Nokia's first half of 2013 critical

Nokia's first half of 2013 critical

Summary: Nokia CEO Stephen Elop says the company is moving faster. It needs to go fast enough to build out its Windows Phone 8 portfolio in the first half of 2013.

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Nokia CEO Stephen Elop said the company has to move faster, relish its underdog role and mine "a landscape of unpolished gems."

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Unfortunately, Elop's work in progress, detailed in a CNET News interview with Roger Cheng, has a time limit. Notably, Nokia has the first half of 2013 to really figure things out.

In the interview, Elop said:

There's been a marked shift towards this challenger mindset. We have to move with urgency. We have to have empathy and listen to our customers. How do we respond to consumer demand that we haven't done as quickly as before? How do we take those bold steps? How do we disrupt the competition? From what I've seen in this organization, that shift is happening.

What remains to be seen is whether Nokia can move fast enough. Sure, the Lumia 920 is apparently selling well, but Nokia needs a broader line-up. Nokia also needs Windows Phone 8 to be a hit. In the U.S., Nokia needs Verizon to get on the Lumia bandwagon more.

Analysts widely expect Nokia to deliver a solid fourth quarter---at least relative to previous debacles---but caution that the first half of 2013 could be rocky.

Oppenheimer's Ittai Kidron said in a research note:

While the Lumia 920 is seeing solid interest, we can't ignore the fact that it's benefiting from strong subsidies from carriers and Microsoft as well as discounting from Nokia. These efforts will moderate in the first quarter of 2013, raising the key question of momentum sustainability.

And Nokia's Windows 8 Phone portfolio needs to evolve. Kidron said:

The Lumia 920 is seeing good demand although reviews are somewhat mixed. For Nokia's Windows strategy to succeed, a broad portfolio would need to gain traction and none of Nokia's other WP8 devices (820, 510, 620) has yet to impress. It's critical that Nokia address this in the first half of 2013.

In other words, there could be a perception vs. reality gap when it comes to Lumia sales. There are supply limitations and it's unclear whether consumers are buying Lumias over Apple's iPhones and Galaxies from Samsung.

Nokia is making progress, but it remains to be seen if Elop can get the company running really hard.

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Topics: Mobility, Microsoft, Nokia, Windows Phone

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27 comments
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  • Some thoughts...

    "In the U.S., Nokia needs Verizon to get on the Lumia bandwagon more."

    While the US is currently the largest single market for Windows Phone, it only accounts for 14%. China and India are right on its heels at 13% and 12% respectively. That's where Nokia needs to target, Verizon be damned. The US is very Apple/iPhone centric, and many people already have smartphones. A global strategy is probably Nokia's best bet in gaining marketshare, where they can compete for people who are new smartphone buyers instead of wrestling away users already entrenched in another ecosystem.

    "The Lumia 920 is seeing good demand although reviews are somewhat mixed. For Nokia's Windows strategy to succeed, a broad portfolio would need to gain traction and none of Nokia's other WP8 devices (820, 510, 620) has yet to impress. "

    The Lumia 920 is already a great success from what I've read about demand all over the world. Even some of my own friends have switched to the 920 after owning iPhone and SGS II. Already it accounts for 3% of all Windows Phone units after being available for a little over a month.

    But as far as where Nokia has been really successful, it's the Lumia 610, 710, and 800, at 17%, 24%, and 18% windows phone market share respectively. These phone again were not US centric, and are low power and cheap.

    Thus, I think this paints a pretty good picture of what Nokia has to do to be successful in 2013. Forget the Lumia 920. Sure it's a great phone and can compete with iPhone 5 and SGS III/, and you need to do that to get great tech press. But what will really drive profits is selling cheaper phones to developing nations, a market Apple has repeatedly shown no interest in, and where Android currently has a defacto majority with terrible, cheap phones.
    ModernMech
    • Well said!

      I completely agree, Nokia's best bet is to fight aggressively in Asia and the Middle East where they have brand recognition and an existing market. North America is saturated with high end smartphones, this isn't the place for Nokia. Devices such as the 620 should only be the start, Nokia needs to roll out a WP8 that offers the strongest bang for the buck, offer features (e.g. HD screen?) that your competitors can't for under $300.
      saqrkh
      • Nokia's issue

        They stopped producing phones. Nokia's "Lumia" phones were designed by Foxconn (in China), and are produced in India. There are those that rail against other companies for using Foxconn, yet applaud Microsoft's subsidiary for using Indian slave labor.
        Troll Hunter J
        • Yet you come here and save you don't mind Apple and others

          using slave labor as long as you get the phone you want.
          William Farrel
    • Great points

      Nokia's and Window's phone strategy should be to go after those w/o smartphones both domestically and abroad. The 920 is designed to make people switch, its very hard to make someone switch cell phones especially when they are invested in a particular ecosystem. The 620 is an entry level device designed for first time users. People that still use a flip phone because they simply don't care or cant afford it. When their existing phone dies, they arent getting a $200+ plan Iphone 5 or S3, they are getting a cheap replacement phone. These arent Verizon or AT&T customers but MetroPCS and Boost Mobile. These customre may not be as lucrative but nickles turn into dollars. Microsoft should sign a deal to be the exclusive carrier for a low end provider like Boost or MetroPCS and let it bubble up instead of down.
      Flash Point
      • There are a lot of people

        that could care less about smart phones. This is a great market to target and WP gives them an easy transition that is smooth as silk with quality phones from Nokia. I'm fairly certain WP has the most supported languages of all the eco-systems. MS has set nokia up to use this abroad and regain the market share they used to own. Now get with it Mr. Elop.

