Lumia sales falter globally, but Nokia is doing great - who'd a thought?

The upcoming fall will mark the fifth anniversary of the release of Lumia 800, the first Nokia smartphone running the Windows Phone 7 operating system developed by Microsoft. This was the first leg in the story was supposed to lead to a third option on the smartphone market and keep both Microsoft and Nokia relevant in an ever changing world.

In September 2013 Microsoft purchased the business unit from Nokia, only to exit the mobile phone device market in 2016. Instead the software giant chose to keep developing it's own Windows 10 Mobile operating system, available to OEMs. In addition Microsoft has been pushing it's cloud services like Office 365 to the dominant platforms, Google's Android and Apple's iOS.

Due to Nokia's dominance in the Finnish market, the country's smartphone operating system was quite peculiar. Where as in elsewhere the Windows Phones were always marginal devices, in 2013 the platform was the most popular smartphone platform in Finland. Finally with even Microsoft effectively jettisoning the hardware business, the Finns are abandoning what remains of the mighty Finnish mobilephone dynasty.

There was never much investment in the business since the current CEO took the helm at Microsoft in 2014. The global market of Lumia smartphones (the moniker for Windows Phones from Nokia and Microsoft) shrank to just 1.2 Million units in the last quarter. This comes with a steep fall the quarter before that the company still shipped almost twice as many units at 2.3 Million.

According to the statistics from the three major operators in Finland, the sales have plummeted in Finland as as well. The operators also state that the chinese brand Huawei has picked up the lower end marketshare. Microsoft mostly targeted with the Lumia device line, this was set in motion by the Lumia 520 - a very appealing device at launch time in February 2013.

In fact in the July 2016 statistics from DNA, Elisa and Sonera the Lumia brand only has one top 10 spot, with Apple, Huawei and Samsung making up the majority of devices. A single feature phone with the Nokia brand also makes the charts.

July 2016 mobile phone sales rankings in Finland

Looking at the statistics above it's clear that Android and iOS still form the duopoly they did when Nokia made the decision to go with Windows Phone in early 2011. No other options like Samsung's Tizen, or more exotic options like Jolla's Sailfish OS or Canonical's Ubuntu Phone have done any better than Windows Phone.

Maybe there really was a trojan horse...

Compared to 2011 time the market has also stabilized and smartphones no longer spark the excitement they used to. Features have stagnated and the average selling prices has plummeted. High quality smartphones like Samsung Galaxy J5 being available for less than 150 EUR and offering an features close to yesteryears flagship devices. Even the smartphone juggernaut iPhone from Apple is facing decling sales with it's 10th anniversary just around the corner.

At the time when the choice to go with Microsoft was made at Nokia, it was evaluated to be either the smartest or the dumbest business move of all time. Many finns suspected that the CEO Stephen Elop was a trojan horse sent in by Microsoft to let the US giant take over the largest company in Finland. Elop was indeed the CEO when Microsoft bought Nokia smartphones, but was let go in 2015.

Fast forward to August 2016 and it looks like Nokia was the winner in what some called the "unholy alliance" of Nokia and Microsoft. Steve Ballmer, ex-CEO and a long time Microsoftie insisted on the purchase of Nokia, but that has proved to be the wrong choice. Thanks to it's sheer size Microsoft has able to to stomach the bad acqusition.

In fact Microsoft has also made a turn to to their roots and seems like the Windows operating system itself is now in the back seat. In the 90's and 00's the company dominated it's own platform and turned strongly inwards, but now they've had to open up again.

Nokia on the other hand has used the funds from the sale of the smartphone business to focus on it's telecommunication networks business. First it bought the other half of the network business from Siemens. Now it's doing a riskier purchase of Alcatel-Lucent, funded in part by the sale of the HERE mapping unit.

It's also interesting that the the Alcatel-Lucent also includes the Bell Labs, the home of the UNIX operating system. This has symbolic value as both iOS and Android build from a foundation of UNIX clones. iOS is based on the BSD operating system where as Android relies on Linux, an Open Source operating system whose development was started in the Helsinki University.

During spring 2016 it was also announced that Nokia branded smartphones with the Android Operating System onboard will be coming to the market soon enough. But in this case it's only the brand Nokia that is used here, with the design, manufacturing and marketing of the devices being done by other companies. And this seems fine as looks like the easy wins from this market are taken and only Apple can really differentiate on the market with it's closed iOS operating system.

It's highly unlikely that nobody had this exact outcome in mind for the Nokia and Microsoft alliance. But that's the general characteristic of large scale plans, they rarely play out as you have, ehm... planned. Plenty of mistakes were made at Nokia and Microsoft between 2011 and 2016, but both were able to react and make tough decisions rather than the whole companies to the ground.

Written by Janita on Monday August 1, 2016
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