Nokia has been having a hard time of it recently. The firm’s floundering smartphone products have been almost completely eclipsed by efforts from Apple and Google, and now the once-king of the handset finds itself shedding marketshare at an alarming rate.
The Finnish company released their quarterly results yesterday, and it makes for difficult reading. Nokia lost €487 million in the three months to July, lost money in its smartphone division (hardly a shocker given the lacklustre performance of the latest flagship devices) and crucially, its regular cellphone division too. Nokia has previously been the dominant force in basic handsets, the sale of which has been the firm’s cash cow for the last few years, but a wave of cheap devices from China is eating into Nokia’s sales. Excessive inventory meant the firm had to cut prices to move their products, which in turn ruined their margins. Nokia’s smartphone market share is now thought to be around 16%, down from 37% just fifteen months ago.
The firm’s CEO Stephen Elop called the results “obviously disappointing”, however he tried to paint a positive picture of Nokia’s prospects. Elop confirmed the first Nokia Windows Phone 7 device would release to consumers before the end of the year – the device it is hoped will turn the company around.
A interesting tidbit from the financial results is Nokia’s newest revenue stream. Following a patent licensing agreement with Apple (similar to the agreement Microsoft is attempting to extract from Android and Chrome OS manufacturers), Nokia received a lump-sum payment of €430 million. Nokia will also continue to receive regular license payments from the iPhone manufacturer. The flipside of that argument is that without divine intervention from their patent lawyers, Nokia would have clocked up losses of almost one billion Euros. Nevertheless, the firm will be relying on all the income it can get as they work back towards profitability and market leadership.
