Is there any hope left for Nokia? (probably not)

By , Jun 15, 2012

It’s not a typo: I really meant Nokia, not RIM. Look, the writing’s on the wall. In the first quarter of 2012, only Apple and Samsung reaped benefits of the 41 percent year-over-year growth in the smartphone biz.

Together, the two frenemies accounted for 55 percent of global smartphone shipments in Q1 and an astounding 90 percent of the profits.

Apple shipped 35 million iPhones in Q1 while Samsung recorded 43 million global shipments. None of this is surprising. What’s stunning is how sharp Nokia’s decline is. Of all companies, beleaguered RIM, whose Q1 shipments dipped 20 percent, may soon surpass Nokia…

These shocking numbers echo a similar note from April (and what Asymco analyst Horace Dediu has been saying all along), when the iPhone and Galaxy makers together accounted for more than an astounding three-quarters of revenues and a whopping 80 percent of profits in the entire cell phone biz, which includes not only smartphones but feature phones and dumb phones as well.

According to ABI’s data, only Samsung and Sony in Q1 experienced sequential growth in shipments compared to the holiday quarter of 2011.

Nokia?

Down 40 percent sequentially.

Senior analyst Michael Morgan summed it up best:

At this point in the year, Nokia will have to grow its Windows Phone business 5000% in 2012 just to offset its declines in Symbian shipments.

In what it called “strategy sharpening”, Nokia shocked investors and media yesterday with news that it will lay off 10,000 employees globally by the end of 2013 and shutter research and development facilities in Burnaby, Canada and Ulm, Germany, along with a manufacturing plant in Salo, Finland.

Its Smart Devices division has been negatively affected “to a somewhat greater extent than previously expected”, the company said as shares lost 16 percent of their value.

The San Jose Mercury News columnist Troy Wolverton likened Nokia’s release to “an amazing collection of Orwellian doublespeak”.

Today, Nokia’s market cap sits at just $8.7 billion as the once leading phone maker struggles with profitability and differentiation. If this downturn continues, an analyst tells Reuters, Nokia will burn through its whole $6 billion cash pile in the next two years.

Another tidbit: Nokia made more from the iPhone last quarter than it did from its Windows Phone-powered Lumia handset.

How?

Because Nokia earned $600 million from the iPhone maker in a patent licensing dispute resolution while losing $1.7 billion selling mobile device last quarter. Also not helping, Nokia’s market share in China collapsed.

CEO Stephen Elop, a former Microsoft executive, promised to “pursue an even more focused effort on Lumia”.

Reuters and Business Week disagree, citing UBS which warns that Nokia would have “to significantly discount its new Microsoft Lumia products in order to gain any traction with retailers, operators and consumers”.

MarketWatch now officially calls Stephen Elop “the worst CEO ever”.

My favorite quote is from Needham & Company, which said that “if Nokia doesn’t come out of its funk within a year, Nokia is going to be finished”.

And esteemed Analyst Tomi Ahonnen, a former Nokia executive, in his critique of Elop says Elop managed to wipe out $13 billion in revenues and destroy $4 billion of profits in just twelve months since he took over the reigns at Nokia.

Who knows, maybe Microsoft dispatched Elop to bring Nokia to its knees so Redmond could buy its patents, know-how and brand for peanuts.

Is Nokia written off in your book yet?

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  • jocastro

    maybe, but probably not, im not a Nokia person.. lol last time i had a Nokia phone it was the one that looked like a fish. and that phone sucked hardcore hahaha.

  • http://twitter.com/newyorkminute10 NEWYORKMINUTE10

    I have never had a Nokia phone. My first phone was SonyEricsson w810i 3 years ago( I have saved it, looks like a new one) and the second one an iPhone 3GS and one month ago I bought an iPhone 4S. I don’t really think that Nokia will die because it’s still great phones to choose who live like in Asia. But I feel sad about the whole situation about Nokia as they are our neighbors.

    • http://twitter.com/Jayyyy9 Jay

      What do u mean by like Asia? Asian no money? Are u sure?

  • http://twitter.com/RichieB07 RichieB07

    I know that if the new iPhone doesn’t blow me away, I’ll probably be getting a Windows 8 Nokia phone.

    • http://www.facebook.com/profile.php?id=100001581901956 Patrick Everett

      I am not certain which smartphone you currently use but iPhone 4S with iOS 6 resolves many outstanding issues for the iPhone:
      Siri QoS (uptime and voice recognition) is dramatically improved since release
      Siri languages added (Chinese (China), Chinese (Hong Kong), Chinese (Taiwan), English (Canadian), French (Canadian), French (Switzerland), German (Switzerland), Italian (Italy), Italian (Switzerland), Spanish (Mexico), Spanish (Spain), Spanish (United States)
      Siri movie times and tickets
      Siri restaurant reservations
      Siri sports scores and statistics
      Siri local searches for areas appropriate based on supported dialects
      FaceTime over 3G
      Passbook organizer
      Privacy Settings (Calendars, Contacts, Locations, Photos, Reminders)
      Mail Signatures per account
      Mail VIP
      Do Not Disturb
      Voice-guided turn-by-turn navigation
      Shared PhotoStream
      Phone (Send to Voicemail, Reply with Message, Remind Me Later)
      Safari (iCloud tabs, Full-screen Landscape, Off-line Reading List)

      • http://twitter.com/RichieB07 RichieB07

        I have the 4 right now, and honestly, I have most of those features (minus the Siri ones) in my jailbroken iOS 5.1.1. None of this really appeals to me, and some features (like Passbook) really just add one more app to my screen I can’t get rid of (freaking Newsstand). All these features are old news and have been in other OS’s for years. I watched the Keynote, and I am not convinced Apple is actually going into the future anymore.

