Bizarre Stat of the Day: Microsoft (and Nokia) have only achieved 50M Lumia activations? Seriously? Out of 76M shipments? What happened to the other 26M? Seriously! Tossed into garbage by retail?

I am doing my catch-up reading after some heavy travel and found a truly bizarre stat from mid November. Microsoft proudly announced they had just passed 50 million cumulative Lumia activations. Yeah, that may sound like a big number until you remember Lumia has now existed as a product available for sale for 37 months and has achieved 76 million cumulative shipments through mid November. Yeah. I know. Thats a massive 26 million missing smartphones. Where the hell are they? What has happened. This was a true WTF moment for me on Twitter when I noticed that number and I had to go back and double-check my numbers through every Nokia and Microsoft quarterly release to verify my numbers. But yeah. 76 million cumulative shipments through mid-November (I have added the half-quarter sales estimate obviously, as we only have the quarterly data through end of September. The cumulative sales were at 70 million at the end of Q3).

LUMIA SHIPMENTS

So lets first check on the math. This is the table of total Lumia shipments from the dawn of this Eloppian disaster in Q4 of 2011.


LUMIA QUARTERLY SHIPMENT NUMBERS

Q4 2011 . . . 0.6 million (TomiAhonen Consulting estimate based on Nokia numbers)

Q1 2012 . . . 2.0 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2012 . . . 4.0 million (official Nokia number)
Q3 2012 . . . 2.9 million (official Nokia number)
Q4 2012 . . . 4.4 million (official Nokia number)

Q1 2013 . . . 5.6 million (official Nokia number)
Q2 2013 . . . 7.4 million (official Nokia number)
Q3 2013 . . . 8.8 million (official Nokia number)
Q4 2013 . . . 8.3 million (TomiAhonen Consulting estimate based on Nokia numbers)

Q1 2014 . . . 8.1 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2014 . . . 8.7 million (TomiAhonen Consulting estimate based on Microsoft numbers)
Q3 2014 . . . 9.3 million (official Microsoft number)
Q4 2014 . . . 6.0 million (TomiAhonen Consulting projection through mid November based on Q3 numbers and historical Christmas sales bump)

TOTAL SHIPPED . . . . 76.0 million
TOTAL ACTIVATED . . 50.0 million
Estimated in channel . . 3.1 million (4 week inventory based on Q3 numbers)
Shipped not activated . 22.9 million (is 30% of total shipped)

Above data by TomiAhonen Consulting 6 Dec 2014, based on Nokia and Microsoft quarterly results and industry data
The above data may be freely shared


So wow. Even if we allow for a generous 4 week inventory build-up (Nokia historically reported about 3-4 weeks of inventory, this is at the high end of that historical pattern) it still means nearly 1 in 3 Lumia smartphones that shipped from Nokia/Microsoft was never activated !!! 

how is that possible? A few scenarios. So some were given to various potential users as samples or as gifts - that were never then even used. And others - probably the majority - were just shipped to stores that were never sold. Some would be returned in later periods and thrown away by Nokia as unsellable obsolete inventory. Others would remain in the stores in disocunt bins until discarded as trash as unsold. Note a significant number would be in that Q3 2012 time period (when Ballmer 'osborned' the Windows 7.x series not allowing an upgrade to Windows 8) and in the Q2 2014 time period when Nokia introduced the X Series. And some may have been given out as cheap kids' toys from those discount bins, never activated but used as a child's toy, unconnected phone. Totally meaningless in the 'ecosystem' that Microsoft attempted to build for Windows Phone. So yes. 30% of all Windows Phone based Lumia smartphones shipped have not been activated. That must be an industry record for futility.

