Nokia Surprises Us by Releasing Q4 Smartphone Results Early. So 3% for Q4 and 5% for full year 2012? And they think this is 'good' ???

So here we go.. Nokia surprised a lot of Nokia-watchers by releasing its official smartphone shipments numbers today, well before the final Q4 results are due. So we can do the Nokia part of Q4 Bloodbath analysis and also the full year for Nokia. As Nokia is the last vendor left providing Symbian, we can do Symbian for Q4 and full year, and as Nokia does the vast majority of Windows Phone, we can also do preliminary estimate for Q4 and Full Year 2012 results for Microsoft's Windows Phone ecosystem. Is it the promised 'third ecosystem'...

NOKIA Q4 SMARTPHONES

Nokia smartphones shipped 6.6 million units in Q4, up only 5% from Q3 when it sold 6.2 million smartphones. This is down from 19.6 million one year ago when Lumia first launched and 28.8 million when Nokia sold only Symbian based smartphones.

Nokia preliminary market share for Q4 is 2.8% (on my target market total unit sales number Q4 of 240 million smartphones). This is down from 3.6% in Q3 and 12.4% one year ago. More ironically, as Nokia's market share was 28.8% in Q4 the last quarter before the Elop Effect and Nokia's new strategy, Elop has managed to scare away literally 9 out of every 10 customers in just 24 months. This is a world record in market failure - not just in mobile phones, in any industry ever, by a global market leader of a Fortune 500 sized company. Literally a world record failure!

For the full year 2012 Nokia has shipped 35.0 million smartphones and end the year with 5% market share. That is a collapse from 2011 when it sold 77.3 million smartphones and held 16% market share, which itself was a collapse from 2010 when Nokia still saw massive growth in its smartphone unit and sold 103.6 million smartphones and had 35% market share.

So currently Nokia's smartphone unit holds 3% market share with essentially flat unit sales and declining market share. Its current ranking for Q4 in the Top 10 is definite to be worse than Samsung, Apple, Huawei, Sony, ZTE, LG, Lenovo, HTC and RIM. Yes. Nokia's best possible finish in the Top 10 is ranked 10th. Nokia was on top of the Top 10 when Elop took over two years ago. But Nokia may have tumbled out of the Top 10 smartphone makers altogether like Motorola did last Quarter. The company chasing Nokia into the Top 10 is Chinese Yulong who sell smartphones under the Coolpad brand and they are expected to sell between 6 and 7 million smartphones this quarter, so it will be very close whether Nokia falls out of the Top 10.

Meanwhile for the full year its not quite as bad for Nokia, as they had early 2012 quarters with healthier sales to help boost their rankings. Nokia's 35 million smartphones sold for the year 2012 puts them ahead of Lenovo, RIM, LG and HTC. Nokia cannot finish lower for the full year than 6th biggest smartphone maker, but also, we know it can't catch Samsung, Apple or Huawei, so Nokia cannot be better than 4th. The race is now between Sony and ZTE for whether Nokia finishes 4th, 5th or 6th. Nokia was twice as big as its nearest rivals when Elop took over.

LUMIA, WINDOWS PHONE, SYMBIAN

So Nokia also announced it had sold 4.4 million Lumia smartphones (they didn't give a split of how many of the new Lumia 920 running Windows Phone 8, and how many of the older obsolete Lumia series, hopefully we will have that split in the official Q4 results). But we can obviously calculate the Symbian/MeeGo split out of that, at 2.2 Million non Lumia Nokia smartphone sales. 

