Nokia has released its Q4 results and we now have a official confirmation that Nokia has indeed sold over 1 million Lumia devices till date. The Nokia Lumia is yet to hit the American market fully as the Lumia 900 is expected to hit AT&T by March 18th 2012. Key highlights of the report:
Earlier when Nokia had signed the deal with Microsoft over Android and had decided to dump Symbian, we all did know a significant amount of royalty was supposed to be paid by Microsoft. Nokia states that during Q4 it received the first quarterly platform support payment of $250 million from Microsoft. Over the term of the agreement these payments as platform support would amount to well over billion dollars.
"Our broad strategic agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft. In the fourth quarter 2011, we received the first quarterly platform support payment of USD 250 million (EUR 180 million). We have a competitive software royalty structure, which includes minimum software royalty commitments. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US Dollars."
Smartphone unit sales
Nokia has sold 19.6 million smartphone is Q4 2011 as compared to 28.6 in Q4 2010. Out of these 19.6 million Nokia has managed to sell just little over a million Windows Phone based Lumia devices. Smartphone sales in the whole of 2011 has dropped to 77.3 million compared to 103.6 million in 2010. This is probably due to the dumping of Symbian and the transition phase to Windows Phone.
"The year-on-year decrease in our Smart Device volumes in 2011 was driven by the strong momentum of competing smartphone platforms relative to our higher priced Symbian devices, particularly in Europe and Asia Pacific, as well as pricing tactics by certain competitors. During the second quarter 2011, our Smart Device volumes were also negatively impacted by distributors and operators purchasing fewer of our smartphones as they reduced their inventories of those devices which were slightly above normal levels at the end of the first quarter 2011, particularly in China. During the second half of 2011, our Symbian competitiveness continued to be challenged across the portfolio driving the significant year-on-year volume decline."
Nokia's low end mobile phone sales are still strong. They have manage to sell 93.9 million non smartphone devices in Q4 2011 alone (339.8 million in the entire year of 2011). The year on year change for the quarter is only -1%.
"Mobile Phones volumes in the fourth quarter 2011 were approximately flat year-on-year. This was primarily driven by our reduced portfolio of higher priced mobile phones compared to the fourth quarter 2010, almost entirely offset by a portfolio renewal, such as the broad availability of dual SIM devices, and higher volumes at lower price points in the fourth quarter 2011.
On a sequential basis, the increase in our Mobile Phones volumes in the fourth quarter 2011 was primarily driven by the broader availability of our dual SIM devices as well as the ongoing product renewal across the mobile phones portfolio, and to a lesser extent from higher seasonal demand for our mobile products."
Nokia CEO, Stephen Elop
Stephen Elop says that they are pleased with performance of their mobile phone business units (non smart phone sales). He goes on to mention that Lumia sales are going to be pushed further this year as they have just re-entered the North American Market and are also expanding to additional markets including China and Latin America in the first half of 2012. It is also to be noted that Lumia devices have not hit everywhere yet and are expected to go on sale in most of the countries during Q1 - Q2 of 2012.
"The fourth quarter of 2011 marked a significant step in Nokia's transformation. Most notably, in Q4 we introduced new mobile phones and smartphones, which resulted from the strategy shift in our Devices & Services business.
Overall, we are pleased with the performance of our mobile phones business, which benefited in Q4 from sequential double-digit percentage growth in our dual SIM business, with particular strength in India, Middle East and Africa and South East Asia. In October, we introduced the Asha 200, 201, 300 and 303, which brought new mobile phones into 76 markets around the world. We are building on this foundation with R&D investments as we continue our journey to connect the next billion to the Internet.
Also in October, just six months after signing an agreement with Microsoft, we introduced our first two devices based on the Windows Phones platform - the Nokia Lumia 800 and the Nokia Lumia 710. We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed of Nokia. To date, we have introduced Lumia to consumers in Europe, Hong Kong, India, Russia, Singapore, South Korea and Taiwan.
We have also started our important re-entry into the North American market. Earlier this month, T-Mobile started selling the Nokia Lumia 710 as a lead device. We also announced the new Nokia Lumia 900 with AT&T, and immediately received a number of industry awards. The Nokia Lumia 900 is our third Lumia device, our first LTE device designed specifically for the North American market, and AT&T is positioning the Lumia 900 as a lead LTE device.
In the war of ecosystems, clearly there are some strong contenders already on the field. And with Lumia, we have demonstrated that we belong 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. To date we have sold well over 1 million Lumia devices. From this beachhead of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful. We also plan to bring the Lumia series to additional markets including China and Latin America in the first half of 2012.
And, while we progressed in the right direction in 2011, we still have a tremendous amount to accomplish in 2012, and thus, it is my assessment that we are in the heart of our transition.
Specifically, changing market conditions are putting increased pressure on Symbian. In certain markets, 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.
During Q4, we also formed the Location & Commerce business to drive value from our leading mapping and location-based services platform. We conducted annual impairment testing in Q4 in the context of our new structure and plans for the future, and valued the Location & Commerce business at EUR 4.1 billion, resulting in an impairment of goodwill of EUR 1.1 billion. The Location & Commerce business is an important asset that is bringing differentiating location-based services to Nokia, the Windows Phone ecosystem, and other Microsoft products such as Bing. We believe this is the leading location-based services platform with an opportunity to become tremendously powerful as computing goes more mobile, and location increasingly becomes a critical organizing dimension for a person's experiences.
In summary, with a strong balance sheet, our performance in mobile phones and the new excitement around Lumia, we are confident that we are on the right track to build long-term value."
You can get the entire Q4 2011 report over here at Nokia