Nokia scaling back Windows Phone 7 production

Compal Communications is Nokia's primary ODM (Original Design Manufacturer) for the Lumia Windows Phone. June revenues for Compel fell 39.5% due to a reduction in orders from Nokia.  Similar reductions are expected for July.

The move isn't surprising in that Nokia will begin shifting to Windows Phone 8 devices and the company wouldn't want to be stuck with a major inventory of the Windows Phone 7 ones.  This scale back could include any of the Lumia phones from Nokia including the 610, 710, 800 or 900.

What does the scaled back production mean to the average consumer? Most shoppers probably won't even notice it and Nokia is still slated to release the pink Lumia 900 over on AT&T on July 15th (a vote of confidence from the carrier, no doubt). Seeing how some of the color patterns of the Lumia 900 flew off the shelf earlier this year (remember the cyan model), we expect plenty of inventory on the pink version.

The greatest impact will likely be felt by Compal. As primary ODM for Nokia, they will continue to see a decline in revenue while production of the Windows Phone 7 devices continues to scale back. The pendulum will eventually start to swing the other way and Compal should see revenue increases once production of the Nokia Lumia Windows Phone 8 devices kicks into high gear late in 2012.

We suspect adjusting inventory based on demand is normal for companies like Nokia and our bet is Samsung and HTC already did this months ago. It would be perhaps more surprising if Nokia wasn't scaling down production at this point.

Edit: According to Digitimes, Nokia outsourced the Lumia 610, 710 and 800 to Compal but their "high end" line is made in-house e.g. the Lumia 900.

Edit 2: Another interpretation of this story would be that Nokia is scaling back production from Compal and instead doing more if it "in house" instead. For instance, they started production of the Lumia 710 for their Latin American market in late 2011. That is certainly plausible and puts a different, less dire spin on the story. Thanks, winpho, for the tip

Source: Digitimes via: wmpoweruser