So Symbian sales are down 37% from Q3, to 2.2 million. Lumia sales now with the new Windows Phone 8 finally launched, are up 52% from Q3 ie up from 2.9 million to 4.4 million. The 'boost' from Windows Phone 8 is a measerly 1.5 million Lumia units - a true catastrophic disaster when we compare for example to 2010 when Nokia launched a new version of Symbian, S^3 and a new flagship, the N8 (like the Lumia 920 now) and Nokia in the Q4 quarter sold 5 million new Symbian S^3 devices including 4 million N8 devices. And the smarphone market has more than doubled since then. If Elop knew what he was doing, he should have sold at least 8 million Lumia 920 units now - yeah, if the consumers were willing to buy Lumia and the carriers/operators and distribution were willing to sell it haha. The news we had earlier this week via Fortune was that a consumer survey of smartphone owners in the USA and Europe by Bernstein found that the Windows Phone customer loyalty is in the toilet, only 37% of Windows Phone owners are willing to buy another Windows Phone smartphone (compared to 95% for the iPhone or 75% for Android smartphones. No wonder Nokia is now suddenly willing to consider shifting to Android).

So for the first time in five quarters of sales side-by-side, Lumia series finally outsells the remaining Symbian smartphones. And now Symbian does tumble to 6th in the ranking of smartphone operating system sales in Q4 behind Android, iOS, Blackberry, bada and Windows Phone. The end is truly in sight now, Symbian Q4 market share is under 1%.

What of Windows Phone? Nokia has been shipping about 75% of all Windows Phone smartphones recently and there is no reason to think this would have changed for Q4. If we use the same ratio, the preliminary estimate for Q4 Windows Phone total shipments would be 5.9 million smartphones and a market share of 2.4% for the quarter. Yes, bigger than Symbian but nowhere near Blackberry, and very close to losing to bada as well. Windows Phone may be currently either 4th or 5th biggest smartphone OS in Q4. For the full year 2012 it isn't that pretty.

For the full year Symbian sold 18.5 million smartphones and Windows Phone will be somewhere between 15 million and 17 million. bada is going to be bigger than Windows Phone but will chase Symbian. Blackberry is nearly twice as big as Symbian at 33.5 million smartphones and Android obvously won the year and iOS is second. So the rankings of the full-year 2012 look like this: 1 Android, 2 iOS, 3 Blackberry. 4th is race between Symbian and bada. 6th is definitely Windows Phone at 2% market share. So much for your promised 'Third Ecosystem' that was supposed to have 20% market share or better by now haha by so many 'experts'.

MY FORECAST? HALF RIGHT, HALF WRONG

Some Tomi-haters are jeering me for that Kantar numbers analysis I gave. I gave the numbers as Kantar reported, and projected from those what it would mean for Nokia and Windows Phone and Symbian. I said the finding was surprising and I flipped my balance of Windows vs Symbian from what I said in November (two thirds Lumia, one third Symbian) to the other way around. Still, I predicted 6.8 million total smartphones for Nokia, it delivered 6.6 million. Thats almost spot on. I did originally have the mix almost perfectly for Lumia/Windows in November but now did alter it to the wrong mix. Yes. That was a bad call. Still, on the big picture I was very close.

As to Nokia actual performance we have the full story now: Nokia sold smartphones in the following pattern since Elop took over:

NOKIA SMARTPHONE SALES COLLAPSE UNDER ELOP
Quarter. . . . Smartphones . . Market share
Q4 2010 . . . 28.8 million . . . 29%

Q1 2011 . . . 24.2 million . . . 24% (Elop Effect) 
Q2 2011 . . . 16.7 million . . . 15%
Q3 2011 . . . 16.8 million . . . 14% (N9 MeeGo launch)
Q4 2011 . . . 19.6 million . . . 12% (Lumia Windows Phone 7 launch)

Q1 2012 . . . 11.9 million . . . . 8%
Q2 2012 . . . 10.2 million . . . . 7%
Q3 2012 . . .   6.3 million . . . . 4%
Q4 2012 . . .   6.6 million . . . . 3% (Lumia Windows Phone 8 launch)
Source: Nokia quarterly data and TomiAhonen Consulting Analysis
This table may be freely shared

Do you really WANT to go back to all those rosy promises of the Third Ecosystem back in February, March and April of 2011, when so many experts promised Nokia and Microsoft would make magical success together becoming the third ecosystem and have over 20% market share? If you remember, my first official forecast in May of 2011 for the year 2012 smartphone sales suggested Nokia would end the year 2012 at 7.4 million smartphones sold and 3% market share. I did expect Nokia to have migrated 7.0 million Windows Phone sales by Q4 and Nokia only was able to do 4.4 million.

