Nokia releases its financial report for Q4 2013, showing a decline in Lumia sales before passing the baton to Microsoft
While both the media and consumers wait patiently for Microsoft to inevitably absorb Nokia's devices and services division, the Finnish company today published its Q4 2013 financial report. This latest report paints a rather bleak image of its Lumia family of Windows Phones. Simply put, Nokia (and Microsoft as both the operating system developer and financial partner) had a bad period to close off 2013. That said, it's not all negative and the Nokia we should see after the Microsoft deal will be a profitable company.
Unfortunately, the report doesn't share the exact number of Windows Phone units sold worldwide, joining Lumia hardware with other mobile devices sold with the Nokia brand (hello, Asha). Nokia does – however – note that smart device sales were up from the same quarter back in 2012, but suffered a fall compared to Q3 2013. Looking back at last year's Q4 report, Nokia shipped 4.4 million Lumia Windows Phones, while 8.8 million were shipped in the previous quarter of 2013. You can attempt to draw your own estimate from those two values.
How ever many Windows Phones Nokia managed to sell last quarter (we're back to Q4 2013), the company managed to more than double its results from 2012 – a positive outlook on progress made with Microsoft and its mobile platform, but this fails to mask the slight dip Nokia has experienced over the important holiday period. Fancy some figures? 2012 saw Nokia sell 13.3 million mobile devices running Windows Phone, while annual sales for 2013 would be at least 27.8 million. It's an improvement, but the division still sits as a loss and burden on Nokia as a whole.
The combined total of both feature phones and smartphones sold in 2013 plummeted, resulting in a 29 percent drop in revenue to 2.63 billion euros ($3.57 billion) compared to the previous year. It would be difficult to point the finger at just what may be the root cause of this turn of events rounding off 2013 since we're looking at both feature and smartphones. Nokia announced the Lumia 1520 and Lumia 1320, the first two phablet devices running the Windows Phone OS. Not only that, but we also saw Nokia's first Windows tablet, the Lumia 2520 hit stores.
What we can take from this report is that Microsoft has some way to go to simply maintain the growth Nokia brought to the mobile platform – 2014 will be an interesting year for Windows Phone.
HERE, there, everywhere
Honestly, it's not all doom and gloom. As well as the "discontinued operations", how Nokia now chooses to refer to its hardware division, the company has other properties up and running. These include HERE, NSN (Nokia Solutions & Networks), as well as healthy portfolio management and Advanced Technologies (innovation and development). We're certainly going to see a different Nokia post-Microsoft acquisition, but if recent reports are anything to go by, Nokia should remain profitable with operations and licensing.
Today, the company also confirmed that an extension to a patent license has been signed with Samsung for a further five years.
NSN and HERE are both providing a solid turnaround for Nokia, leaving its handsets side of the business as the rotten apple. NSN itself achieved underlying operating profitability with a Q4 2013 non-IFRS operating margin of 11.2 percent, compared to 8.4 percent in Q3 of the same year. Nokia's HERE platform and services is where the growth is at, however. External net sales grew to 225 million euros ($306 million), an increase of 10 percent year-on-year and 28 percent sequentially.
Looking forward, not only is Nokia working with Microsoft to further integrate its HERE services and snatch up important licensing fees, but the Finnish company has also partnered up with numerous automobile companies and manufacturers. We've covered the progress made with the likes of Continental and are excited to see just how Nokia can work with said companies to further advance the overall driving experience. While the sales of Nokia Lumia hardware certainly isn't going to turn heads, it would be wise to keep an eye on HERE, NSN and other Nokia ventures.
Check out the full report over on the Nokia website.
Update: Nokia has gone on record to confirm that 8.2 million Lumia Windows Phones were sold in Q4 2013, down from 8.8 million in Q3.