High Lumia returns and 'compromise devices' hurting Nokia's smartphone comeback

High Lumia returns and 'compromise devices' hurting Nokia's smartphone comeback

Summary: Nokia is likely to cut its second quarter results forecasts, according to analysts, with new Lumias failing to impress.

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Financial analyst RBC Capital Markets has trimmed full year estimates for Nokia's Lumias sales from 32 million to 30 million, citing lacklustre feedback on the company's new hero devices, the Lumia 928 and 925

In a note to clients on Thursday, RBC wrote that it was more likely than not that Nokia "may negatively preannounce its second quarter results over the next weeks", with a loss of three percent for its devices and services business, compared with Nokia's own outlook of a two percent loss, plus or minus four percentage points.

Nokia has said it expects Lumia sales in the second quarter will at least beat the 27 percent quarter-on-quarter growth seen in the first quarter, when it shipped 5.6 million Windows Phones. Consequently, it's expecting to sell 7.1 million this quarter.

However, RBC's forecasts are lower, and the analyst expects Nokia to only sell seven million. With Symbian in the mix, it should sell 7.5 million smartphones altogether.

Nokia's latest Lumia 928 and 925 appear to be "compromise devices", whose specs don't measure up to Samsung's flagship Galaxy S4 and HTC's One. Another problem Nokia is facing, according to RBC, is higher than normal return rates for its Lumia devices.

"[We are] trimming our CY13 devices estimates. Nokia appears to be a step behind the competition in introducing compelling smartphones with excitement around the Lumia now replaced by what we believe may be higher than normal return rates," the analyst wrote.

Meanwhile, Nokia's feature phone business is being hammered by cheaper Android devices such as Samsung's Galaxy Star in markets where its feature phones were traditionally popular.

The bottom already appeared to have fallen out of Nokia's feature phone sales in the first quarter, due to the arrival of low-cost Android smartphones that outshone its S40-based Asha range. 

RBC lowered its full year estimate for Nokia's feature phone business from 218 million to 196 million device shipments.

Nokia declined to comment on the RBC report when contacted by ZDNet. 

Topics: Nokia, Hardware, Smartphones

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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74 comments
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  • Curious about the reasons for the returns

    Defective HW?

    "Bad" HW specs or design?

    OS or app issues?

    Does not look good for MS and Nokia.
    D.T.Long
    • I too am a little surprised...

      considering I have heard nothing but good things with Nokia's products lately (the 900 had a bad batch that had some bugs). MS is fine... Nokia I worry about a bit. They don't have the cash reserves to stay in a losing game for very long.
      kstap
      • MS will probably ....

        "rescue" Nokia at some point, when it hits rock bottom. I think Nokia made a HUGE mistake when they became essentially exclusively an MS shop.
        D.T.Long
        • I disagree

          If you mean choosing Android over Windows Phone then technically, it makes logical sense for Nokia to choose Windows Phone.

          Android is built by Google and so most of the services that run beneath (maps, search, etc) are defaults and cannot be changed. Most of this default services on Android are services that Nokia has which will force them to be irrelevant, a big reason it chose Windows Phone. For sponsorship, R & D and of course some exclusive services, Nokia did well choosing Windows Phone and I think they will bounce back, only time will tell.

          I suspect Nokia adding Ubuntu mobile to it's list than Android which Samsung has about 95% market share already. It's a loose-loose for Nokia picking Samsung.
          ericjojo69
          • Agreed

            But I think they should have never let Meego go.
            BTW, Google may have been willing to compromise on some things just to get Nokia in their camp. I don't know how far of course.
            In any case it was clear that the new CEO was the prime reason for the MS alliance, not technological or market considerations.
            kirovs
          • oh yes

            I agree with you to some extent. But then letting Meego go IMHO makes sense coz the OS couldn't compete quickly with the newly born iOS and of course Nokia was loosing cash pretty fast.
            ericjojo69
          • This is crap, don't buy into it. There is nothing about the S4 or HTC One

            that is better than the 928, or even the 920 for that matter. The Nokias still have better performance, better build quality, better call quality, better cameras, better maps and tbt directions, a more secure and reliable and robust os, better email, and on and on and on. And no there are not high lumia returns.
            Johnny Vegas
          • Really?

            The two Lumias I tried were crap. The first one had the screen shatter, just from falling over, the second had the infamous "purple haze" issue. Those were so-called "hero devices too"
            Troll Hunter J
          • Wrong...

