Blog Post

Nokia’s Windows Phone transition shows promises kept

Nokia’s(s nok) smartphone sales were down 31 percent in the final quarter of 2011 as the company’s switch over to Microsoft’s(s msft) Windows Phone continues. The company said its new Lumia phones equated to “well over a million sales” through today, and it intends to build upon the momentum of its new platform. While total device revenues declined 18 percent for the year, Nokia is focusing less on the numbers and more on the word “transition.”

Looking at the pieces of the commentary from Nokia CEO, Stephen Elop, you can see this theme throughout (emphasis mine):

The fourth quarter of 2011 marked a significant step in Nokia’s transformation. Most notably, in Q4 we introduced new mobile phones and smartphones, which resulted from the strategy shift in our Devices & Services business.

We are building on this foundation with R&D investments as we continue our journey to connect the next billion to the Internet.

We have also started our important re-entry into the North American market. Earlier this month, T-Mobile started selling the Nokia Lumia 710 as a lead device. We also announced the new Nokia Lumia 900 with AT&T, and immediately received a number of industry awards.

And, while we progressed in the right direction in 2011, we still have a tremendous amount to accomplish in 2012, and thus, it is my assessment that we are in the heart of our transition.

It shouldn’t surprise that Nokia devices sales are down; any company undertaking the massive strategy of retooling its smartphone lineup with a new operating system would likely see the same results. Sales of more than a million Lumias may not impress at first glance either, but as noted earlier this week, the devices only just began to rollout in November; and even then, only to a few countries. Nokia has many more regions to focus on with the current Lumia as it preps the next generation of devices. Given the circumstances, I’m not sure the company could have done any better with its Lumia sales with such a limited time and regions.

As much as 2011 was a transitional year for Nokia, 2012 is the year when the sales figures really start to matter. Indeed, the company isn’t even providing targets for 2012 due to the uncertainty of its transformation. Given how quickly the mobile industry is moving, that makes sense because Nokia isn’t out of the woods yet by any means.

Apple’s(s aapl) successful iPhone is picking up even more momentum and a slew of new Android(s goog) phones are expected at next month’s Mobile World Congress event, for example. Ecosystems are key to attracting customers and developers. Windows Phone still faces some negative stigma from Microsoft’s prior mobile efforts: think Windows Mobile and the Zune.

But even in the face of such challenges, you can’t overlook what Nokia has done in the 11 months following Elop’s pronouncement of massive change. The company quickly retooled its hardware and software for Microsoft’s platform. It has won a number of awards for its new devices and actually got people at the Consumer Electronics Show talking about Nokia for the first time in recent memory. It hasn’t announced devices only to have people wait six months to buy them. And it has two carrier partners in the U.S. in AT&T(s t) and T-Mobile.

The important part is this: For now, Nokia is delivering on all its promises; something I can’t recall happening for a number of years prior. And that, at least, gives it — and to an extent, Windows Phone — a fighting chance.

6 Responses to “Nokia’s Windows Phone transition shows promises kept”

    • Mauritz Nordlund

      Elop is insane and needs to get fired as soon as possible. Nokia was unique and could build phones for 50 dollars and sell them with a profit. Then Elop came with his Microsoft background and decided to switch to Windows Mobile.
      Elop’s insanity went so long that he let Nokia’s factories be empty while he outsourced manufacturing of the Windows phone to south Korea. Please explain to me: What does Nokia do with their phones? They don’t do the OS. They can’t choose the hardware (its MSFT mandatory hardware). They don’t even manufacture them. Still it took over a year to get one phone out.

      Now a short history lesson:
      1996: LM Ericsson worlds largest phone company. Hires ex Microsoft Rolf Skoglund. 5 years later Ericcson’s shares had dropped over 90% and they faced bankruptcy.

      Nokia makes the exact same mistake and goes from nr1 company in the world to a company that looses billions each quarter.

      The fact is: Microsoft have never succeeded in a market with competition. After 30 years as the world largest software company they still make 94% of their profit from Windows and Office. Two market segments without competition.

      The 1 million Lumia phones that was “sold” was absurdly subsided by MSFT. The phone cost 50 EU with contract and you got a 200 EU Xbox console for free.

      I love Nokia. I love Ericsson. Elop needs to be fired as soon as possible. Nokia will fail with this strategy. Embrace Android and crank out elegant/cheap phones that is Nokia’s hallmark. To bad that its too late and Samsung is the new Nokia.