Nokia has lost its once-dominant position in the global cell phone market, with Android phones and iPhones overtaking it in the growing smartphone segment. The Finnish company is attempting a comeback with smartphones using Microsoft's Windows software, a struggle that Nokia CEO Stephen Elop characterized as a "war of ecosystems." Including other models, Nokia sold 19.6 million smartphones in the quarter. Nokia shares rose more than 2 percent to €4.15 ($5.37) in afternoon trading in Helsinki.
Michael Schroeder, analyst at FIM bank in Helsinki, said markets had welcomed Elop's comments on sales of Lumia. "Nokia is not necessarily dead in the water. The average selling price of a Nokia handset rose by €2 from the previous quarter to €53 but was down by €16 from a year earlier, reflecting a higher proportion of cheaper mobile phones in Nokia's product mix. The company also reported a 4 percent drop in sales for Nokia Siemens Networks, its joint network equipment unit with Siemens AG of Germany. After selling four in 10 cell phones worldwide in 2010, Nokia has steadily lost market share to competitors including Apple and Samsung. Nokia is currently selling two Windows models, the Lumia 800 in Europe and parts of Asia, and the Lumia 710 in the United States.
“The massive marketing investment to promote the Nokia Lumia 800 contributed to ship better-than-expected volumes.” Stephen Elop, the former Microsoft executive who is directing Nokia’s transition from its own Symbian operating system to Windows, said the company planned to widen its aggressive selling of Windows devices, which I.D.C. estimates had only a 1 percent share of the global operating system market in the fourth quarter, far behind the leading operating systems, Android, made by Google, and iOS, made by Apple. The company announced planned to sell a third Windows phone, the Lumia 900, through AT&T Mobility in the United States.
Mr. Elop said Nokia would also start selling Lumia devices in China and Latin America by June. The average selling price of a Symbian phone slid 23 percent to €53 in the quarter from €69 one year earlier.--Sales fell 38 percent in Europe, Nokia’s largest market, and 40 percent in China, its third-largest market, during the quarter. Mr. Elop said that Symbian devices were being undercut by lower-priced smartphones. Mr. Elop said Nokia expected to sell fewer Symbian devices than originally anticipated when he announced the decision to adopt Windows in February 2011. At the time, Mr. Elop predicted Nokia would sell 150 million Symbian devices as Nokia ramped up production and made the transition to Windows phones.
Nokia began selling its first Windows model, the Lumia 800, in October in selected markets in Europe and Asia. By 2015, Windows and Nokia will be the second-largest smartphone operating system in the world, I.D.C. estimates, with 21 percent, trailing Google’s Android with 47 percent but ahead of Apple, with 19 percent. The company sold 19.6 million smartphones during the quarter and 93.9 million feature phones. Nokia also saw prices for its handsets fall. Profit margins also fell considerably on mobile handsets to 3.4 percent. A year ago, Nokia reported profit margins of 12.7 percent on devices.
On the bright side, the company's new Lumia smartphones that use the Windows Phone operating system are selling well. Nokia CEO Stephen Elop said in a press release that the company has already sold well over 1 million Lumia handsets. Nokia, once the worldwide leader in cell phone sales, has seen sales slip since the introduction of Apple's iPhone in 2007. The company launched the Lumia line of devices in October in Europe with two devices, the Lumia 800 and Lumia 710. Nokia began selling the Lumia 710 this month on T-Mobile USA.
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