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Nokia emerges smothered in red ink, manages to flog cheapo Windows Phones

A little more kerr-ching than last time

Designing a Defense for Mobile Applications

Nokia bagged record sales of Windows Phones sales in the third quarter of 2013, thanks largely to its low-end models: 8.8m Lumia handsets were shifted, up from 7.7m in Q2.

The mobile-phone division, for which Nokia has accepted a bid of €5.44bn in cash from Microsoft (pending approval at a shareholders' meeting), recorded revenue of €2.89bn, down 19 per cent year on year, and a small loss of €86m, or €47m non-IFRS.

Revenue from "smart devices" rose to €1.25bn, up from €976m this time a year ago. However, this includes sales of 5.9 million Asha full-touchscreen "smartphones", which run a tarted-up Series 40 OS. Symbian sales were 3.5m a year ago, but "approximately zero" in Q3 2013. And mobile phone sales are significantly down from a year ago, although 55.8m units sold represents an increase from the previous quarter.

To put that into perspective, Apple's "flop" iPhone 5C phone, which borrows its design aesthetic from Nokia's distinctive Lumias, is expected to ship between 10m and 11m units in its first full quarter on sale.

Nokia's average selling price (ASP) of €143 per smartphone device reflected the dominance of low-cost models. Nokia doesn't break out sales by model, but AdDuplex (which monitors a small sample of ad-supported apps on a given day) claimed 23.2 per cent of Windows Phone-generated traffic came from the Lumia 520 and a further 9.2 per cent from the Lumia 620 - the two cheapest Lumias.

Nokia said the low ASP to "was primarily due to lower recognition of deferred revenue related to services sold in combination with our devices and lower sales of accessories" along with currency fluctuations offset by a shift towards the more expensive 1020 and 925 Lumias.

As part of the Microsoft deal, Nokia stays in Finland, keeps the networking group, the HERE maps division, and the patents in an "advanced technologies" group. Microsoft acquires 32,000 employees whose work generated €14.9bn of revenue in 2012, almost half of Nokia's gross income.

The deal is expected to close in Q1 2014, Nokia confirmed today. So Nokia Siemens Solutions Networks becomes Nokia's primary cash cow. The NSN division saw revenue of €2.53bn in Q3. ®

The smart choice: opportunity from uncertainty

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