Still, from Spring 2011, I was by far the most pessimistic of any analysts making Nokia or Windows Phone forecasts at the time. Now look at the results? I was TOO OPTIMISTIC. Nokia did even worse than I was able to forecast and NOBODY had published a forecast worse than mine. Do I prove value on this blog?

Then when I had seen how much Elop had mismanaged the Nokia Lumia launch and first Lumia handsets, I did offer a revised forecast for year 2012 sales in June of 2012, where I downgraded my forecast to 5.3 million total smartphones (ok, that was too pessimistic, it was 6.6 million, but the average of these two forecasts was almost spot-on) and my forecast for Lumia sales in Q4 - with the stated clarification, that two Windows Phone 8 based Lumia phones would be launched by November 2012 - said Q4 Lumia sales would be 5.0 million units (was 4.4 million). For the full year 2012 I predicted 19.0 million Lumia shipments (the most pessimistic view in the industry) and Nokia only managed 13.9 million. Again, from June 2012, that was THE most pessimistic Lumia forecast by any forecaster or expert in the industry, and AGAIN I was too optimistic on Lumia.

No forecaster gets it 100% right, that is not possible. But the professional forecasters amongst us try to offer better insights and also - very importantly - to revise forecasts when facts change - AND to EXPLAIN WHY their forecasts have changed. I have done so diligently on this blog, and if you trusted what I said, you were closer to the truth than any other published expert at the time. During the summer of 2012, looking into Windows Phone 8, many of my peers were promising 8 million to 10 million Windows Phone Lumia sales levels. I said 5.0 million, was crucified here for being too pessimistic - and yet, I was the closest to the truth and even I was too optimistic on how incredibly poorly Nokia would perform in Q4.

With that, open for discussions and debates. But people commenting - if you come here to gloat that I was 'wrong' - I will delete your comment without a moment's thought unless you can provide any analyst whose forecast at the time - by May of 2011 or by June of 2012 - had a better number than mine. That Kantar projection was a warning on a usually-reliable early number, and I clearly state now, my revised mix, based on the Kantar numbers, was wrong; but my earlier mix of Lumia/Symbian was spot-on (I should have stayed with the November forecast haha).

PS what will Nokia and Windows Phone look like in smartphones for 2013? The market share will linger in the 2% to 3% range, it will not somehow magically now bounce up to 12% or 16% or 20%. That will not happen. I trust I have enough of a track history of being the most accurate Nokia smartphone sales forecaster that you can trust that prediction. If I'm off, I'm more likely to be too optimistic on Nokia than too pessimistic, but even if I'm off by 100% then Windows will be no bigger than 6% this year. And it won't be that big. And even 6% won't make Windows Phone anything like the, ahem, 'third ecosystem' haha.

For those interested in our crowd-sourced forecast competition from one year ago, those who were guessing Windows Phone to be around 2% or 3% are now the front-runners such as Eldar Murtazin and Jonathan MacDonald. See all contestants in the Twitter-based guessing game here. 

Also don't forget my new series of blogs, telling each Nokia management mistake on this journey to the world record of management failure by Elop, in simple, one problem per blog postings (short ones, honestly) each illustrated with one picture

Part 1 - the Nokia smartphone unit sales collapse following Elop Effect  

Part 2 - The competition during Elop's tenure - Nokia vs Samsung vs Apple iPhone 

Part 3 - the Nokia smartphone sales collapse compared to biggest failures in handset history (Palm, Motorola, Siemens etc) 

And to those who might suggest this disaster was not foreseeable, actually Nokia itself acknowledged all these problems we see now, in its SEC Form 20-F filing to the New York Stock Exchange in March of 2011. All the problems they said might happen - actually did come true. This is the worst disaster in any industry, ever. And if every risk that Nokia anticipated with its high-risk Windows strategy DID come true already, then don't expect any kind of speedy - or even slow - recovery. Nokia is doomed. Or at least, is doomed if Nokia's own risk assessment was this accurate. You judge for yourself, read the updated analysis of Nokia Form 20-F and the truth (with statistics).

