Nokia sees sales, shipments and profits slide
Looks for solutions pick-me-up
The recession bit Nokia with a vengeance in the second quarter, with the company seeing most of its major metrics take a turn for the worst.
Nokia's profit before tax for the second quarter of 2009 fell by some 74 per cent, with the company only bringing in €380m compared to the €1.4bn it managed in the same period last year.
Shipments were down 15 per cent compared to 2008, though they still topped 103 million handsets. But the average price dropped to €62 as the company was forced to cut prices, not to mention selling as lot of cheaper handsets.
So, inevitably, net sales were down 24.6 per cent on last year to €9.9bn.
Overall Nokia reckons it managed to increase its market share, by a single percentage point to 38 per cent since the last quarter, but down from the 40 per cent it managed last year.
Things don't look much better for the rest of the year either - with the company predicting that volumes and market share will remain pretty static, which seems at odds with the company's prediction that the industry will continue to contract by a total of about 10 per cent during 2009.
In smartphones Nokia reckons it still has 41 per cent of the market, though emphasising how Nokia no longer views itself as a phone manufacturer CEO Olli-Pekka Kallasvuo said: "Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity we are accelerating our strategic transformation into a solutions company."
Nokia has wanted to be in services for along time, and is now betting that Ovi will provide its own door to a new revenue stream. But the company is going to have to make more money selling handsets if it's going to continue to fund its solutions-company aspirations. ®
I used to work in a test team at Nokia and they treat their test engineers as second class engineers demotivating them by indirectly suggesting they are not critical to justify their salaries. Because of this, it has lead to a high churn of engineers. HR where useless and spineless to flag up this problem to senior management and only resorted to the age old lazy management attitude "If people don't like it then they can leave" - and leave they did! As a result software quality suffered.
I said goodbye to Nokia
I've used a Nokia of various types since 2001, but when my second N95 broke with the same fault, I swore I'd never use them again. So now I have an iPhone, and I'm not regretting it.
They have lost the plot with quality assurance. On a plus side, their 5800 gets much better 3G signal than my iPhone 3G S - so they can make decent radio chips still. Shame about everything else.
Tragedy of the Incumbent
Nokia have facilities and resources at their disposal which are the envy of, for example, the open hardware movement, and where the latter group (or indeed any minor competitor) could probably do so much more than they can currently achieve with only a fraction of Nokia's resources, what we'll see being played out is the usual squandering of such resources by a big company as it thrashes around to find a sustainable strategy. (It's like various proprietary computing companies which met their end in the 1990s and how various Linux-related start-ups could have done wonders with the resources of those proprietary companies, which instead were written off or disposed of on the cheap upon liquidation.)
It's the tragedy of the incumbent - it can't see the riches it has at its disposal. (Meanwhile, tangentially, since Orlowski won't let us comment on his pieces [http://www.theregister.co.uk/2009/07/16/creative_commons_fail/], let it be said that the whole point of Creative Commons is the licence standardisation, not what the licences let you do, and the real tragedy is that the brand tried to be too many different things at once under one movement, resulting in confusion about what Creative Commons actually means, if it should mean anything at all in itself.)