.6% market share for Microsoft, congratulations 'Third Ecosystem' for once again falling behind Android, iOS, Blackberry and even bada...  Small solace, however, that it would look like Windows would finally pass Symbian in globakl market share. Not exactly 'Third Ecosystem' arguably.. Fifth? Microsoft's market share would have peaked at 3% in Q2 and would now again be falling. Yes, they do hope and wish and pray, that Windows Phone 8 can somehow be the magical unicorn that can save Microsoft in mobile. Six years ago Microsoft was the second biggest OS in smartphones and had 12% global market share. Three years ago they were the 4th biggest OS and held 9% market share. Two years ago, Microsoft had fallen to 5th place with 5% and a year ago, when they started their hype about 'the Third Ecosystem' (haha) they had fallen to sixth with 3%. Today, if these Kantar numbers hold, Microsoft in Q3 is down to 2.6%. How's that Third Ecosystem looking now to all you smart folks in Redmond?

Nokia's Symbian? Again if these Kantar numbers hold for the rest of the world, and remember, for Symbain its less accurate than Lumia, because Kantar's country profiles cover only half of Symbian sales while they covered 3/4 of Lumia sales, but yes, if the numbers hold, then Symbian would end with about 3.6 million total unit sales globally and about a 2.1% market share, tumbling down to sixth place, even behind Windows for the first time ever. Symbian held 15% this time last year, and 38% when Elop took over 2 years ago when Nokia still had many strong Symbian partners making handsets on that OS platform. Again, the pattern - he actively destroyed yes, 9 out of 10 loyal customers that Nokia had painstakenly built over decades. He wiped them out, starting with the Elop Effect, in only two years. No company that led its industry, has ever, under the worst outside influences, natural disasters, manufacturing errors or management blunders, been able to demolish 9 out of 10 loyal customers they have had, in any industry, in such a short period of time of only 2 years. This has never happened. Elop is by far the most inept, incompetent management fool to ever take over as CEO of any company in any industry, ever. He has to be fired immediately!

But yeah. What can we expect from the smartphone unit in Q3? We've heard that Lumia series has seen major price cuts across the board. We can also expect with such catastrophic Symbian sales fall, that Symbian prices have fallen too. I am projecting an ASP (Average Sales Price) for the smartphone unit at around 134 Euros (down from 151 Euros in Q2) and total smartphone division revenues of 978 million Euros (down 37% from the 1.5 Billion Euros in Q2). The smartphone unit will report a Nokia-record loss and the whole handset unit continues to report an operating loss as does the whole Nokia Corporation, obviously. 

As the world migration from dumbphones to smartphones continues, and will be about 38%, Nokia continues to regress and while before Elop took over, Nokia consistently led the industry, with its smartphone migration rate AHEAD of the industry, Elop has steered Nokia away from its future and today, in Q3 we can expect that Nokia's smartphone migration rate - its future in fact - is down to 9%. Shame!

Thats what the Kantar numbers suggest for us. I would suggest getting some tissues to wipe out the tears, when Nokia reports its Q3 results, and if you were somehow invested in Nokia's smartphone strategy with Stephen Elop's mad Microsoft strategy and Windows Phone and Lumia, may I recommend a good bottle of Finnish vodka perhaps to drown out the misery. I can recommend a good Finlandia vodka if you are prone to the traditional, or if you are more adventurous, perhaps the 'Black vodka' 'Salmiakki Kossu' licorice flavored black Koskenkorva vodka.. That should help you forget the misery for at least one night..

For the rest of the industry, plenty of good news coming from companies big and small from Apple and Samsung, to Lenovo and ZTE, to even newborn Finnish smartphone maker start-up Jolla soon to announce their first MeeGo smartphone, and even Hewlett-Packard is talking about re-entering the smartphone wars. Its a good time in smartphones - if you're not Nokia or Microsoft. 

And those who still think they believe - please wake up! Look at Lumia 920 and 820. No meaningful carrier deals, ridiculous pricing, they have far LESS availability, countries and carriers than Lumia 800 and 720 (cheaper phones too) had last year. Yes, Nokia has higher prices, and less carriers and less countries now for these two new Lumia smartphones, than at this time last year for the first two new Lumia smartphones. Why would LESS carriers, in LESS countries with HIGHER prices result in better market success for Nokia? Now after its brand has been severely smeared by a botched year of marketing blunders with the Lumia brand and destroyed Symbian and MeeGo brands? Why would it be 'better' now when EVERY major element for Nokia is worse now, than a year ago?