Comments

[Tester]

@rew:

Do we need to play this game again?

It's called 'forecasting', not 'clairvoyance'.

Not always, if you try to extrapolate future data from what you have available, the result will be correct.

If, for example, there was a minor aberration in Kantar's Symbian numbers, of course they will affect the precision of the forecast. That's simple math - especially if it comes to low marketshare products like Nokia currently has to offer.

[Winter]

@Tester
"That's a game only a monopolist in complete control of its business can do. MS won't ever be able to get there in mobile with the current competitors."

But Nokia does not have that option. They have welded themselves to the MS train.

[Tester]

@Nokiawatcher:

That's the typical kind of Microsoft statistics-tweaking we are known for.

Of course relative growth is higher if you start with almost nothing and will make any statistic look great. What should not be ignored is absolute percentage:

WP grew from 0.62% to 3.24% in that time period. Ouch!

(Android grew by more than 7 percentage points (3 times as much as WP) in the same time period, btw, but since it started well over 20 the relative growth is only 1/10th of what Windows Phone gets here.)

Sorry, but anyone using these kinds of statistics loses all credibility in my book. It's an act of desperation to make oneself look good.

[osakkeenomistaja]

@Lasko

Johtamisessa on parantamisen varaa, siinä olen ehdottomasti samaa mieltä. Tuote, siis WP on mielestäni kuitenkin hyvä. Käyttöjärjestelmä on sulava ja ulkoasu miellyttävä. Ulkoasu sopivasti erilainen kuin muilla.

Lehdistöstä sen verran että Nokiassa olisi myös hyviä asioita kirjoitettavaksi. Kuitenkaan suomalainen lehdistö ei niitä halua syystä tai toisesta tuoda esille.

Niin, ja en sulje silmiäni ikäviltä asioilta. Olen tiedostanut ne jo aikoja sitten. Kuitenkin kun olen tänne asti mukana roikkunut niin tyhmää olisi nyt hypätä junasta pois.

[Nokiawatcher]

Thanks. But do you think it will continue beyond 3% of phone owners, or will the growth in UK stall soon or even go down again when Blackberry 10 and the cheap iPhone come on the scene?

[Tester]

@Nokiawatcher:

The overall impression seems to be that it'd remain at low numbers. Even the most positive outlook right now, IDC's 4 year projection, only says 11-12% for 2016. (Last year they predicted 19% for 2015 so even they had to revise down quite heavily.)

It comes to the simple factor whether people actually WANT to buy Windows phones. Currently it doesn't look like that's the case. I personally think that Windows Phone 8 already had its window of opportunity. Soon the Android makers will release their next generation with full HD displays and other boundary-pushing features. I'm sorry, but the Lumias won't have any chance against that.

So, judging from the platform's capabilities, overall market reception, user satisfaction and developments among competing manufacturers my estimate is that 5-6% is the limit - but only with discount pricing and targetting low end customers.

[Lasko]

@osakkeenomistaja

It is absolutely fine (and absolutely valid) that you think that the Lumia is a good product; but the problem is not what you think, the problem is what others think. And we know that 98% of the market thinks that it is not a good (enough) product, and that of this remaining 2% 2 out of 3 people will not buy another of this product; we know that carriers and retailers do not support the product (enough) as well. This is the problem. And this problem is NOT caused by the press.

Windows Phone is a niche prodcut, but Nokia is not a niche company - that's the 'horrible' in the 'horrible' product.

Yes, the media is to blame for 'There is no news like bad news', but this is not a problem specific to Nokia, and this is NOT the problem OF Nokia. There problem is the exclusive Windows Phone strategy.

