Everyone was expecting Nokia’s smartphones sale in Q4 2013 to go up, with estimates that it would break 10 million units. Instead they sold 8.2 million Lumia handsets, a sequential drop on the Q3 sales of 8.2 million units. While that is still an 86 percent increase on Q4 2012, it is not the sort of performance you would want to see in the holiday quarter.
Tero Kuittinen has already taken a look at the impact Microsoft’s brand is having on Nokia’s sales here on Forbes, but I want to talk about another area which may have contributed to the drop in sales during the quarter.
Nokia’s Windows Phone line-up was old. In the modern smartphone world handsets that are approaching their one year anniversary are not going to be able to compete with the latest retail release on other platforms. For whatever reason, Nokia did not have a new budget smartphone to sell during Q4, while Android had Motorola’s Moto G leading the way and Apple’s reworking of the older iPhone 5 into the iPhone 5c range allowed iOS to have a handset that was effectively new in the eyes of the public.
The combination of Nokia’s lacklustre line-up with the glacial pace of Microsoft’s expected upgrades to the Windows Phone OS (and the potential compatibility issues of the new OS on the older handsets) meant the existing handsets were going to struggle to be at the front of the retail shelves.
It didn’t need to be like this. Nokia had a low-end handset designed, and had a solid opportunity to launch it.
Nokia World took place in Abu Dhabi on October 22nd last year. Yes, Q4 had already started, but announcing a low-end handset at that event with a little sparkle of “it will be in stores on Friday” would have been a good start to a festive marketing campaign. Although there were suggestions that the Lumia 520′s successor (the Lumia 525) was going to be announced at the event, alongside the Lumia 2520 (a Windows 8 RT tablet), the Lumia 1520 (Nokia’s first 6-inch screened smartphone with PureView), and the Lumia 1320 (a mid-ranged handset also with the larger screen), it never showed up.
When the refresh of Nokia’s low-end Windows Device quietly arrived five weeks later on 27th November, the only specification change was a doubling in memory (from 512 MB on the Lumia 520/521 to 1 GB). That single change along with the new model number meant it could be sold as a new device (and rightly so). The memory boost allows the Lumia 525 to run a wider range of apps (mostly games) from the Windows Store compared to the older model. The suggested retail price of $195 SIM free and unlocked matched was lower than the Lumia 520 when it was launched. The potential was there, but to compound the damage of missing the bulk of the festive gift-buying season, the Lumia 525 received a very limited rollout, initially going on sale in one territory, Singapore.
Had the Lumia 525 been announced at Nokia World on October 22nd and went on immediate sale, Nokia would have entered the festive period with a refreshed product line-up, the marketing teams could have pushed these new handsets, and more momentum could have been built up to generate more sales. The Lumia 520 is the best-selling Windows Phone handset (and arguably the best-selling Windows powered device of 2013 across the board). A refreshed low-end handset would have been incredibly attractive on the high street. Instead the marketing focus from networks and retailers went to the rush of new handsets from the other mobile platforms.
It’s impossible to say just how many Lumia 525s could have been sold had the handset received a speedy world-wide roll-out, but the lack of momentum in Windows Phone as a platform is worrying for the platform’s progress in 2014. Microsoft will likely be announcing details on Windows Phone 9 at the Build conference in April, slowing sales of Windows Phone 8 handsets just as the announcement of Windows Phone 8 saw a slow-down with Windows Phone 7.
It’s unlikely that HTC or Samsung will make any concerted effort to push a Windows Phone 8 flagship once the purchase Nokia’s Devices and Services by Microsoft is completed. While there are noises about Sony releasing a Windows Phone handset, right now they are just that. Noises. As Mobile World Congress approaches, we may see more handset news from Nokia (we might even see the mythical Android handset as a final present from Finland) but the sedate pace of releases from 2013 cannot be repeated in 2014 if Windows Phone is to build up sales and market share.
The message to Nokia, Microsoft, and all the Windows phone manufacturers is this. Release often, iterate multiple handsets around a common design, build up momentum, and communicate the impact of Windows Phone 9 clearly to developers and consumers.
Another few quarters of performance matching Q4 2013 and Windows Phone will enter a downward trend it may not escape from.