Don't delude yourself! Don't think Windows Phone 8 can somehow magically transform reality and turn this turd into gold. It won't. Windows Phone is an utterly dead end for Nokia, getting ever less carrier support and ever worse sales for Nokia. It won't get better with Windows Phone 8, it will get worse in 2013. Trust me, I was the most accurate forecaster for Nokia troubles in 2011 nd 2012, I know what I am saying, its not the handsets (which are not competitive) nor the operating system (which still is not up to par) nor the PC ecosystem 'synergy' on the desktop (which Nokia had with Symbian and full Windows integration years ago on the E-Series) nor the number of apps in the Windows Phone 8 stable (far far below what rivals have). No. Its what Elop has been complaining bitterly about every quarter since his Elop Effect - its the carrier relations. Just like we have again this story today at Tech Thoughts.

Nokia's carrier relations were poisoned by Stephen Elop the CEO and they have only gotten worse, not better. Nokia cannot recover with this guy in charge. No pretty Lumiaphone can ever save that. Its what Elop himself says, he says his phones are fine, its the nasty carriers who won't sell his phones. It what ratings agencies Moody's and S&P and Fitch have said, time and again, when they have downgraded Nokia now to junk level. Its not the handsets, stupid, in mobile it is, has always been, and always will be - the carrier relationships. I told you so on this blog in 2007 about Apple, in 2008 about Motorola, in 2009 about Microsoft (Kin), in 2010 about Microsoft (Windows) and Palm, in 2011 about Nokia - and Samsung - and now again in 2012 about Windows Phone and Nokia. And yes, its going to be carrier relations also in 2013 with Nokia. Its always about the carrier relationships!

And am I really that nuts? Or are you also noticing what is slowly building as increasing agreement that the 'Third Ecosystem' fairy tale is accepted as mythology and reality is setting in? Its not me anymore and some other enlightened mobile specialists like Horace Dediu ie Asymco who saw throught the Elop fantasies immediately. Now look what Canaccord Genuity says now it expects Lumia sales to be - in Q4 when the new Lumia 920 and 820 are selling on Windows Phone 8. Do they expect Nokia to achieve new Lumia sales records in Q4? No! Not even matching the 4 million unit sales Lumia did last quarter. They expect total Lumia sales to be 3.8 million smartphones only for the big Christmas Quarter. That would be about 1.6% market share for the Nokia Lumia unit at the end of this year. Not my words, this is one tech analyst. Nokia's Lumia market share at its best peak, this Q2 was nearly 3%. That is what misery looks like. And they are not alone.

There is now Credit Suisse, one of the biggest financial houses has downgraded their Nokia views to this level. They now say for 2013 they expect Nokia total smartphone market share - not just Lumia, all Nokia smartphones combined - to be 2% for the year! That, my dear readers, is very far from the promised 'Third Ecosystem' by which Nokia and Microsoft were supposed to have well in excess of 20% market share in this beautiful partnership. Now Microsoft is creating its own tablets, rumors are flying about Microsoft's own smartphones, and Microsoft openly celebrates HTC's new Windows Phone smartphones ahead of those from 'strategic partner' Nokia. Stephen Elop sounds almost like he's crying when he tries to reassure in interviews that all is ok with Microsoft. And you know what? Credit Suisse now is openly talking about Nokia being broken up and/or sold, mentioning potential buyers of Nokia or its parts as - Apple, Ericsson and Huawei among others. Wait? Who told you this same story a few months ago? Is it that I am crazy, or is it perhaps, that Nokia truly has been colossally mismanaged by CEO Stephen Elop and the company is now headed to be wrecked to pieces. Credit Suisse says they explicitly do not believe the current Nokia program in the handset business to be able to return Nokia to profits (wait - I said that!). Incidentially, Credit Suisse of course lowers their target for Nokia share prices too..