And of course Nokia should switch from this strategy immediately - there is no success with it, because there is no success for Windows Phone - at least not at a rate Nokia would need.

"When you discover you are riding a dead horse, the best strategy is to dismount."

[vladkr]

Dear osakkeenomistaja,

Sorry that I can't write in Finnish, I forgot almost everything of it.

I understand you position, but you have to face that Nokia has nothing to do with Finland any more.

If few months ago, I could say that Nokia is only a postal box, it isn't any more as they even sold their HQ.

To sum up :
- Phones are designed in Sunnyvale, California (6 metres away of Apple offices)
- Phones are manufactured mainly in China, few in Brazil and India.
- Most R/D workers were fired
- Software is made by MS
- Hardware is made by Qualcomm

I would also add all Nokia workers, who were fired under Elop presidency, were in the most abominable way :
- Romanian workers were offered the cellphones they used to manufacture, and which were unsellable as they were Osborned.

- Most Finnish workers were "sold" or "offered" to third parties with work experience reset to zero, making them ineligible for compensations when their new employer fired them almost immediately.

You want to support Finland ? Buy Nokian Renkaat/Jalkineet, buy Fazer, buy Fiskars, buy Mercedes A-class, buy Valio, etc.

But buying Nokia won't support Finland any more.

[osakkeenomistaja]

Dear Lasko and vladkr,

Now I am too tired to this kind on conversation, is Nokia going to be profitable or not.

In my opinion Nokia Lumias are fully competitive with best Android and iPhone devices. Only problem is how to get customers test those devices. I think that Nokia has now great portfolio of smartphones and basic phones.

And, vladkr, yes I have Nokian winter tyres in my car, I drink Valio's milk, I eat Fazer's chocolate. Mercedes A-class is too small for us and also too expensive. I try to buy as much Finnish foodstuff as possible.

I wish all the best everyone! I am over and out now.

[newbie reader]

@vladkr
// buying Nokia won't support Finland any more.

Nokia still pays taxes in Finland, no?

[vladkr]

@Newbie reader:

They were divided by 5 between 2008 and 2011... it should be even less for 2012

[newbie reader]

> They were divided by 5 between 2008 and 2011

well, smartphone sales are also down, about the same ratio

[Lasko]

@osakkeenomistaja

No, 'tricking' people into buying Lumias does NOT solve the problem.

As said, there ARE already people buying Lumia devices, but the surveys from Yankee and Bernstein have shown that 2 out of 3 people will either return their device immediately or will not buy another Windows Phone product.

Windows Phone is NOT a desirable product, it is NOT 'if they try it they will like it', it is NOT a marketing problem, it is a product problem.

[m]

@Tester: "The question is, what is genuine profit and what is just clearance of obsolete stock?"

What is interesting is that the earnings releases only ever use the word "ship" when referring to phone counts, but in the pre-earnings press release they only used the word "sold". So I think that the 4.4M Lumias includes much overstock that was already counted as shipped in Q3.

@Tomi, you said that some carriers report more old Lumia sales than new. So it seems likely that the actual number of Lumias shipped in Q4 was less than 4M, maybe as low as 3.5?

Tester, I agree that a lot of the "profit" is a recovery of some of the cost of the stockpile of WP7 Lumias shipped in Q3.

I agree with those predicting a shock with the actual earnings release. I would bet that Nokia will report a net loss.

But why the rosy pre-earnings press release?
- A pump-and-dump? A short squeeze? Could Microsoft interests be buying up stock at depressed prices and then squeezing the shorts at pumped up prices?
- Elop needs to get it stuck in shareholders' minds that WP8 is doing well enough to keep giving it another chance, even though it's still a loss and will continue to be a loss? Somehow, that truth seems to continually be lost in the repeated message, "Lumias are selling well."

I will bet on it, Nokia will report a net loss in Q4.

[Lasko]

@Dan

According to some articles on the internet Windows Phone is the best operating system, with the best customer satisfaction, and the best hardware and the most sold operating system.