Remember, first of all, that this was a new smartphone series replacing the world's bestselling smartphone for which Elop boldly promised 1-to-1 transition. Not allowing any growth while the market has more than doubled, even at 2010 sales levels Lumia should have sold 338 million smartphones. For every one conversion Nokia then gave away 4 loyal customers to the competition (most of them went to Samsug as we've seen). But those numbers were based on the reasonable assumption that every Nokia Lumia that actually shipped from Nokia factories was then sold by retail. Not that another third of what shipped were not ever sold. So the rejection rate of loyal Nokia existing (Symbian) smartphone owners was more like 5 out of 6 rejected.

We know of course now what were causes to the comprehensive Lumia market failure. There was the carrier/retail boycott that even CEO Stephen Elop openly admitted to the Nokia shareholder meeting. This had started just before the first Lumia handsets started to be sold in 2011 Then there were the infamous 101 faults (later upgraded to 121 faults) that caused the series to produce Nokia record level return rates and huge dissatisfaction by loyal Nokia users and severely bad word-of-mouth in 2012. This was to the degree that even the new Asha series outsold Lumia for the full period that the two were sold side-by-side from 2012 to 2014. And various consumer surveys found that the early buyers of Lumias (and other Windows Phone smartphones) rated them as the worst things they'd seen and would not buy another again, etc from 2012 on. And then no upgrade path to Windows Phone 8 in 2013. And pigheaded refussal to give Nokia loyal customers what they wanted (like good cameras, big screens, QWERTY keypads etc) until Elop was no longer calling the shots and the first good cameras and big screens came too late in 2013 to stop the handset unit collapse. Nokia even launched Android based smartphones in early 2014 as the ultimate proof that the Windows Phone based Lumia series was a dead duck. Even Asha series outsold Lumia in the periods when both were sold side-by-side while all the marketing push went to Lumia. Total utter comprehensive market failure if you sell your phones at a loss and still one third are never even activated!

While Elop's propaganda machine was churning out lies about how iPhone users n England were fed up with Apple and how Lumia was a big success in America and outselling the iPhone in China (all later found to be totally unfounded lies) the reality was that the product line was a sales disaster. The Lumia line never once even broke even any quarter. Even now through two quarters of Microsoft ownership the Lumia series is sitll generating a loss. Not one quarter of a profit.

So now we know. Nokia shipped its 50 millionth Lumia smartphone to its retail channel in the first week of March 2014. Since then Nokia/Microsoft has shipped another 26 million more Lumia smartphones running Windows Phone. But they didn't achieve 50 million activations of Lumia until after the third week of November 2014. Thats pathetic. Lumia is the most disasterous smartphone series of all time. It is a dead phone shipping. Even those who receive it as a gift or as a freebie are apparently not bothered to activate it. Yes, even if we allow for large inventory buildup, an unprecedented 26 million smartphones running that hated Windows OS, yes a massive 30% of the Lumia branded devices have never been activated. What happened to them? Most probably were just thrown away by the retail channel as unsellable junk.

Notice by the way, that my previous estimate of the installed base of Windows Phone smartphones is clearly far too big. If the 50 millionth Lumia had been activated mid-November then Lumia installed base was only about 41 million and the total Windows Phone ecosystem installed base would then be only about 44 million rather than the 59 million I have reported on the blog about Q3 smartphone market shares. And that 44 million for Windows Phone would mean 2% market share of installed base not 3%. I will go correct that blog.

Comments

[grotos]

I suspect this could be the same with Android phones - we are given shiped units and not sold & activated.

Maybe this is overall trend and now we see confirmation in data?

People buying iPhones made concious decision about phone because of the high price - probably all or almost all iPhones are activated because of high price.

[Elie]

Are the phone activated are not in WP8 only? Cuz even if you hâte Wp, I find this number quite suspicious

[AndThisWillBeToo]

Few more options:

1) Phones used as feature phones. Do you know how poor the Ovi account activation % of Nokia's Symbian and S40 feature phones were? Phones activated in China may not be able to access Microsoft servers so Microsoft never sees them "activated". Also I cast my doubts that kids, elderly people and users without data plan ever create the Microsoft account mandatory to see device "activated".
If you want to rule this option out, you need to have Android activation % for comparison. If it gets even close, this whole blog post turns pointless.

