Nokia's next challenge: Weathering Symbian's quick demise

Summary:Can Nokia significantly boost Lumia sales given that sales of Symbian devices are falling off a cliff? Probably not.

Nokia's fourth quarter was a mixed bag as it sold 1 million Lumia devices---below consensus estimates and above worst-case scenarios---but a bigger challenge looms. Can the company significantly boost Lumia sales given that sales of Symbian devices are falling off a cliff?

Stephen Elop, CEO of Nokia, put the Lumia vs. Symbian race in context. He touted Lumia sales and noted that Nokia's plan was to gain traction country by country. Elop noted in Nokia's earnings release:

In the war of ecosystems, clearly there are some strong contenders already on the field. And with Lumia, we have demonstrated that we belong on the field. Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing. To date we have sold well over 1 million Lumia devices. From this beachhead of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful. We also plan to bring the Lumia series to additional markets including China and Latin America in the first half of 2012.

The catch?

Changing market conditions are putting increased pressure on Symbian. In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian's traditional strengths. As a result of the changing market conditions, combined with our increased focus on Lumia, we now believe that we will sell fewer Symbian devices than we previously anticipated.

In other words, Lumia has to offset falling Symbian sales just for Nokia to tread water. No pressure there Mr. Elop right?

That Symbian pressure is partially why Nokia's outlook isn't so great. Nokia projected first quarter sales that were below the usual seasonal trends and break even for the devices unit. In other words, Nokia really has no visibility into its business.

Barclays Capital analysts said in a research note:

Nokia has sold more than 1.0 million Lumia devices. We consider this a solid metric compared to consensus of 1.3mn and worst case fears of only 500,000. Nokia's global Lumia rollout continues in 1H12, but under more duress as Symbian demand is declining more rapidly than expected.

If Lumia and Windows Phone devices can't offset Symbian Nokia will have more pain ahead. There's already a lot of sales headed in the wrong direction. Here's the earnings report for Nokia. The table is in Euro.

Related:

Topics: Enterprise Software, Nokia

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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