Owing to a reduction in the demand for Symbian based phones, Nokia has lowered its forecast on profits for the first quarter of the year. The drop in demand for Symbian phones has been attributed to the slow yet steady transition to Windows Phone. The world’s largest phone manufacturer said that the operating margin for both services and devices is expected to be at a 3% loss. This margin accounts for 60% of total sales. The previous forecast was around the breakeven point, either above or below by 2 percent points.
An analyst at popular research firm Canalys, based in Reading, England asserted that Nokia is currently in a transition phase as the demand for their Symbian phones is eroding owing to the accelerated demand of its Lumia handsets, just five months since they were introduced. Even Nokia’s CEO, Stephen Elop announced that the profit revision was the result of Nokia’s transition to the Windows Phone platform. Nokia began marketing the Lumia handsets from November last year, and has released a total of four phones till date. Nokia claims to have sold over 2 million Lumia units at an average price of 220 Euros. However, sales of the new phones have showed a drastic increase, thus leading the company to declare the transition period as a temporary problem.
Nokia also recently announced a software update for the Lumia 900 which will fix the memory management issue. The company has even offered to exchange defective Lumia 900 handsets in exchange for new ones and also announced that the update can be downloaded through Microsoft’s Zune service. Further, Nokia announced that consumers who purchased the device through the 21st of April would receive $100, credited to their AT&T bill the following month.
Nokia has plans to release the earnings results of the first quarter of 2012 on the 19th of April. Analysts claim that these trends will continue into the next quarter as well after which the company will return to positive results. Mr. Elop announced that Nokia would boost investment in order to catalyze the transition. The correction in profit margins was courtesy of several declining core markets like India, China and the Middle East. In China, Apple has clearly overtaken Nokia in the sales numbers as Samsung continues to enjoy its monopoly. Canalys is expecting Microsoft’s global smartphone operating market to increase by 1.3% from when data was last released in December. Judging Nokia’s numbers this early is not fair and the year end numbers should give a better idea of its position.
