In my Bellwether note this morning I remarked that five years back Nokia would have been the mobile and smartphone bellwether but no more. Nokia’s half year results just published, show how true that is. Whereas smartphone sales have boomed, Nokia has slumped. Back in 2005, Nokia had over 70% of the smartphone market. It is now nearer 25%. Indeed, Nokia shipped just 16.7m smartphones in the last quarter compared with 20.3m for Apple. Giving up the smartphone lead to Apple (and possibly to Samsung too) must be a bitter blow for Nokia.
Nokia reported a pretty disastrous 25% drop in net sales and a 33% slump in smartphone sales. Oh, and a Euro500K loss too. Stephen Elop said that the challenges facing Nokia were “greater than expected”. Bit of an understatement here methinks. Elop is betting Nokia’s very existence on its tie up with Microsoft and the launch of its Windows based smartphones. Elop says that people who had seen it were “very optimistic”. Quite why Elop didn’t fully appreciate that pre-announcing that Nokia’s current range of smartphones would soon be out-of-date wouldn’t have a disastrous effect on sales is beyond me. Indeed, one looks in wonder that anyone at all actually bought a Nokia smartphone since.
Nokia now faces the age old ‘catch up’ problem. By the time its Windows phone is released Apple’s iPhone5 will be in the stores. Maybe even an iPhone nano. Then, of course, cheap Android phones are storming ahead. The Nokia Windows phone is going to have to be super good for this to stand even the remotest chance.