Plus HERE Maps wasn’t part of the acquisitionDespite elation amongst the financial markets that Microsoft had finally acquired Nokia’s Devices and Services division, Noka actually managed to post a year-on-year decline in handset sales by 30 per cent. Nokia also revealed an operating loss of $452 million. In Nokia’s defence, one observer suggested that Nokia’s patent licensing business pulled in roughly $119 million in profit over the last three monthsand that HERE maps brought in $13.8 million. However, Nokia admitted that “Our Smart Devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms.” According to Vasileios Tziokas, marketing manager with Upstream, “Emerging markets consumers’ desire for smartphones is increasingly being met by an onslaught of cheap handsets from all corners.”
Furthermore, Tziokas argues that, “The feature phones that built Nokia’s brand in developing markets are falling out of favour, and despite releasing an Android phone in emerging markets such as India, this was not enough to stem the losses.”
Nokia itself conceded that, “Our mobile phones net sales were affected by competitive industry dynamics, including intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio.”
Tziokas beleives that, “Whilst the Nokia X shows that the company is aware of the change in customer demands, it highlights that cracking emerging markets requires in depth local knowledge.”
The combination of Android OS, Microsoft services and Nokia’s brand power should have been a run-away hit, but so far its success has been limited to China – where inital stocks sold out immediately.
“An alternative route for Nokia, which could prove fruitful in the year ahead, is to partner with local mobile operators who understand their customer base and have the capabilities to create culturally relevant and localised content,” Tziokas suggested.