Nokia has reason to celebrate its new Lumia phones. But the handset maker otherwise introduced bad news to the market this week.
Nokia lost $1.7 billion in the first quarter of 2012. Revenue is down about 30 percent from the year-ago period and the company has spent more than $2.6 billion in the last six months alone. In the wake of the news, Colin Giles, the sales chief, is departing the company and he will not be replaced.
"In February 2011, we identified shifts in our industry and internal challenges at Nokia that were contributing to the deteriorating conditions and prospects for our company," Stephen Elop, CEO of Nokia, said in the earnings call. "Most notably, we described how the mobile industry shifted from a battle of devices to a war of ecosystems. In response, we implemented a series of strategic changes and embarked on a major transformation. This included five distinct aspects of our new strategy."
Banking on Lumia?
Nokia's net sales for the first quarter totaled 7.4 billion euros. Nokia hopes to build on that with its new smartphone strategy, which includes expanding the Lumia portfolio to cover higher and lower priced units. Nokia is also planning to expand geographic coverage to 45 countries. Nokia also renewed its feature phone portfolio with seven new Asha products.
"First, we entered into a comprehensive partnership with Microsoft to improve the competitiveness of our smartphones and to differentiate against Android and Apple," Elop said during the call. "With this unique partnership, we gained advantages and have for instance received continued support from Microsoft in the form of go-to-market and R&D cooperation that this year alone will total $1 billion."
Elop said he was pleased with the rate at which the company has turned the Microsoft partnership from strategy to implementation. Doubling the number of Lumia devices sold quarter-on-quarter is a respectable pace, he said, however the sales results have been mixed. Nokia exceeded expectations in markets like the United States, but he said establishing momentum in certain markets, including the United Kingdom, has been more challenging.
Progressing on App Front
One of Nokia's biggest challenges with the Windows Phone mobile operating system -- or with any mobile operating system that's not iOS or Android -- is attracting developers to the ecosystem. Elop recognizes that challenge and says Nokia has exceeded its own expectations.
"Most notably, we will soon have more than two-thirds of the top 100 applications from competing ecosystems on the Windows Phone marketplace, and that continues to grow," Elop said.
"Additionally, through developer evangelism, training, products seeding and a variety of tactics, the rate of Windows Phone application development is accelerating. Today, we have more than 80,000 apps across 54 markets and in 23 languages. We expect this number will accelerate as Microsoft introduces Windows 8 for PCs and tablets and the next versions of Windows Phone."