According to reality the market share is less than 2%.

Can you spot the difference?

[Roger]

I am interested to know if you Tomi believe Nokia can turn the corner if it starts selling Android phones by say late this year. It should not be hard to slap on Android on the same WP hardware as it uses QC chipset ? Nokia will then join a successful ecosystem that enables Nokia a free hand to innovate.

[m]

@osakkeenomistaja, I'm sorry to say this but by buying a Lumia, you're not supporting Finland, you're supporting Microsoft. The Lumia line is not profitable at Nokia, it is a loss. That means that right now, the more Lumias they make, the more money that Nokia earned over the past decade is burned.

Admittedly, the goal with Elop's Nokia is to build up WP until it is profitable for Nokia, and if that happens then supporting Lumia now is an investment in Finland's future. HOWEVER, if it fails, and Nokia finally gives up on WP, then all of that investment is gone to waste, dumped into advertising or carted off by Microsoft. If it fails, then the more it is supported now, the more is wasted. Ifwhen that happens, Finnish people will realize that they've been taken advantage of and abandoned by foreign interests.

[Stephen Elop]

I believe that you overestimate the Elop Effect in Q1 2011. It is just the general post-christmas fall. Elop Effect took its full strength in Q2 2011.

[Henrik]

@Roger The Lumia 920 Hardware is more up to date with Android hardware. So they have a change with that. If they puts Android on that.
But it will not be in the high end market. The Lumia is only a dual core CPU and high end Android is Quad core at the moment. and moving to 8 or 4+4 cores (long story but 8 core and 4+4 core is not the same)

But if Nokia updates the hardware like the rest of the industry and do a little catch up. Then they have a change.
Nokia have some grate cameras and some beautiful screens.

But looking at the Lumia 900 that they had before the 920. The the hardware is to old for anything but low end Android phones.
So it all depents on what hardware they would use to ship with Android. AND the price. They can't sell on there name as Apple is doing. So they have to match the prices of the other Android phones out there.

What would be nice to see would be Nokia's skins and features that they would/could add to there flavour of Android.
But I fear that most of there brain power for that is either fired of has left on there own. :-(

[peter sellers]

@Tomi

Hey Tomi, thanks for keeping up your writing. I feel like I'm in an alternate universe where the media is almost exclusively inept and you are literally the only person writing the actual story. A couple points...
-Nokia sold 4.4 million Lumia phone... that's awful. In Q4 they added (and sold) the Lumia 510, Lumia 920, Lumia 822 and the Lumia 810. It's not as though they stopped selling the old ones. As Nokia adds new products to its 'Lumia' line its only natural for it to expand, sadly for Nokia, 4.4 million isn't much of an expansion.
-It is good I suppose that they will make a profit this quarter but as far as I can tell it seems to be mostly due to their Asha line and NSN. I would absolutely LOVE for someone from the media who keeps writing about Lumia's "success" and the "turnaround" finally paying dividends, to explain to me how selling 4.4million smartphones of an ENTIRE product line is somehow magically adding to Nokia's profitability.
-Morgan Stanley predicted Nokia selling 32 Million Lumia phones in 2012. How did they do? 13.3 Million Lumia phones sold in 2012. Morgan Stanley was off by 18.7 Million!!!!! So this is good news?

Additional thoughts...
-Obviously switching to Windows Phone OS is the stupiest move in history, and is almost 100% responsible for the death of Nokia. However I believe abandoning selling phones straight from Nokia has also contributed greatly to the downfall of Nokia. Nokia used to be the ONLY place to buy a well made cellphone at a very competitive price that was completely unlocked. This made them non-existant in North America where the carriers run the market, but internationaly they were loved for this practice. Elop sold Nokia's soul to the carriers for a piece of the North American market and Nokia lost big!
-I sympathis with you Tomi, I used to love Nokia. What Elop has done to the company is criminal, we just talk about it on the internet but I can only imagine how the employees of Nokia feel, who find themselves jobless because their new CEO is trying to save Windows Phone.