Nokia Q1 revenue falls 29 percent, head of sales steps down

By Lee Kaelin on April 19, 2012, 9:30 AM

Nokia has announced the financial results for their first quarter of 2012 this morning, revealing a dramatic 30 percent drop in net sales as well as the stepping down of the company's head of sales at a time when the Finnish phone giant is fighting an uphill battle against fierce competition in the smartphone market.

The company's head of sales, Colin Giles, a 20-year Nokia veteran has stepped down to be "closer to his family" and will be replaced by Niklas Savander, currently the executive vice president of markets. The disappointing results are in line with Nokia's predictions last week, which sent the firm's stock prices tumbling by 14 percent upon announcement.

All told, sales dropped to €7.35 billion ($9.65 billion) during the first three months of 2012 according to the Financial Times, down from €10.4 billion during the same period last year, and a 29 percent fall on the last quarter's results. Nokia posted an operating loss of €1.4 billion ($1.8 billion), a decline from 2011's first quarter operating profit of €439 million, not helped by restructuring charges of €1.1 billion relating to the joint venture with Siemens to make telecoms equipment during what Nokia typically calls their quietest period.

Handset sales in Europe dropped 32 percent during the three month period, down to 15.8 million units. Sales in China were even worse, with just 9.2 million handsets sold, a landslide 62 percent decline. In total, worldwide handset sales dropped by 24 percent, to 82.7 million during the three month period compared to last year.

Chief executive Stephen Elop said the company was still working its way through a "significant company transition in an industry environment that continues to evolve and shift quickly". They have been dealt further blows by rapidly declining Symbian sales since the announcement of the partnership with Microsoft and their Windows Phone mobile operating system.

Despite strong sales in the US, which has seen over 2 million Lumia 900 smartphones sold in the first few days alone, worldwide sales of the new Lumia range of smartphones has been disappointing according to Elop, who noted that the firm was experiencing particularly intense competition in the UK.




User Comments: 13

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lawfer, TechSpot Paladin, said:

Lee, did you mean Elop said sales were disappointing overall in the US or you meant he said disappointing overall worldwide?

Guest said:

To bad, they could have sold a lot more if they would have given people a choice of OS, instead of making WP7 the only option. Oh, well. It is at least good for those who want a WP7 phone.

But, it look like anyone who buys one will not be able to upgrade to the WP8 phone OS, they will just have to buy another phone when they want to upgrade. Similar to what happened to early adopters of Android phones.

Scshadow said:

I have no desire to try a windows phone. And it wouldn't be the nokia 900 if I did. When people put out utterly stupid ad campaigns, I don't buy their products.

lawfer, TechSpot Paladin, said:

I have no desire to try a windows phone. And it wouldn't be the nokia 900 if I did. When people put out utterly stupid ad campaigns, I don't buy their products.

You make no sense.

Leeky Leeky said:

Lee, did you mean Elop said sales were disappointing overall in the US or you meant he said disappointing overall worldwide?

Sorry for the delay Lawfer, I've been having internet issues all day. I'll edit the article in a minute to make the point clearer, so thank you for bringing it to my attention.

Elop stated that he felt worldwide sales had so far had mixed success despite the early launches of the four main Lumia products, and the mostly positive media coverage surrounding them (issues aside). He pointed out the UK as a particularly competitive market, implying the strong competition from RIM, the army of Androids and Apple.

He also commented the following: "We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging."

I did read whilst researching for the article that Nokia's US-based sales were down 50 percent on either the same period last year, or the fourth quarter period of 2011. I was unable to verify these figures adequately though, hence not being included in the article.

Guest said:

Since when did the N8 run WP7?

Guest said:

Nokia's key competitive advantage has been about the quality of their phones - battery life, construction/build quality and reliability.

They made 2 critical mistakes:

1) Choosing Windows for their OS over Android. Most consumers have already owned Android or iOS phones. Meaning next time they decided to upgrade there is very large chance they'll go for Android or iOS again. No one cares about WP7.

2) They announced their partnership with MS almost a year before any product was available. As a result, no one wanted to buy phones with an OS (Symbian) that they knew wouldn't be supported much longer.

Had Nokia gone with Android, they would have had a phone with leading edge build quality and construction and arguably world's best (or at worst 2nd best OS). The decision was so simple, anyone with any knowledge of phones would have gone with the open Android OS and used the leverage of Nokia's hardware (awesome build quality, cameras, etc.) to be a key differentiator in the Android market.

Now Nokia is obviously different but it's using an OS almost no one cares about. It's not looking good. The mistake of not going with Android may prove to be their downfall. Unless of course MS had a plan all along to cripple Nokia so they could buy it for cheap and then pour Billions of dollars into it. Maybe the ELOP guy is like a Trojan Horse destroying the company from within slowly, getting it ready to be a buyout target for MS for pennies on the dollar.