2) Less likely but possible scenario is some misinterpretation by the speaker in question (this was a clipper of presentation in MSFT developer event AFAIK). If he e.g. was talking about activated Lumia phones currently in use (much more significant number for developers) it would drop all older phones that have rotated out of the use. Basically anything sold prior to Q3 2012.

I vote for option #1.

[baron99]

Yes, we are to believe all sorts of Microsoft phones were sold in china and not activated ....LoL!, I got a bridge to sell you too!

[abdul muis]

I guess this is maybe the accounting magic at work. Someone in marketing department mess up with the number to make it look like Lumia is gaining marketshare, but someone in other department didn't consult the marketing department, and went with honest number.... result.... big mess...

I wonder if BB will have the same mess. BB device also failing so hard.

[KPOM]

There are probably lots of discrepancies between shipment and activation statistics. Is it possible that phones can be "activated" without it registering as such? According to this, in the week leading up to and including Christmas, 3 times as many Apple iPhones were activated than Samsung devices. These are worldwide statistics.

http://www.flurry.com/blog/flurry-insights/apple-and-apps-dominated-christmas-2014#.VKGMK-ADAE

I doubt that Apple actually outsold Samsung 3x in the weeks leading up to Christmas, even in the US. More likely Apple sales matched Samsung's for the quarter. But virtually all iPhones get synced to an Apple ID or iTunes account as soon as they are turned on, and Apple does sell a lot more phones on the retail market directly to consumers, rather than to carriers.

[AndThisWillBeToo]

@abdul
Thanks, I had forgot how the unique peculiarities of this forum: in general Microsoft numbers are fake, falsified and cannot be trusted. However THIS specific number is 100% legit and verified. As all of a sudden are all the past quarterly shipments that previously have been suggested to be greatly exaggerated by several commenters here.

I still vote for #1: phones sold but not connected to Microsoft account. Lumia 520 is a smartphone alright - but it's still mainly sold to featurephone users.

[togga]

I suspect some phones are bought by MS-fanatic IT-staff and pushed to employees that does not want nor use them.

[falito]

why change the numbers of shipments, real sales, activation or tommy BB.. this info appears 3 months ago when MS launch L830&L730 in India on Oct. 1st: http://indiatoday.intoday.in/author/Sahil-Mohan-Gupta/5.html --if we stay with tommy #s we have for last 5 quarters *2013-Q4:8.2´M. **2014-Q1:5.6´M. Q2:7.4´M. Q3: 9.3´M. Q4:zero = 30.5´Ms tommy now say´s:4Q13-4Q14 = 40.4´M ??? WTF.---

[abdul muis]

@andthiswillbetoo

I bet you never use, or try WP device.

Microsoft has done something great to PUSH user to register/activate the phone. If the phone didn't activated with Microsoft Account, you can't save the phone number in address book. Awesome, isn't it?

[abdul muis]

@thiswillbetooand

Quote: "Phones activated in China may not be able to access Microsoft servers so Microsoft never sees them "activated""

No!!! The only one that got blocked in China were Gmail/Google. Not microsoft. and as I wrote above this post. If you don't activate your WP device, you CAN'T SAVE PHONE NUMBER into the adress book, and I bet no one will use WP phone like that.

[AndThisWillBeToo]

@abdul muis
> I bet you never use, or try WP device.

In fact I do, daily. I've set up two - one for me and one for my mom. In both cases I have had certain interest to install apps so I have also included the MS account. I cannot therefore say if you're right or not about not being able to add a contact without MS account but I'm going to believe you here.

