Nokia used to be the number one smartphone maker in the world. It created the smartphone market in the late 90s and dominated it for years. But then, in 2007, Apple launched the iPhone. It redefined the entire category, and soon became the number one smartphone company in terms of sales, in the US. Trying to emulate Apple’s success in smartphones, Google launched the Android OS, and it soon dethroned Nokia’s Symbian as the leading smartphone platform worldwide.
Stephen Elop, the man who people call Microsoft’s trojan horse in Nokia, has been at the helm of Nokia for about a year now. He has been making some changes to Nokia’s strategy to make it a smartphone giant again, but they don’t seem to be working. Nokia has pledged allegiance to Microsoft’s Windows Phone 7 platform, sidelining Symbian and MeeGo in the process.
Today, Nokia released its Q2 2011 earnings report. Compared to Apple’s outstanding results, they are extremely disappointing.
Nokia has posted a â‚¬487 million operating loss, down â‚¬782 million from a profit of â‚¬295 million in Q2 2010. Its sales are down to â‚¬9.275 billion, from â‚¬10 billion in Q2 2010. While it had nearly â‚¬1 billion in cash last year, it now has â‚¬176 million in debt. Even its EPS is down to â‚¬0.06; a drop of nearly 45%. The sales of all its product divisions have been dropping; smartphone sales are down 32% while feature phone sales are down 20%. Apple sold more smartphones than Nokia, at a much higher profit margin. In other words, it is completely fucked.
Nokia hasn’t launched a single successful product this quarter, as it concentrates its efforts on the Windows Phone 7 devices it plans to launch soon. If it screws up its Windows Phone 7 launch, which I think is very probable, it will likely end up either dead, or will be acquired by Google, Microsoft or Apple for its enormous patent portfolio.
Interestingly, Nokia seems to have made nearly â‚¬430 million as patent licensing fees, most of which is probably from Apple, as part of a settlement in a patent lawsuit that Nokia won.