Guest said:

"2) They announced their partnership with MS almost a year before any product was available. As a result, no one wanted to buy phones with an OS (Symbian) that they knew wouldn't be supported much longer."

and from a different guest:

3) It looks like WP7 phones will not be able to be upgraded to WP8, so why buy a phone that will not be supported much longer. If you want to buy a Windows phone, you should wait until WP8 is available.

I believe ELOP is the trojan at Nokia, doing exactly what you are talking about. Destroying Nokia from within. To bad for Nokia, they could have had an awesome Android phone.

spectrenad said:

The problem is not the OS itself, it's the lack of knowledge ppl have about it. When win8 finally comes out, they will probably sell more phones, as it will surely be heavily marketed as a cross-platform OS.

lawfer, TechSpot Paladin, said:

Sorry for the delay Lawfer, I've been having internet issues all day. I'll edit the article in a minute to make the point clearer, so thank you for bringing it to my attention.

Elop stated that he felt worldwide sales had so far had mixed success despite the early launches of the four main Lumia products, and the mostly positive media coverage surrounding them (issues aside). He pointed out the UK as a particularly competitive market, implying the strong competition from RIM, the army of Androids and Apple.

He also commented the following: "We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging."

I did read whilst researching for the article that Nokia's US-based sales were down 50 percent on either the same period last year, or the fourth quarter period of 2011. I was unable to verify these figures adequately though, hence not being included in the article.

No worries, thanks a lot for the detailed response.

I guess it makes sense, the ad campaign behind the Lumia 900 was a lot more direct than the Lumia 800's launch. There's also the fact that the 900 hasn't been released outside the US market. Even then, however, I'm afraid it wouldn't have helped Nokia that much.

"2) They announced their partnership with MS almost a year before any product was available. As a result, no one wanted to buy phones with an OS (Symbian) that they knew wouldn't be supported much longer."

and from a different guest:

3) It looks like WP7 phones will not be able to be upgraded to WP8, so why buy a phone that will not be supported much longer. If you want to buy a Windows phone, you should wait until WP8 is available.

I believe ELOP is the trojan at Nokia, doing exactly what you are talking about. Destroying Nokia from within. To bad for Nokia, they could have had an awesome Android phone.

Would you think I'm crazy if I tell you choosing Android would have been a an even worse decision? In fact, I'd go as far to say Android wasn't even an option to them.

The last thing this market needs is another Android device. Regardless of Nokia's great hardware construction, it would have been lost in the myriad of devices. There's also this thing called innovation. They saw WP7 as a way to bring freshness to the market and like literally every analyst says, WP7 needs to stay alive, and not only for the obvious "competition is good for the consumer" reason, but for the change it brings to the market.

In perspective, WP7 has more apps than webOS and BlackBerry combined, and that took half the time it took HP to buy Palm to then kill of its platform. If you look close, people have already heralded WP7 as the official 3rd platform. Hell, with a 1.5% marketshare, WP7 gets twenty times more coverage than was BB does. You know what that tells me? That people like the underdog. That Nokia made a very risky decision; but the right one under the circumstances. It will all come down to WP8 now, as it is not just a refresh like Mango, it will be a major revamp of core functionality. With that, and Windows 8, I see a chance for Nokia and Microsoft, especially when you factor in that the Lumia 900 has already sold millions of units.

Archean Archean, TechSpot Paladin, said:

In addition to lawfer's valuable remarks:

Having used Sensation Z710e and Lumia 800 for a while now, I'd say WP is genuinely better in some ways (from iOS and Android), i.e. it doesn't want to be 'imitating' desktop environment on a small screen of smartphone, so it only shows you information you need and the rest is not there to mess with your experience, but when you need additional stuff it is just a swipe away. My second observation (pointed out on various other sites) is, WP is hugely better at utilizing resources when compared to android. One of the simplest example of this is, on my droid when I want to go into settings it takes several seconds before anything happen, and it is an 'dual core' SoC, compared to Lumia's single core. Personally I prefer 'quality' over 'quantity'. But that is just my opinion. In business speak, utilizing your resources 'optimally' is always a better solution, than to throw more resources to achieve the same goal.

Guest said:

WP7 on the N-800 ? Nice photo edit but wrong choice of OS.

Leeky Leeky said:

No worries, thanks a lot for the detailed response.

I guess it makes sense, the ad campaign behind the Lumia 900 was a lot more direct than the Lumia 800's launch. There's also the fact that the 900 hasn't been released outside the US market. Even then, however, I'm afraid it wouldn't have helped Nokia that much.

No problem at all, Lawfer.

I'd agree as well. The US launch of the Lumia 900 is potentially the biggest they've ramped up the PR machine for the WP OS handset range to date. It's not due to launch in the UK for another week (April 27), though they are offering* [link] .

I don't recall the Lumia 800 launch being that big an affair either to be honest, but it is a fantastic handset -- at least mine was until it went for a swim courtesy of my 2 yr old daughter. lol.

*The handset will be free on most "mid-level* contracts over here. So anything around the £30-35 mark usually carries all the top smartphones free of cost -- the iPhone aside, which usually still costs a bomb.

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