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Nokia’s Q4 2010 Earnings: A Faint Glimmer of Hope

January 29, 2011 in Nokia Randomness
It could happen.

It could happen.

So, yesterday Nokia announced its first-quarter earnings. The numbers kinda sucked, to put it bluntly, but they beat the estimates. Still, there might be some light at the end of the tunnel, and no, we’re not talking about MeeGo.

Some of the highlights:

  • Overall sales rose 6% to 12.7 billion euro, compared to last year. Devices & Services rose 4%, but was offset by a 37% jump for NAVTEQ and 9% increase for Nokia Siemens Networks (gasp!)
  • Profit fell 23% (from last year), to 884 million euro.
  • Nokia shipped 28.3 million smartphones/mobile computers in Q4
  • The average selling price (ASP) rose to 69 euro vs. last years 65 euro
  • Market share fell to 32%, from 34%
  • Nokia will host a Strategy and Financial Briefing in London on Feb. 11

That last one matters for a very interesting reason:

“Nokia must compete on an ecosystem-to-ecosystem basis. In addition to great devices, we must build, catalyze, and/or join a competitive ecosystem.”

Spoken by the CEO himself, Mr. Stephen Elop, it’s the “money quote” according to Business Insider. And the biggest shred of evidence so far that suggests Nokia just might be considering a foray into the Android or Microsoft “ecosystem.”

Branching out makes sense on a lot of levels.

Symbian, as proven by reviews of the latest Nokia high-end devices, is not going to cut it. It would take a complete makeover to become a viable high-end consumer OS, and that would take time. A lot of time. And a lot of positive PR. But let’s not forget MeeGo: as of three months ago, it was ridiculously slow, unfinished and unusable. As of April 2011, it’s supposed to be handset-ready. At that point, Android will be 2 years, 7 months old. iOS will be 3 years, 3 months old. And Windows Phone 7 will be 5 months old.

That’s problem one. Problem two is that each “ecosystem” already holds a competitive advantage that’s attracted some kind of consumer following. Windows Phones have Xbox Live, Office, and Zune integration. iPhones have iTunes, the highest (and maybe lowest?) quality apps, and the most intuitive interface. Android phones have Google services, lots of apps, and a large variety of handsets.

MeeGo has its open-source nature, which is great for developers/stakeholders, but not something most consumers will care about.

In other words, it’s a tough bet for Nokia, and an uphill battle for MeeGo at this stage of the game.

Investing resources into either Android or Microsoft, however, would be the equivalent of hedging its bet. If MeeGo does well, Nokia loses little by producing, say, Android phones. If, however, MeeGo does not (in my opinion a larger possibility), Nokia has something to fall back on, besides selling all those “budget” priced handsets.

Either way, we’ll find out on February 11.

Nokia Q4 2010 Press Release
Is Nokia About to Embrace Android?




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