Nokia’s Lumia sales shrink; on to the next model again

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Stop me if you’ve heard this one before – sales of Nokia’s flagship smartphone declined in the last quarter as carriers and retailers pulled back from its first Lumias, leaving the Finnish firm pointing to the promise of yet another upcoming model.

Reporting a “difficult quarter”, Nokia CEO Stephen Elop said Q3 global Lumia sales volume dipped from four million during the previous three months to 2.9 million, amongst a total 6.3 million smart devices.

Nokia tried to explain this fall happened “as we shared the exciting innovation ahead with our new line of Lumia products” – in other words, because it interrupted the sales flow of its earlier Lumias by announcing an enhanced next model.

Stephen Elop, NokiaThat makes it sound like Nokia is master of its own destiny. Nokia’s new  Lumia 920 and 820 products will ship with Microsoft’s Windows Phone 8 platform toward the end of October or in November. But it also conceded:

“The sequential decreases in net sales and volumes in North America were primarily due to lower operator and distributor demand for Lumia as well as our efforts to prepare the distribution channel for the upcoming sales start of new devices.”

That has had a big financial impact. Nokia chalked up €120 million ($157 million) in “excess component inventory, future purchase commitments and an inventory revaluation related to our current Lumia products”. In other words, it has bought parts and contracts for way more Lumias than it can sell.

Lumia and Symbian handset sale volumes and revenue also fell in China, where Android rivals are gaining share, while European Lumia volumes also dipped despite a rise in feature phone sales. Only in Middle East and Africa did smartphone sales volume not shrink.

The average selling price of Nokia’s Lumias dipped from €186 this spring to €160 ($209) in Q3 because sales of its lower-priced model, added later, began to filter through, dragging down the average.

Now the firm expects the upcoming holiday-quarter sales to be worse than usual because of the timing of its soon-to-launch new Lumia 920, which have a full quarter of sale to report until next year. So Nokia reports Q4 will be “a ramp-up quarter”.

Quarterly net loss ballooned to €969 million ($1.27 billion) from €68 million in last year’s quarter. Nokia has lost a third of its quarterly smart devices net sales over the last year.

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