        After purchasing a 920 I am completely satisfied. In my Cell Phone life (19years) Nokia's have been my favorite phones.
        Rob.sharp
    • Still No Windows Phone 8's seen

      Even almost 2 months after launch, I don't know anyone who has a Windows Phone 8 or even an older 7 device. The only place I have seen one is on a billboard, a TV Ad or NCIS:Los Angeles (Microsoft a show sponsor)

      The 'in the hand test' says iPhone, Samsung Galaxy, a decreasing number of corporate or child Blackberries, and the odd Nokia Symbian 'ignoring the march of technology' hold-out.

      Windows Phones are nowhere in the wild.
      neil.postlethwaite
      • You might need to leave your Mother's basement to see them.

        I've been seeing them everywhere I look lately. People seem to be snatching up the Lumia 920 and the HTC 8x at a pretty decent pace. They are awesome phones. I happen to have the 920 and my wife chose the 8x after we upgraded from our iPhones.
        gomigomijunk
  • Verizon is key in the US....

    Not sure where you found all your stats, but Verizon is definitely key in the US. I think Nokia and Windows Phone would be doing much better at this point if the Lumia 920 was on Verizon. I ended up getting the Lumia 822 about 10 days ago, but I would have gotten the 920 right when it came out. I decided that the 822 has enough of what I wanted in a phone (larger screen, LTE, faster processor), plus it has some things that the 920 doesn't have like a micro-SD slot.... I have a 64GB card in my phone, which is really nice. I have all my music and a ton of movies that I do not need to worry about syncing anything and I still have over 23 GB free! Anyway, I didn’t want to wait until April or whenever Verizon was going to get their version of the 920. However, I think others may just be waiting, or at least holding off until Samsung releases their phone. Still, I think Windows Phone and Nokia will surprise when they announce this quarter’s sales figures.
    toph36
  • Nokia needs to get it's supply chain management in shape.

    They are missing vast opportunities to device shortages. Very poor execution.
    Johnny Vegas
  • The key sentence

    " ... benefiting from strong subsidies from carriers and Microsoft as well as discounting from Nokia..."
    Nokia and windows phone fail without it, the not so bad sales of 920 and others will be short lived.
    Nokia needs money; selling phones at discount is great for costumers, not good for them.
    AleMartin
  • The thing that bugs me

    Is that the 820, as the replacement for the 800, has lost the styling of the 800 (the 920 gets that now) and I don't want a phone as big as the 920.
    TKR1
  • Nokia running on fumes

    Now that they have completed the sale and lease-back of its head office building in Espoo, Finland they have a little more cash to work with. They will need to hit the target with every throw for some time to recover. The big question that is not really being asked here is:

    Did Nokia make the wrong decision when they hitched their wagon to the MS phone platform?

    So far MS has not had a success in the mobile market and going with a long shot on top of their own long shot will greatly increase the odds of that challenge.
    coastin
    • I can answer that

      It was a terrible decision... at least for Nokia.
      I wonder if Elop is really incompetent or if he is just playing some other game.
      AleMartin
      • Elop is destroying Nokia

        So that Microsoft can collect all of Nokia's Patents. Nokia has stopped manufacturing phones, and is only a shadow of themselves these days. All the problems stem from putting a "Softie" in a position of power.
        Troll Hunter J
        • If you knew what you where talking about, I'd believe you

          but your as far removed from the industry as is the guy that rotates my tires on my truck.

          I always laugh that so many "experts" like you come here to comment on such things.

          :)
          William Farrel
          • And being a paid Microsoft troll

            Somehow makes you an expert? Simply using logic, points to Elop being the biggest problem with Nokia.
            Troll Hunter J
        • The Three Anti-MS Stooges! ;-)

          Come on fellas, tell us how we should take your points of view serious?
          To take you serious in this subject it's like trying to take LD serious when he tells us all how perfect MS is. (Oh and I do primarily use MS but find him a little over the top)
          martin_js
      • MeeGo/Intel

        Nokia should have taken Intel's money and went MeeGo and Intel inside, for a true differentiation in the marketplace.

        After all, Intel still gagging to get some mobile market share, after their disastrous selling off ARM Xscale in 2005 and having nothing to fill the void with, and also being a MeeGo core partner (Meego = Nokia's Maemo+ Intel's Moblin platforms) - The N9 was a credible first, and last device with this O/S on it.
        neil.postlethwaite
    • No they made the right decision

      look at the Android manufactures fighting for the scraps, many having a hard time of it.

      Nokia didn't have the time of money to jump into that fray. This was the best choice presented them.
      William Farrel