      • http://twitter.com/warrenskipper Warren Skipper

        There are a few ways to get rid of Newsstand; install NoNewsIsGoodNews (free) by Ryan Petrich or use the feature in Springtomize 2.

      • Dan

        You can use springtomize to hide newsstand, or simply put it in a folder once you have the infinifolder or folderenhancer tweak

      • http://www.facebook.com/profile.php?id=100001581901956 Patrick Everett

        That you “have most of those features (minus the Siri ones)” on your jailbroken iPhone 4 suggests that Apple did exactly what they needed to do. If those are features that people consider important enough to jailbreak their device for then those are exactly the features they should implement.

      • http://www.facebook.com/profile.php?id=558812483 Gustavo Adolfo Mirabal

        ohhhh Shocker!!! IOS6 is what ive being using for a year with my jailbroken phone. You didnt list anything original

  • Well_Said

    No, I wound’t write off Nokia despite the fact that the company has been losing a lot in the last 2 years. They just need to focus on finding another market.

  • Loopthree

    Nokia are the authors of their own demise. They put all there eggs into the ‘mass production of cheap handsets’ basket, and then were too cautious to move with the times when the market shifted, and demand for premium devices grew.

  • apple_man9

    Bye Bye Nokia

  • http://twitter.com/TarekMMD Tarek

    What a shame. The only other series of phones I liked were Nokia’s. All my previous phones prior to the iPhone were Nokia’s, with the exception of two years with Motorola (Verizon did not have what I wanted…left them as soon as the two years were up). I went back to Nokia again. Until the iPhone 3. Now I cannot imagine going back to Nokia at all.

    I wish they could get themselves back in the market again.

    • http://www.facebook.com/saif.fersi.14 Saif Fersi

      Yep true Nokia was a leader but not anymore

  • http://www.facebook.com/profile.php?id=100001581901956 Patrick Everett

    Reports such as this only hasten Nokia’s demise; who wants a smartphone from a company that may not be in business within two years. No customer support, no software updates. Furthermore, developers won’t flock to develop apps for an ecosystem that may cease to exist and partners won’t create “Made for Lumia” accessories to extend the capabilities of Nokia smartphones.

    Without research & development, Nokia won’t be able to innovate either. While reducing the number of employees may seem efficient, the resultant reduction in innovation suggests that the company doesn’t even have a long-term plan to create value.

  • http://www.facebook.com/profile.php?id=1595420643 Simche Apple Konstantinovic

    May you rest in peace Nokia…

  • http://twitter.com/SubPrimeTime Javier Lopez

    I’d like to challenge the author to make an educated prediction of what will become of Nokia as opposed to pointing out the obvious and hopping on a market analyst’s bandwagon.

    • DilbertAsended

      He did.

  • http://www.facebook.com/people/Dejan-Ljepava/1153451343 Dejan Ljepava

    well, sooner or later everything comes to the end. nokia made a quality phones in a past. still have n8 and I love it. in a few years we’ll read same about android and ios. that’s life.

  • http://www.facebook.com/profile.php?id=1328808990 Bhuvan Kalra

    R.I.P Nokia. It kinda all started with you. As a 90’s kid. From snakes game to Bounce.

    *BUT* Future = Apple.

    Best Wishes.
    Regards

    Apple ;Freak!

  • gcat10

    They’re not down and out just yet. What’s killing them is trying to compete with Apple directly. They don’t have the hardware or software to do that.

    The dumb phone market, especially outside of the US, is extensively larger that the smartphone sector. Nokia absolutely rules that market. If they can convert quarter of those people into some sort of a smartphone, they can come back.

    Plenty people around the world have express the willingness to buy cheap wifi-only smartphone. I’m sure they’re would be some interest in the US as well.

  • DilbertAsended

    Elop is a hitman.

  • http://twitter.com/CVthegreat Braun Buffel

    Nokia used to be a hero back in 1990’s. I still remembered the most hits phone was Nokia 3310 back then.

  • Wael Abdo

    RIP NOKIA.

  • Dan

    Gotta say that this a pretty big hurdle. The bad media they are getting now will probably make it so that people who stay informed of these things will stay away from anything Nokia. Who wants to buy a phone from a company that’s going down the toilet. Too bad though.

  • http://twitter.com/T1rell T1rell

    incredible, back in the day nokia used to be one of the flagships of mobile phone companies. never would have thought that it could go downhill so easily, just goes to show how much apple changed the game…

  • sasan akbari

    One day nokia was the best, and my first phone was nokia N73.
    But now nokia is falling down. Poor nokia.

  • http://www.facebook.com/people/Mateo-Mejia-del-Castillo/538808577 Mateo Mejia del Castillo

    I dont think Nokia will die, they are making a big step with new Lumias Phones, people, I know they came a little late, but, this kind of market takes its time to retrieve people confidence and love on Nokia Lumia, Im sure they will grow up a lot with the upcoming devices and software updates, AND SERIOUSLY, APPLES NEW iOS ITS NOT THE BIG DEAL, FOR ME ITS A KIND OF iOS 5.2, AND I THINK NEXT iPHONE WONT BE AS GOOD AS THE SGS III OR HTC ONE X, SO CALM DOWN, NUMBERS ARE NEGATIVES, BUT, AGAIN, IT TAKES ITS TIME, JUST WAIT TILL THE NEXT LUMIA ANG WINDOWS 8, ull see people.