Fact is that the number Tomi picked here was mentioned by a speaker in developer event. As Elie said above, the difference is too suspicious to be true no matter how much Tomi wants to accept all the bad numbers about WP and reject all positive ones. The idea that one third of all Lumias ever produced were thrown into the trashcan is compelling but it would show up as too much red ink in fiscal reports (be it Nokia, MSFT, carriers or retail) to be left unnoticed.
Did the speaker talk about WP8 Lumia activations only? Plausibly as this was for SW devs but the number is still too low. Was it installed base but he mixed the terms? Was he just clueless? We may never know.

[abdul muis]

@AndThisWillBeToo

"The idea that one third of all lumia .... to be left unnoticed."

Well, there's the reason why some lumia were discounted very big. Unfortunately, even with big discount it still hard to sell the lumia's. The lumia might not be dumped into the trash can, but maybe nokia/microsoft already giving the huge discount in the first place so the retailer won't lose much. The retailer maybe getting a big profit from other related discount such as Windows OS, MS Office, or X-Box for selling the lumia phone.

[Winter]

Here are two others who found the same numbers remarkable:

http://www.ubergizmo.com/2014/11/microsoft-50-million-lumias-activated-and-counting/

http://wap.business-standard.com/article/technology/microsoft-banks-on-unique-apps-to-take-on-smartphone-rivals-114120400931_1.html
"Globally, we have 50 million Lumia activations. India is the fourth largest market in terms of Lumia sales. Lumia is the fastest selling smartphone in its segment and is the most competitive offering for the smartphone user,"

https://twitter.com/search?q=%22but%20shipments%20since%20Oct%202011%20%3D%2067m.%20So%2C%2017m%20lost%20at%20sea%3F%22&

Charles Arthur ‏@charlesarthur Dec 5
Nokia India chief says 50m Lumia activations worldwide but shipments since Oct 2011 = 67m. So, 17m lost at sea?

[Winter]

And some come up with a solution to the discrepancy:

Rami Saajoranta ‏@RSaajoranta Dec 5

I think @aatifsumar might be right: I know many Lumia users who are only using it to call other people @charlesarthur @teroterotero

(see the twitter link I gave)

[abdul muis]

@Winter

Around 1.5 year ago, my driver upgrade his old S40 phone to the 'cheap/big-discount' lumia phone. And he told me that he lost my number and can't save my number into his phone. I offer him to look onto why, and found out that if the phone is NOT ACTIVATED (use internet, and put some microsoft account), it CAN'T store NEW CONTACT.

So, I think that everyone that suggesting that the lumia is used as dumbphone and not activated, has no idea about the phone need to be activated with microsoft account to be able to store new contact in address book.

[AndThisWillBeToo]

@Winter
Shorter link:
https://mobile.twitter.com/charlesarthur/status/540943269493239808

[Winter]

@Abdul Muis
"So, I think that everyone that suggesting that the lumia is used as dumbphone and not activated, has no idea about the phone need to be activated with microsoft account to be able to store new contact in address book."

I think these people might be like your driver. They simply do not store their contacts because they are unable to get through the technology and do not have someone present to help. So, they memorize their numbers, or use pen&paper.

[Winter]

@ExNokian
"C.A. said there are 17M too many Lumias shipped vs. activations, Tomi here says 26M."

Determining the number of Lumia's shipped is not trivial. You have to comb through the media hype of MS and Nokia and add them up yourself.

Tomi has given the numbers he used, so you can check for yourself where he erred. C.A. does not give a breakdown on how he got to his release numbers. So I stay with Tomi here until someone comes up with better numbers.

[abdul muis]

@Winter

"I think these people might be like your driver. They simply do not store their contacts because they are unable to get through the technology and do not have someone present to help. So, they memorize their numbers, or use pen&paper."

I hope what you write is sarcasm. Because I'm not sure anyone will memorize number or use pen & pencil. I think if the user can't save the number, after a while, they will sell the phone to friend/relative or second hand shop, and the phone will go round and round until it find an owner that will activate the phone.