Results for Nokia’s last quarter with Windows Phone: slightly worse than flat? Over to you Microsoft

Nokia has released its fourth quarter results for 2013. They make odd reading because of the division into “Continuing operations” and “Discontinued operations”, the latter including the mobile phone business which has been acquired by Microsoft. This tends to cloud the key point of interest for some of us, which is how Windows Phone is faring in the market.

The answer seems to be that sales slightly declined, though it is not clear. Here is what we know.

Mobile phone revenue overall declined by 29% year on year and by 5% quarter on quarter, for the quarter ending December 2013.

Nokia states in its report:

The year-on-year decline in discontinued operations net sales in the fourth quarter 2013 was primarily due to lower Mobile Phones net sales and, to a lesser extent, lower Smart Devices net sales. Our Mobile Phones net sales were affected by competitive industry dynamics, including intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio. Our Smart Devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms, as well as our portfolio transition from Symbian products to Lumia products.

Disappointing; though in mitigation Lumia (ie Windows Phone) sales volume in 2013 overall is said to be double that in 2012.

We do know that much of Lumia’s success is thanks to the introduction of low-end devices such as the Lumia 520. That has been good for building market share, but not so good for app sales or mind share – on the assumption that that purchasers of high-end devices are more likely to spend on apps, and that aspirational devices have a greater influence on mind share than cheap ones.

That does mean though that units might have gone up even though revenue has fallen.

Still, the results do put a dampener on the theory that Windows Phone is taking off at last.

This is a moment of transition following the Microsoft acquisition. Microsoft has not got a good track record with acquisitions, and the Danger/Kin disaster is hard to forget, but Nokia comes with an influential executive (Stephen Elop) and common sense would suggest that the team which created excellent devices like the Lumia 1020, and which was able to engineer strong budget offerings like the 520, should be kept together as far as possible. Or will it be dragged into the mire of Microsoft’s notorious internal politics? Over to you Microsoft.

Update: it is now reported that Lumia sold 8.2m devices in Q4, down from 8.8m in Q3 but up from 4.4m in the same quarter 2012.

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