You may not like the way I write about Nokia or Elop. You may not want to believe the Microsoft strategy is fundamentally flawed and doomed. But please look at least at these other experts and accept it is a dire possibility. I am no longer the only one saying Nokia's 2013 market share in smartphones will be in the tiny single digits and Nokia won't be able to return to profits with that business. This company is a dead man walking - and that is all thanks the the most incompetent CEO of all time - when Elop took over the smartphone unit grew unit sales, grew revenues, set a Nokia-record for increases in profits, was highly profitable; and Nokia's market position was bigger than its two nearest rivals - combined! Nokia was witnessing solid share price growth since Elop too over - up 11% in the first 5 months (wouldn't you love to have that now?) and each of the three ratings agencies rated Nokia one notch below perfect - this after a difficult summer emerging from the global Great Recession that plunged most of Nokia's rivals into loss-making. Nokia's smartphone unit generated 40% of Nokia's total profits and let me repeat - Nokia was growing smartphone sales (and revenues, and average sales prices and profits). What moron takes a company that is twice as big as Apple in smartphones, the business Apple decided to stake its whole future on - that during 2010 grew more smartphone sales than Apple's iPhone - and dismantles that market-dominating juggernaut? Who abandons an overpowering - and growing - lead over Apple?

That all was voluntarily destroyed by Elop with his mad Microsoftian Misadventure. This is a delusional madman in charge and the first step for Nokia's future is to fire the idiot in charge. If you don't want to take my projections or numbers in this blog now, please consider those increasingly coming from the other analyst houses who also now talk about 2% or worse for Nokia smartphones - Palm died when it fell below 2%. This is the certain road to ruin! If you don't like my numbers in this blog, then at least be honest, lets see late October when Nokia Q3 results are released. If Nokia reports increasing smartphone sales, Lumia sales growing and a profitable smartphone unit - I will gladly celebrate Elop as a management genius. But you know that won't happen. There is no AT&T miracle or China surprise. Santa Claus is not visiting us. We know Nokia is reporting again worse numbers than we've seen before. We can see the writing on the wall... Its time to make that call, its time to end it all: its time for Elop to fall.

PS - For those who want to understand the handset market in more detail, please see TomiAhonen Phone Book 2012 or who want to see the near future of the mobile industry, see TomiAhonen Mobile Forecast 2012-2015.  

Comments

[ExSam]

Will WP8 change the prospect for Nokia in Q4? Highly doubt it.
Now it seems that most smartphone purchases in the developed world are replacement purchases.. no reason to change the platform.

[observer]

Well done MS, it looks like an MS mobile operating system is FINALLY comparable with Symbian. It only took you 12 years and billions of dollars, you sure showed those upstart brits who the f****** daddy is!

being sarcastic in case you missed it :)

Whatever happened to msmobiles?

[CN]

Maybe you Tomi fix this tiny mistake, just to avoid unnecessary debates.

"...so we want the last month of Q2, June, which is also the last full month before Microsoft Osborned the Nokia Lumia series, crashing their sales."

You must refer to the announcement of June 20, right? In which case June is not the last full month.

[zlutor]

@Tomi: how long this strategic renewal/turnaround - or agony, whatever you name it - could last? What solution do you see if any?

[Jack1059]

The ceo and the board simply cant be this stupid. To ride a company into the ground, destroy its share price, gut its marketshare and turn it into a money losing proposition. All this and no one does anything to change course? There has to be something going on in the background that we cant see. No combo of ceo / board can be this stupid for this length of time.

[ejvictor]

I just love the fact that NO ONE has played with a WP8 phone yet and everyone pronounces it GREAT! The SDK for Windows 8 Phone is not available in G.A. - so developers can't port existing apps... not a single product launch by any WP8 OEM has allowed public to touch or play with devices. Poor Nokia, can't wait for Jolla to showcase a device.

[zlutor]

@Jack1059 - what if it is not stupidity at all?

Known fact that big investors of Nokia and M$ are quite common. Thus they have no other choice but forcing Nokia to go this road (to have M$ any chance in mobile OS domain) - whatever it cost. Desktop dominance of M$ is loosing relevance, they have to have signiffican footprint in mobile OS domain otherwise they are over.
Not now but in 10-15 years...

Unfortunatelly Nokia was the leader when they entered this battle. If they selected Samsung then our Korean would be in the deep s#it now and nokia would rocket its sales... :-(

At least I see it so. But I'm not the expert here... :-)

[vasras]

ejvictor : "I just love the fact that NO ONE has played with a WP8 phone yet and everyone pronounces it GREAT!"

MS knows how to employ PR agents and astroturfing carpet-bombers.

Let's see what it will be like when it ships. It has so many changes and it has been so buggy (rumors) that I doubt it will convince the digerati.

