Nokia Lumia fails to halt smartphone sales slump

By Dave McQueen

Nokia’s set of recent results for 4Q11 show some of its worst results ever for a final quarter. While total volume shipments were down eight per cent year-on-year, probably in line with expectations, surprisingly volume sales for smart devices were down a massive 31 per  cent – and this during a quarter when Nokia launched its eagerly-awaited Microsoft Windows Lumia smartphones.

The company has stated that it sold “well over 1 million” Lumia devices, but this would have disappointed bearing in mind the impressive demand experienced during the first days of launch back in October. This early promise obviously never really materialized for the remainder of the quarter, which is a key time of year for all handset vendors. In tandem, the company’s Symbian smartphone sales are suffering as the trend towards lower-priced smartphones on the Android platform is taking hold and quickly eroding Symbian’s volume. Nokia must hope that its price-competitive Asha range of S40 devices can help stem some of this tide in a number of markets owing to the selection of on-board apps that these devices have, giving some element of “smartness”. With the average selling price (ASP) for smart devices also on the wane – down nine per cent year-on-year – the company needs to quickly rebalance its portfolio in the sector and find volume for its “hero” devices if it is to remain a key player in this highly competitive market.

However, Nokia can claim limited success in its mobile phone business, notably dual-SIM handsets in emerging markets, but again ASP has fallen by 24 per cent for the quarter year-on-year. The company still leads the market in terms of volume in the non-smart segment, with a solid array of available handsets, but it is quite clear that margin and profit are becoming key indicators in the market rather than purely volume, which is ripe for attack by the growing strength of the cost-conscious Chinese vendors.

Moving forward, the company hopes to it can crack the North American market with its Lumia devices – notably the flagship Nokia Lumia 900 LTE smartphone with AT&T, designed specifically for the North American market. While the device has already won awards and has beaten Apple’s iPhone and BlackBerry to market with LTE (but not Android), it remains to be seen whether the device has a strong enough pull to attract the hordes of AT&T subscribers that are already attached to the Apple brand.

Nokia needs to extend the Lumia range across price tiers and move quickly to other mobile operators and markets if it is to achieve critical mass for the devices, notably breaking China, as its smartphone volumes are clearly reliant on Lumia starting to plug the gap left by declining Symbian sales.