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April 19, 2012updated 23 Aug 2016 2:57pm

Nokia continues slump; ditches head of sales

Nokia’s first quarter results have not been boosted by the launch of its new Lumia smartphone line, as the company slumped to a €1.3bn loss and its head of sales resigned.

By Allan Swann

Nokia’s revenue has fallen by 29% year on year, from €10.4b this time last year to just €7.4b. CEO Stephen Elop blames a difficult transition to a new platform and poor device sales.

"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges."

Like Research In Motion’s woes, analysts are wondering if Nokia’s step change this time last year was already too late. Most other struggling mobile phone makers, such as Sony Ericsson and Motorola, threw their lot in with Google’s Android, the only real competitor to Apple’s iPhone.

The new range of Lumia mobile phones powered by Windows Phone 7.5, were meant to begin the fight back against the dominant Google Android and Apple iPhone devices.

The company launched the Lumia with a massive light and sound show featuring DJ Deadmau5 on London’s Southbank, and an aggressive advertising campaign in the US. It appears to have not worked, as Nokia’s Head of Sales, Colin Giles, has now said he is ‘retiring’ to spend more time with his family.

"Colin’s leadership has been very valuable as we shifted Nokia’s strategy and aligned the sales organization around our new product families, Lumia and Asha," said Stephen Elop, president and CEO. "We appreciate the commitment that Colin has demonstrated to Nokia over the years, and we wish him much success as he takes the next step in his career," said Elop.

Ovum’s Tony Cripps says that the popular sentiment is that the new Nokia devices aren’t strong enough to challenge the Google/Apple duopoly, but that this is more a customer perception problem than a device problem.

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"There’s little objectively wrong with many of the products competing with Apple, Samsung and Google/Android that greater customer awareness and a big budget marketing drive could not cure," he said.

"That’s something European carriers need to do a great deal more to assist the underdogs with if they aren’t to be the engineers of their own self-fulfilling prophecy of handing all power over their subscribers to the duopoly of Apple and Google.

Just last week Nokia gave advance warning that its next two quarters would be weak. At its full year report in January, it made the unusual step of not producing a 2012 outlook. That alone started alarm bells ringing.

"We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging."

Nokia claims it sold more than 2 million Lumia devices in the quarter. The company shifted 1 million Lumia’s in 4th quarter 2011 – but this remains a drop in the water compared to Apple’s 37 million over the same period.

This brings its Lumia range sales to a grand total of 3 million since the Lumia 800’s launch in November (see CBRs review here).

Elop says the company is renewing its investment in the Mobile Phones business unit to address gaps.

"We have a clear sense of urgency to move our strategy forward even faster. We are pursuing step function changes by having launched the Lumia 610 and Lumia 900 in the first quarter, expanding market coverage, increasing advertising, introducing key customer-requested features and broadening our most successful go-to-market activities. At the same time, we have focused our efforts in the low-end of smartphones and feature phone asset to drive improved business results and conserve cash."

Bizarrely, the company also also announced a 41 megapixel cameraphone at CES, the Pureview 808.

Nokia, like RIM, mostly dismissed the threat that Apple’s iPhone posed 5 years ago. It has gradually been sidelined in the high end smartphone market, and has similarly been making full scale changes at the top.

Nokia has been squeezed out of the low end of the smartphone and featurephone market by cheaper Chinese manufacturers. While still dominant in the feature phone market, these are also being replaced by smartphones in greater numbers – in both the developed and emerging markets.

Nokia’s device sales Year on Year have declined across the board: Europe (-35%), Middle East and Africa (-32%), China (-70%), Asia Pacific (-28%), North America (-34%) and Latin America (-3%).

The collapse of the brand in China means that Nokia will probably find it very difficult to stay relevant in that market in the face of the local mobile companies.

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