Feeds

Nokia ‘giving away phones at cost’

With margins so thin you need a microscope to see them

Top 5 reasons to deploy VMware with Tegile

Nokia's financial results for the second quarter of 2011 are due tomorrow, and the company has already warned investors of very bad news coming. Yesterday, it issued a peek into just how tough things have got in 2011. Nokia said its smartphone profit margins were down to 6.2 per cent in Q1 2011, with margins of 16.4 per cent on basic phones.

In other words, Nokia's bargain basement models, sold to emerging markets and typically making use of very old technology, make it more money than its premium "flagship" models which boast its "state of the art" features.

"There are no very big cuts per model, but the scale – across the portfolio – is unseen for a very, very long time," Reuters quotes one unnamed source at a European operator as saying.

This is a completely arse-backwards approach for any technology company, of course, since all the expensive R&D should appear first in high-margin products before being amortised over the years in cheaper models. It's a sign of how uncompetitive and undesirable Nokia's high-end offerings have become that the company practically has to give them away. In May, Nokia warned that "operating margin will be substantially below its previously expected range of 6 per cent to 9 per cent for the second quarter 2011. This update is primarily due to lower than previously expected net sales. While visibility is very limited, Nokia's current view is that second quarter 2011 Devices & Services non-IFRS operating margin could be around breakeven.”

Translation: we're going to have to give our kit away at cost.

And despite the availability of two more Symbian models in the last quarter, there's little sign of change until Microsoft-based phones appear, possibly at the end of the year. The "contractual obligation" Meego device won raves from bloggers who hadn't seen it – but appears to have been given only a limited release. The UK will probably not be taking the N9.

We'll know more by this time tomorrow. ®

Security for virtualized datacentres

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
Comcast exec: No, we haven't banned Tor. I use it. You're probably using it
Keep in mind if, say, your Onion browser craps out on Xfinity
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.