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Nokia, the once-mighty Finnish mobile handset maker, is betting its future on the success of its new Windows Phone smartphones, but sales so far around the world have been mixed.
Nokia has announced four new Lumia smartphones in the market since October. Stephen Elop, Nokia’s CEO, noted that the devices, which have been released ahead of schedule, have received high acclaim from reviewers and consumers, but sales have been mixed throughout different regions of the world.
For example, initial U.S. sales of the company’s Lumia 710 at T-Mobile and the newly launched Lumia 900 on AT&T have been strong. The company hasn’t disclosed specifically how many it’s sold in the U.S. But in total Nokia says it has sold more than 2 million Lumia smartphones, so far. But the company has had trouble in markets such as the U.K., where it initially launched the Lumia 800 and Lumia 710.
“We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim,” he said in a statement. “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.”
During the conference call today with analysts and investors, Elop attributed Nokia’s stronger U.S. sales to the fact that it’s been able to target its training and sales message. He said T-Mobile USA showed a strong commitment to selling the Lumia 710. And even though the carrier is small compared to others in the U.S. market, he said that the focused sales push has had a positive effect. Also getting the right price point for the device has helped it sell well, although he was careful to say that Nokia will not discount the Lumia products too much simply to drive sales.
Elop said that the company has employed a similar strategy with the launch of the Lumia 900 at AT&T. Specifically, the company has sent out a “veritable army of Nokia employees” to train sales associates in AT&T stores. And he said that training is still ongoing with an emphasis on making sure that associates can articulate the differences in Nokia’s Windows Phones. He said that this focus has resulted in the strong sales.
But he added that this is not as easy to do in other markets, such as the U.K.
“When you look at the U.K., it more difficult to get that much focus around a specific product,” he said.
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He explained that in markets, such as the U.K., devices are sold in a variety of retailers and carriers. Consumers don’t buy their phones from one particular carrier. This makes it difficult to train sales associates to sell the devices. With that, Elop said the company has learned something with each product launch, and he expects the company to employ strategies that have been successful in one market in other markets as it continues to roll out the Lumia products.
“There is a lot we have learned about the marketing messaging (in the U.S.) that we will be able to bring back to key markets, like the U.K.,” he said. “We take a step and learn and keep pushing forward.”
Nokia laid a big bet last year when it decided to abandon the Symbian operating system for Microsoft’s Windows Phone platform. The company has worked quickly to introduce new products into the market using the new platform. Its first two products were announced in October with two more following early in 2012. The company now has a portfolio that spans the high end to the low end. While Elop said he is confident the company can make a successful transition to the Windows Phone platform, he also acknowledged that the company is facing challenges at the lower end. And it’s these challenges for which he blamed the company’s earnings shortfall.
“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly,” he said in a statement. “Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges.”
During the conference call, Elop noted the rapid growth of the Google Android ecosystem, which has become a major challenge for Nokia. He said that the company would focus more on educating consumers and sales associates about the benefits of the Windows Phone ecosystem.
This is an important issue that Nokia must address with its partners. Even though Nokia and Microsoft have been spending big bucks on advertising and education for sales associates, on the first day the Lumia 900 was launched in the U.S., there were some associates who were unable to articulate the strengths of the Lumia 900 and the Windows Phone platform.
But Elop said the company is working hard to get more devices in sales associates’ hands, as well as, educating them on the features and benefits of the device and ecosystem. As part of this push, Elop said the company would launch a second wave of advertising for its Lumia products, and he said that the company would increase its investment in advertising.
Elop also talked about other actions the company plans to take in the second quarter. While the Lumia 900 and Lumia 610 were introduced in the first quarter, the company will be selling them in the second quarter. Elop believes that having a full portfolio of products with the Lumia 900 at the high end and the Lumia 610 at the low end will help drive adoption. Nokia will also expand sales into more markets, such as in Eastern Europe and throughout Asia.
Elop said the company also plans to work with Microsoft to add new features to the Lumia products, such as Wi-Fi hotspot tethering, vCard or digital business card sending and receiving, panorama picture taking, and adding a DLNA client to connect the Lumia smartphones to a TV.
And finally, Elop said the company will continue to invest in getting developers to create exclusive apps for the Windows Phone platform.
Still, Elop admitted that the first quarter was a disappointment. The companyreported an operating loss of $1.76 billion for the quarter. Nokia warned last week that its earnings would fall short of expectations due to weaknesses in emerging markets. Nokia said that “competitive industry dynamics” in developing markets such as India, China, Africa and the Middle East led to a shortfall.
But he said that this is just the beginning of Nokia’s battle to regain its ground. And he said he is confident that the company can improve its feature-phone and low-end smartphone ground in developing markets, as well as grow its high-end smartphone business with the Lumia Windows Phone products throughout the world.
Updated 6:03 a.m. PT:This story has been updated with additional information from Nokia’s quarterly conference call.
Correction 7:42 a.m. PT:This story misstated how many Lumia 900 devices Nokia has sold. The company has not disclosed that information, but it has sold 2 million Lumia smartphones in total.
