Nokia loses smartphone market share and operating profit, hints at OS switch

January 27, 2011 9:05 AM
Devindra Hardawar

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Despite increased smartphone shipments in the fourth quarter of 2010, Nokia still lost ground to the iPhone and Android in market share — something that hurt the phone manufacturer when it came to operating profit, according to the company’s fourth quarter 2010 earnings report.

But new CEO Stephen Elop has some ideas on how he can turn around Nokia’s fortune. In particular, he hinted in a call with investors that the company may consider adopting a competing operating system in its high-end devices.

Nokia shipped 28.3 million smartphones in the last quarter, an impressive bump from 20.8 million units shipped a year ago and 26.5 million from the previous quarter. But its market share dropped a massive 7 points since the previous quarter to 31 percent — a sign that the release of Microsoft’s Windows Phone 7 platform, as well as increasing success from the iPhone and Android, were significant blows to Nokia’s smartphone presence.

Operating profit dropped to €1.09b (€745 million net) from €1.47 billion (€950 million net) last year. So while Nokia may indeed be shipping more phones, they’re likely lower-end dumbphones and feature phones, both of which are not making the company much money.

The company is still mum on sales numbers of its flagship N8 smartphone, which is a sign that there’s not much good news to report (personally, I sort of hated it). We also reported last week that it canceled the release of its X7 smartphone on AT&T, something that would have been a major step forward for Nokia in the US, and its E7 smartphone has been delayed for some time.

Nokia’s biggest problem right now isn’t hardware, it’s the company’s complete inability to deliver a modern OS that can compete with Apple’s iPhone OS, Android, or even Palm’s floundering webOS. Hype for its upcoming MeeGo OS has been floating around for years, but the company has still failed to deliver anything meaningful on that. So now it has to rely on its aging Symbian OS, which by this point is just a stain on the company’s generally slick hardware.

Perhaps in recognition of its current software deficiencies, Elop mentioned to investors the company’s need to “build or join a competitive ecosystem” — which is a roundabout way of saying that he’s considering Android or Windows Phone 7 Nokia devices. We’ve reported on Nokia’s potential interest in WP7 for months now, and considering Elop came straight from Microsoft, a move in that direction wouldn’t be all that surprising.

Via Engadget, All Things Digital

Warders

your assertion is baseless, Nokia has sells more Symbian OS phones in a month than MS sold licenses of WP7 since its launch. Their ecosystem is growing rapidly and tops popularity across the developing world. It may not be the top global patform but it will be easily be in the top 3. The combination of software services revenue and hardware sales revenue will allow Nokia to remain profitable over time. As Nokia said in the past, giving up ther software relagates them to be just another hardware manufacturer and unable to differentiate themself from the vast number of other manufactures.I think everyone recognizes that Nokia needs to up their game on their software and they have been consolidating their platform using QT which means that any ap developed on QT runs on any Nokia device
http://www.devindra.org Devindra Hardawar

Software services like its failed music service? Multiple sources have told us that Nokia is looking at WP7, it isn't just some idle speculation. And yes, Nokia has said it wouldn't give up its freedom in the past, but that was at a time when the company was doing *much* better. Desperate times call for desperate measures, and few companies are as desperate to regain their former glory as Nokia.But I'm not ruling out Android as a possibility either. My point is Nokia needs to do something because MeeGo is far off, and Symbian is dead in the water (where did all those Symbian partners go, hmm?).
PeterA650

I'm willing to bet they move to WP7. Microsoft and Nokia are the underdogs in mobile and they absolutely need each other if they are to survive. Microsoft has a (somewhat) cool OS and plenty of cash to buy themselves an app ecosystem. Nokia has some cool devices with an uncool OS and a failed app ecosystem.
http://www.devindra.org Devindra Hardawar

Exactly, it does make sense in a crazy way. Microsoft needs Nokia's clout in Europe and other markets, and Nokia needs a solid OS and a proper entry into the US market. It's win-win, if the egos behind both companies can handle it.
http://twitter.com/usemeego meegouser

Nokia's music service hasn't failed by a long shot. OVI unlimited service came to an end in a lot of territories but OVI musicis the biggest music store outside the US. Hey have 65% of the Chinese app and music online market share for example. Nokia's app strategy is Qt. The same apps are already being released across all SYMBIAN^1,^3 and maemo/MeeGo. The OVI store. The fastest growing app store in the world. It's currently at over4 million downloads a day.MeeGo is about to launch at MWC. If you were subscribed to the MeeGo dev list or saw the huge amount of hiring Nokia has been doing adertised on he Linkdin C++ and Qt groups hen you would never speak this Android/WP7 hogwash.Elop spoke about ecosystems, not operaing systems. There's a huge difference.
http://pulse.yahoo.com/_UXT5T2RWMAAY5MYQMCXAGPE3AA Jonathan

Actually, the savior for NOKIA is its hardware: far superior to any other manufacturer. What the new CEO needs to do is enable users to custom build phones, i.e. do a DELL. This will get NOKIA back on track for a couple of years while they figure out that what people really want is a well-made, European quality phone with custom components and a US-style user-friendly platform like ANDROID. And yes, I just saved STEVEN ELOP hundreds of thousands in some Big Mc Kinsey fees.
http://www.jeffpinkham.com Jeff Pinkham

I agree with you Devindra since when he joined,one of the first comment elop made about Android was to quote a famous Fin saying: “It's like pissing in your pants to get warm” so android is out and Wp7 it will be.
http://viettelonline.com/ USB 3G Viettel

Still, with a pink, blue and black colour scheme – it’s almost like heading over to Willy Wonka’s chocolate factory
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