Nokia sales keep on sliding as it gears up for Windows Phone 8

Nokia sales keep on sliding as it gears up for Windows Phone 8

Summary: The Finnish handset maker points to a 'tough' transition for smart devices as it reports a 19 percent fall in third-quarter revenue year-on-year, though it notes the pain would be worse if not for cost cuts.

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Nokia has reported a loss of €576m in its third quarter, which it put down in part to a "tough" transition to Windows 8-based Lumia handsets.

On Thursday, the company said it had net sales of €7.2bn (£5.85bn or $9.44bn) in the three months to the end of September, a year-on-year decline of 19 percent on €8.9bn in 2011. A fall in the number of handsets sold — primarily smartphones — accounts for much of the downturn.

nokia-lumia-920
Smartphone sales have dropped at Nokia. Its latest flagship phone is the Lumia 920. Image: Ben Woods

"As we expected, Q3 was a difficult quarter in our Devices and Services business," Stephen Elop, chief executive of the company, said in a statement. "In Q3, we continued to manage through a tough transitional quarter for our smart devices business, as we shared the exciting innovation ahead with our new line of Lumia products."

Much of Nokia's smartphone hopes lie in the upcoming release of the Windows Phone 8-based Lumia 820 and its flagship Lumia 920 devices later this month, as well as the success of Microsoft's mobile platform as a whole.

However, Roberta Cozza, mobile analyst at Gartner, said the smartphone sector — and Nokia's fourth quarter — will be tough nuts to crack.

"The challenges remain in the higher-end, but that's no surprise, [Nokia] didn't have any new products in Q3," Cozza told ZDNet.

"Q4 is also going to be very challenging. There are very high-profile, high-end devices in the market like the iPhone 5, but also Samsung being more aggressive on the pricing of the Galaxy S2 and Galaxy S3. And price cuts of the iPhone 4 and 4S."

Cozza added that the pressure on Nokia will primarily come from price cuts on existing high-end handsets. However, the company has the opportunity to broaden its portfolio and introduce more mid-tier devices to avoid going head-to-head with its biggest rivals.

Smartphone sales drop

In its third-quarter report, Nokia said it sold just 6.3 million smartphones, down 63 percent year-on-year. Beyond smartphones, handset sales fell 15 percent to 76.6 million. However, the Finnish handset maker's performance was brighter when looked at in comparison with the second quarter, showing a four-percent rise in sales.

Despite the across-the-board decline, Nokia's €576m loss is better than its showing on its first and second quarters, when it was in the red for €1.3bn and €826m respectively. The company said the improvement was largely to cost-cutting measures, although maintaining the average selling price of its non-smartphones in a competitive market also helped.

One of the cost-cutting measures has been a reduction in staff over the course of the last year. On 30 September 2012, Nokia had 105,265 employees whereas on the same date in 2011 it employeed 135,949 people.

Looking ahead

Looking ahead, Cozza agreed that Microsoft's release of Windows Phone 8 on 29 October could help Nokia, as buyers get used to the operating system. On the other hand, the influx of Windows Phone 8-based devices from the likes of Samsung, HTC and Huawei could cause the Finnish giant problems going into 2013, she noted.

The Finnish hardware maker's own outlook for its smartphone unit the next financial quarter doesn't paint a prettier picture, even though handset vendors can usually look forward to a bump in the Christmas and holiday season.

"Nokia expects the fourth quarter 2012 to be a challenging quarter in smart devices, with a lower-than-normal benefit from seasonality in volumes, primarily due to product transitions and our ramp up plan for our new devices," the company said.

Nokia's share price was up around four percent at the time of writing following the financial disclosure.

Topics: Nokia, Mobility, Smartphones, Tech Industry, Windows

Ben Woods

About Ben Woods

With several years' experience covering everything in the world of telecoms and mobility, Ben's your man if it involves a smartphone, tablet, laptop, or any other piece of tech small enough to carry around with you.

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24 comments
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  • It's only natural

    Of course they will slide, people are holding back for the latest Windows 8 phone, like me for example, waiting for my shinny red Lumia 920
    Zarniw00p
    • That would be if...

      Nokia survives long enough. The current cash burn coupled with the lack of consumer interest in WP, are not looking good. Sure there is certain level of fanboy interest in WP, but real people do not want it.
      Troll Hunter J
      • "real people"

        I would like to see this polling that shows nobody wants Windows Phone.
        Michael Alan Goff
    • people are? lol

      They aren't waiting for that crappy OS. People wait for newer version of Android and have been waiting for their ordered iPhone 5 to arrive
      shellcodes_coder
      • That same

        "crappy" os will be on 100's of millions of desktop computers in the next year or two. So I wouldn't call it crappy. Not Windows Phone 8. Windows Phone 7 was a little "light" but not 8. 8 is the real deal.
        mikroland2.0
        • crap is crap, is not related to the amount of people using it

          look at windows, traditionally a crappy OS widely used around the world.
          theo_durcan
          • Yes, crap is crap

            You are a piece of crap, for instance
            markbn
  • Nokia sales keep on sliding as it gears up for Windows Phone 8

    This was expected when Microsoft Windows Phone 8 was announced. People are waiting for the 920 before buying. A non story.
    Loverock Davidson-
  • Bye bye Nokia

    Look forward to taking my grand children to the science museum and showing them the Nokia exhibits.
    Alan Smithie
    • along with...

      Windoze phone OS
      shellcodes_coder
    • along with...

      Windoze phone OS
      shellcodes_coder
      • Your knees must be soar.

        Besides, Steve Blow Jobs has been dead for over a year now, you iNaive.
        mikroland2.0
    • Museums

      I have a pile of Nokia phones, that nobody wants anymore. Great products at their times.
      But.. without vision for the future, no company can exist.
      danbi
  • why?

    Why are yall doing these stories... The 920 is already sold out in some countries infact even out doing the Jesus phone I mean the iphone 5, if they sold and unlocked version in us it would be sold out as well, no HTC stories no Samsung stories?
    UStudio
    • lol

      Jesus phone. I'm taking that to Cnet XD
      Fat Albert 1
  • another victim of Microsoft Kiss of Death

    I mean, at a time where every modern OS is able to drive multiple cores they married the fate of the company to an untested OS unable to drive more than 1 core, orphaned 6 months later. Good job from Elop, the demolisher.
    theo_durcan
    • agree with you

      Microsoft = bad luck
      shellcodes_coder
  • Nokia is dying...

    what? people are waiting for Windows phone 8? how many? 100? Windoze phone will choke Nokia to death
    shellcodes_coder
  • Nokia Leadership: You Mr. CEO

    Case study: Follow Andy Grove's model and ask yourself: What would my replacement do? Then do that: Embrace Windows and Nokia to save your job.
    NokiaMeister
    • T-Mobile Leadership: You Mr. CEO

      Case study: Follow Andy Grove's model and ask yourself: What would my replacement do? Then do that: Embrace Windows and Nokia to save your job.
      NokiaMeister