Selling one million Windows Phone devices is just the start – Nokia is now in a race to build an ecosystem around its smartphones as sales of its Symbian decline faster than expected.
It’s now almost a year since Nokia CEO Stephen Elop said the handset maker had “poured gasoline” on its “own burning platform”, as it struggled to cope with the success of Apple’s iPhone and Google’s Android.
In a bid to turn around its fortunes, Nokia then signed a deal to make Windows Phone its principal operating system over Symbian, and has since released three Windows Phone-powered Lumia handsets. The company’s results revealed it has now sold one million Windows Phone devices.
Yesterday Nokia reported an operating loss of £1.07bn, while net sales fell 21 per cent year on year.
CEO Elop used martial language when discussing Nokia’s results, casting the mobile marketplace as a battlefield where Nokia faces formidable opponents: “In the war of ecosystems, clearly there are some strong contenders already on the field…Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing.”
But he also pointed to unexpectedly strong competition from rivals to Symbian, most commonly Android, and added: “There has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian’s traditional strengths. As a result of the changing market conditions, combined with our increased focus on Lumia, we now believe that we will sell fewer Symbian devices than we previously anticipated.”
David McQueen, principal analyst at Informa Telecoms & Media, said sales of Lumia devices would have been disappointing to Nokia, bearing in mind the impressive demand experienced during the first days of launch back in October.
But selling the handset is no longer enough – with the success of iPhone and later Android apps, the mobile device is just one part of a broader ecosystem, so encouraging app developers to build on Windows Phone, and extending the number and types (phones and tablets) of devices is key.
And in this new, much more complicated world Nokia’s heritage counts for little: while one million Lumia devices might seem a lot, it is tiny compared to the 37 million iPhones Apple sold in its last quarter. The challenge for Nokia and Microsoft is to position themselves as a viable third option for consumers and businesses that don’t want Androids or iOS devices.
“Nokia has got to grow and get some critical mass and get that ecosystem up and running. The more apps and developers you get the more phones you sell and the more developers you get,” McQueen told silicon.com, and added: “I’d expect more devices at lower price tiers because you have to fill that gap left by Symbian.”
McQueen said he was also expecting a tablet device to come from Nokia this year “that will help fuel the ecosystem that they are desperate to get going.”