Signs of hope for Nokia as smartphones take on increasing importance
Sales of Nokia Lumia smartphones increased by 32 percent quarter-on-quarter to 7.4 million during the second quarter, but the Finnish manufacturer still posted a loss of €115 million as overall sales of mobile phones declined during the same period.
The loss was far better than the €824 million one it announced at the same time last year, while Nokia has said it expects demand for the Lumia range to continue to grow.
Last week, the Finnish manufacturer announced the Nokia Lumia 1020, a Windows Phone-powered device with a 41 megapixel camera, that it hopes will challenge the likes of the iPhone and Samsung Galaxy S4.
Nokia Lumia sales
“Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem,” said Nokia CEO Stephen Elop. “During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue.”
Analysts attributed the increase in sales to cheaper devices entering the market, specifically the Nokia Lumia 520 and 720 devices announced at Mobile World Congress (MWC) earlier this year. However sales of smart devices as a whole decreased, chiefly because of the transition from Symbian to Windows Phone, which is now almost complete.
In recent years, Nokia has struggled to make an impact on the smartphone market, relying on strong demand for its feature phones. However competition from low cost smartphones is eroding this market and sales of non-touch feature phones, making the performance of the Lumia range all the more important.
The popularity of the Nokia Asha feature phones that offer a range of smartphone functions has been described as a “holding” tactic by Nokia to maintain shipment levels while it reduces the cost of its Windows Phone devices.
Windows Phone transition
“The main sign of hope is that smartphone shipments have increased quarter-on-quarter,” said Ian Fogge, head of mobile at HIS. “That’s a key sign of growth because the future of Nokia on the smartphone side of things is pinned to those Lumia Windows Phones.
“A bit more worrying is what’s happening with their non-smartphone shipments, which are down and the average selling price is also down. This emphasises how important it is for Nokia to accelerate the transition to smartphones and make their Windows Phone strategy a success.
“Nokia has a lot of work to do. They need to ship greater numbers of Windows Phone than they’re doing so there’s a big enough market for developers to create compelling apps. What makes smartphones ‘smart’ are the apps that consumer use and at the moment, Windows Phone doesn’t have the breadth, depth or quality of Apps that iOS and Android have.”
Nokia was also keen to point out the strong performance of Nokia Siemens Networks, the telecommunications equipment manufacturer it assumed full control of earlier this month after agreeing to buy out partner Siemens for £1.5 billion.
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