Lumia 620 is big news

[Reflexx]

Please don't forget that the Android development moves at a much much faster rate than WP. By 2014 even low end Android phones will run fine - they will come a long way from the Eclair/Froyo/Gingerbread days (and WP7 will be dead). The success of WP will depend on the same things as today - a mature OS, ecosystem and marketing.

But even more importantly - selling cheap phones will not save Nokia. While I do agree that the cheap phones are the road to market share for WP, the same can't be said for Nokia's future. They NEED to sell their high end phones to get out of the slump they are in right now.

Nokia's bread and butter has always been feature phones. That's where they made most of their money because of the huge volumes they'd sell.

Why do you think that they NEED to sell a bunch of their high-end phones?

The profit margin on the high-end phones isn't so much more than it is on the low-end phones. High-end phones partly exist to sell the low-end.

It's like Chevy selling their Corvette. They don't make a lot of money on it. But the Corvette helps to sell their other models.

 

[brmiller1976]

Please don't forget that the Android development moves at a much much faster rate than WP. By 2014 even low end Android phones will run fine - they will come a long way from the Eclair/Froyo/Gingerbread days (and WP7 will be dead).

I have heard that promise ever since the G1. Android was always going to be stable, usable, and lag free "in the next version."

It's been over four years now, and Android (despite all the "rapid development") is still a laggy, malware-riddled, crash-prone, barely usable mess.

 

[Bryan_J]

If anyone can make cheap (I suppose I should say "inexpensive" phones work, it is Nokia. Those of us in the US sometimes forget that Nokia built a gigantic business around what we'd consider low end phones. It'll be interesting to see if they can repeat the success they had in the past with this device or not.

 

[Bryan_J]

I have heard that promise ever since the G1. Android was always going to be stable, usable, and lag free "in the next version."

It's been over four years now, and Android (despite all the "rapid development") is still a laggy, malware-riddled, crash-prone, barely usable mess.

Well, yeah... but what other OS has a phone that can double as a 46" LED flat screen TV if you turn it sideways?

 

[ynight]

Well it's a circle. Bigger user base-more developer-wider acceptance-more market presence both ends

 

[StevesBalls]

This is the part of your argument that I don't understand. Why can Nokia not afford to sell a lot of cheap phones? It's what they've been doing during all of the last decade. Nokia can absolutely afford to sell al lot of cheap phones, they just can't afford to do only that.

Exactly - that's what they've been doing the last 10 years and look where it got them.

The landscape has changed, look at the mobile phone industry today - the only companies that make money are Samsung and Apple. Apple only sells high end stuff and while Samsung does sell a lot of cheap phones they make most of their money on the Galaxy S series. The problem that Nokia is facing right now is simple - they are running out of money and they can't afford to flood the market with cheap phones for a long time. They NEED to sell their high margin high-end phones or otherwise they will run out of money soon.

And so far, it does not look like WP8 will turn things around for the Windows Phone platform.

 

[a5cent]

Exactly - that's what they've been doing the last 10 years and look where it got them.

Nokia's problem is not that they've been selling cheap phones, but that they've been selling cheap feature phones during the world's transition to smartphones.

The problem that Nokia is facing right now is simple - they are running out of money and they can't afford to flood the market with cheap phones for a long time.

You're going to have to back that claim up. IMHO, as long as Nokia can sell cheap smartphones at a profit, they can afford to flood the market with as many cheap devices as the market is able to soak up.

Nokia's losses last quarter weren't dramatic. Also, the question most analysts are asking themselves now is not when Nokia will go bankrupt, but if current Lumia sales suffice to achieve profitability in Q1 2013. I'm guessing they do.

 

[paulm187]

I'm worried about NFC on this phone. With a smaller battery there is bound to be issues. Nokia could have dropped the NFC and used the budget to bump up the RAM to 1GB

 

[Mirachen]

why do not i love Lumia920？Yep, money is the main cause, while at the same time it is such a big brick for me. For my part, Lumia920 is a lovely phone and much cheaper than opponents' flag-ship. I love 820 and if my wallet permits I may get one the coming year. Now comes the 620. Really a lovely colourful phone. It will no doubt threaten the low end android phones' position.