            "Android is built by Google and so most of the services that run beneath (maps, search, etc) are defaults and cannot be changed."

            BS... I have an Android (S4), i can easily change Search engine (with 2 tabs) and even to Bing, which map app, etc. etc.

            Android is made by the open handset alliance (84+ tech com, led by Google), were Google apps isn't a part of, handset makers has to seek licence from Google to get G-apps (maps, Gmail, Now etc,) on their devices..


            Microsoft and it's lynch mob, fairsearch dot org, are claiming (to the EU) that Google forces android handset makers to put G apps to prominent places such as Home screen, but the HTC "first" the facebook phone or the HTC one is proves thats not the Case, both has G-apps..

            "I suspect Nokia adding Ubuntu mobile to it's list than Android which Samsung has about 95% market share already. It's a loose-loose for Nokia picking Samsung."

            Nokia and Huawei are the only left on the WP scene, Nokia had a great win over Samsung and HTC, that it seems like they left WP (without saying it!)

            Even Nokia's shareholders are pushing for a plan B.

            "Nokia shareholder tells CEO Elop he's going to hell, If you're in a hole, stop digging

            Nokia CEO Stephen Elop has been taking flak from angry shareholders at the company's annual investor's conference, with accusations flying that he's running the company into the ground by keeping Nokia as a Windows-only operation.

            "You're a nice guy ... and the leadership team is doing its best, but clearly, it's not enough," shareholder Hannu Virtanen told Elop, Reuters reports. "Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road."

            I think is to late for Nokia to switch to another OS, and if they did, they should go with Android as their best chance, but then WP is as good as dead...


            And Samsung doesn't have 95% of the android market share, but made 95% of all android handset maker profits in Q1/13, but a guess from gartners Q1 smartphone sales, then a 55-60% share..
            pedling
        • Not at all

          Microsoft is keeping Nokia alive. Microsoft has the cash to help them and Microsoft is paying Nokia a lot to keep exclusivity. Microsoft also puts ads up for the Lumia devices. PLUS Nokia pretty much owns the Windows Phone market, which will help them out as Windows Phone continues to rise. I have the 928 and have NOT experienced any of the issues that reviewers have said about the device. The Verge article is highly bias as well as the Cnet article.
          MattTCarey
          • oops

            you are forgetting something, the $1Bn annual platform payments have now ended, and it is NOKIA who will be paying Microsoft minimum royalty payments.

            Then Nokia will have to stump up another $3-400million for its Tax fraud in India

            Things are not looking good for Nokia haha
            DejaVu2
      • Yeah

        ...somebody's (RBC) claiming something about "high return rates," with no data backing it up that we can see. Color me skeptical until there's some real information supporting the claim. The 925 and 928 were never intended to be the major step forward ... that's EOS, or whatever it'll be called.
        WebSiteManager
        • the lumia is rock solid

          worst problem I've ever had was pocket lint in the headphone jack lol

          Please tell me how the specs don't compare? WP8 is a faster and cleaner OS and doesn't require 8 cores like android. It's also half the price and comes with a free wireless charger, NO flagship droid comes close.

          What will hurt nokia is the phones are so good, after the contract there is no need to even upgrade hardware.
          everss02
          • silly

            android doesn't require 8 cores, I know you are just exaggerating due to frustration with the general failure of windows based phones. Android is not a compromised OS like windows, being more feature rich and general purpose. This is why android is huge and windows phone is nowhere. Sorry windows it was too late to be Apple.
            drwong
          • android is trying to be apple(hence why they keep getting sued)

            both are just a sea of icons, nothing works together.

            I can do everything from 5 or 6 tiles in my wp8, I'm done while your still searching for the app to push.

            btw my work provided phone is a galaxy, so I know they suck and are slow. at least apple keeps it's efficient and malware free.
            everss02
          • a galaxy what?

            Android has full widgets, not just simple limited tiles, nor just a sea of icons. If you say suck and slow then you are obviously not using anything at all current, if you've even used an android based phone. I will point you to a comparision video, which as usual, concludes the lumia was outdone by the android in just about every front.
            http://www.youtube.com/watch?v=9GZc98HxxJk
            drwong
          • S2

            S2
            everss02
          • all the comments on the youtube are laughing and say the 920 is better

            ever though its 6 months old and half the price
            everss02
          • Just to listen to a carolla podcast

            I have to install in app on the S2 4.0.4, just retarted


            And emails are soooo slooooow on the S2, push the button and wait............
            everss02
        • You have to buy

          their 40 pages report at reuters....
          pedling