But perhaps with WP 8.1 in 2013 :D

[Luca]

Dear Tomi,
Thanks for the nice article, i would like to know more about the references you did about the carriers relationship importance, could you post the links to blog articles talking about apple carriers relations in 2007, and motorola you mentioned in the article?
Thank you very much for your helpful insights.
Bye
Luca

[Luca]

P.s. What about asha line? Do they count as smartphones? Unlikely to lumias, i saw many asha phones in the hands of teenagers.

[vladkr]

Windows Phone strategy cost a lot... but let's be as optimistic as Stephen Elop and Nokia's board who really think (officially) they will succeed.

How many years will be needed for a return on investment?

S.E. keeps on saying he did the right choice? His mistakes already cost several dozens of billions euros. How can he justify it was the right choice?

Why is he still paid millions/year instead of being paid according to company results (like Steve Jobs for example)?

P.S. Nokia promotes its Lumia 920 quite aggressively, saying it's far better than the competition in picture taking. What guaranties do we have final products will be as good as the prototypes?
Before the N9 was released, the prototype was said to have exceptional radio qualities, thanks to its design. The final product's radio performances are... average.

[vladkr]

Elop sold Nokia's IP-TV to Accenture... he's right, IP TV has certainly no future...

Every time I consider him as stupid, he makes something even more stupid.

"If NASA can send monkeys to space, why don't they send Stephen Elop there ?"

[CN]

@vladkr

It was NSN's business, not Nokia's. You need to understand how NSN is mostly an independent unit and how NSN has nowadays clear focus on what it intends to be. You need to understand what is the IPTV SW solution of NSN and selling this one plays no role in Nokia's success in whatever IPTV will or will not be in the telecomms arena. If IPTV will fly, you don't need the solution be provided by NSN.

[chainsmoker]

Hi Tomi,

Out of these summed (wp7 + wm) values in the kantar june data,
how do you calculate the average of 6.9?

gb: 4.1
ger: 6.8
fr: 2.7
italy: 6.2
sp: 1.9

At least in the written report Kantar had not calculated any "EU5" value for this june report.
If you weight an average value with population, you have ca. 4.6.

I.e. less than in september.

[Tomi T Ahonen]

Thanks chainsmoker,

I corrected the math, you are right, I took the wrong number from my table, the weighted EU5 average number should have been 4.6 not 6.9. Now the story is updated and corrected - am thanking you for spotting the math error.

Tomi Ahonen :-)

[concerned citizen]

Apple was making killing in the market in the last weeks of September thus in my opinion the figures for iOS and high end smartphones overall will be significantly different even for Q3 and totally different for Q4. What is your analysis of the iPhone 5 impact and also the Galaxy S3 sales still going strong to Q3 and Q4?

[vladkr]

@CN:
Maybe to you NSN is "mostly" an independent unit (that's not the definition of a JV I have), but still half of revenues it generates goes to Nokia's pocket, and cash is something Nokia needs more and more.

I know with Baron you're a great fan of the management carnage Nokia is facing, but I don't see anything good in this sale (and neither do many financial analysts). At the first sight, it may be cool as it provides Nokia with easy cash, but on the long term it's another nail on Nokia's coffin.

But you may be right, these guys know what they're doing... as their "huge" proved these recent years.

[m]

Luca,

Nokia has begun calling the Asha line "smartphones" for marketing purposes. I wouldn't doubt that they'd group them in with their smartphone division in the earnings releases, to soften the pain of Lumia deficits. In the past few quarters, Elop has been doing all he can to make his WP plan sound like it's still breathing, including hiding costs specific to Lumia, and I expect that to continue.

[Spawn]

@vladkr

> "If NASA can send monkeys to space, why don't they send Stephen Elop there ?"

Because unlike the Nokia BOD the NASA has a clue and knows that Elop burning the space so noone can go there in future would not be in best human interest.

[CN]

@vladkr

Or maybe I just know a little bit more what this IPTV is about in this case.. ? ;-)

17 employees to Accenture, 23 to Belgacom. Peanuts compared with what NSN has done recently. And if you haven't seen the actions in their focusing plans - and how they indeed walk the talk changing their strategy - please find out. It's mostly there in the public.

And again, no point taking Nokia into this discussion. There are loads of solutions from variety of infra suppliers and if IPTV eventually flies, Nokia will enjoy it - no matter whose infra is delivering the service. And in terms of revenues through NSN sales, should NSN be the supplier of IPTV solution? Not worth a lengthy discussion.

P.S. NSN revenues. Positive cash flow is of course nice, but the fact is that NSN has always been a loss making unit. Don't let non-IFRS numbers confuse you.