 

[caret]

Nokia's biggest market isn't at the high-end, it never has been. It's a little insular to assume that Nokia's success depends on the rich side of western markets, which is a rapidly shrinking demopgraphic anyway. There just aren't enough numbers able to afford these luxury (because that's what they are) phones to support Nokia's historic balance. They got where they are by producing good quality handsets at a price that the masses can afford. If in the western markets that is the 620, then the 620 will be an important piece. In developing markets (which are just as important), the Lumias aren't even that relevant (that's not to say they're not on sale, because there are rich people everywhere). Ultimately, I'm sure revenue is welcome from anywhere - they need to make all their current phones profitable and they can't afford to shun new markets out of a veiled snobbery. They know that and that's why the 510s and 620s of this world exist.

Personally, I've had a 610 for a few weeks now, and I can tell you it is a quality product. Bang for buck wise, it dumps on the high end phones. The biggest problem is the Windows ecosystem, which is an absolute mess - lay that one at Microsoft's door. Too many different Microsoft brands competing for prominence leaves the end-user experience a nightmare. WP is supposed to collect third party accounts in one place so you don't have to worry about managing them, and it does that well. Unfortunately, Microsoft have failed to provide the same unified interface to all its own services. It's very indicitive of a corporation that is internally very competitive (which can be good), but which fails to protect the marketplace from internal politics (bad).

So would I pass over Nokia in the future? Well, they've definitely converted me back from Sony Ericsson, but I wouldn't neccessarily be looking for a Windows Phone. Nokia, being the main player in the WP arena, need to crack some whips with Microsoft. They're making their phones look bad.

 

[StevesBalls]

You're going to have to back that claim up. IMHO, as long as Nokia can sell cheap smartphones at a profit, they can afford to flood the market with as many cheap devices as the market is able to soak up.

Nokia's losses last quarter weren't dramatic. Also, the question most analysts are asking themselves now is not when Nokia will go bankrupt, but if current Lumia sales suffice to achieve profitability in Q1 2013. I'm guessing they do.

Q4 2011: $1.3 billion loss. Q1 2012: $1.7 billion loss. Q2 2012: $1.01 billion loss. Q3 2012: $754 million loss.

I don't know about you, but I wouldn't say that those numbers look very reassuring. Let's see if they can turn in a profit in Q1 2013. I'd say no, but if they do then I'll owe you a beer.

 

[a5cent]

Q4 2011: $1.3 billion loss. Q1 2012: $1.7 billion loss. Q2 2012: $1.01 billion loss. Q3 2012: $754 million loss.

I don't know about you, but I wouldn't say that those numbers look very reassuring. Let's see if they can turn in a profit in Q1 2013. I'd say no, but if they do then I'll owe you a beer.

That Nokia has been loosing money is well understood. Unfortunately I didn't clearly state which claim I was asking you to back up (sorry). It was this one:

...and they can't afford to flood the market with cheap phones for a long time.

Anyway, the numbers you've quoted aren't as bad as they look. Over half of the losses you've listed are due to one-time restructuring expenses. Those restructuring efforts have largely run their course. According to Nokia's internal accounting they already returned to profitability in Q3 2012, based on a non-IFRS operating margin of 1.1%.

I'm expecting to get that beer, but it'll be a close call. :wink:

 

[a5cent]

Q4 2011: $1.3 billion loss. Q1 2012: $1.7 billion loss. Q2 2012: $1.01 billion loss. Q3 2012: $754 million loss.

I don't know about you, but I wouldn't say that those numbers look very reassuring. Let's see if they can turn in a profit in Q1 2013. I'd say no, but if they do then I'll owe you a beer.

Well, can I get that beer now, as Nokia has already achieved profitability in Q4 2012, or do I need to wait another three months? :angel:

 

[crystal_planet]

. They NEED to sell their high end phones to get out of the slump they are in right now.

Wrong.
They need to sell their devices regardless of what line they come from. Selling 20 620s is better than selling two 920s. What do you think the cash cow is for Chevrolet? The Malibu or the Corvette?

 

[based_graham]

I would subsidize, try getting it out on a lot of retail channels and have it compete with the iTouch.