Ever since Windows Phone 8 and Nokia’s next generation handsets started to appear, we were all likely wondering the same question: “Will Windows Phone 8 be enough to turn Nokia around from a rough couple of years?”
The answer might not be completely revealed yet, but so far things are certainly looking better than ever for Nokia. The company has now reported a profit of $585 million and $10.7 billion in revenue, likely due to both stronger Lumia sales and company restructuring.
Although Nokia’s Lumia Windows Phone devices are doing better, the real driving force for the company is actually the Nokia Siemens Network, which has brought in $334 million, while Nokia’s actual handsets and hardware (from Asha to Symbian to Windows Phone) have brought in around $367 million.
While we already heard some previous information about 4th quarter sales, it seems that everything is now out in the open and Nokia is back in business.
So what does Nokia’s CEO Stephen Elop have to say about a great end of the year? Here’s his exact words:
We are very encouraged that our team’s execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.
While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the HERE brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks.
We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.
Things are starting to fit together in all parts of Nokia’s business from Windows Phone 8 to its other efforts like Asha and obviously its Nokia Siemens Network. Still that’s doesn’t mean the company’s struggles are completely over just yet.
Nokia has already mentioned that they expect its devices & services division to go back into loss-making in the beginning of this yea, largely in part of a competitive start to the year and other common issues that many companies face during the first half of the year.
With new competitors like RIM’s Blackberry 10 hitting the market and even new competitors in the Windows Phone 8 world (like Huawei and perhaps Lenovo and Asus?), things are going to continue heating up. Let’s hope Nokia can keep things heated up and continue moving forward.
Another big change for 2013 is that Nokia is now finally paying Microsoft for Windows Phone 8. To be fair, Nokia has always paid Microsoft a minimum royalty payment for use of Windows Phone 8, but in Microsoft and Nokia’s exclusivity agreement Microsoft has been paying Nokia back with “platform support payments”.
The end result is that Nokia was getting more from Microsoft than it was giving. With more sales and other changes on Nokia’s end, this dynamic is starting to shift. While Nokia probably still isn’t paying much to Microsoft, it is worth noting that the royalty payments in total are now more than what Nokia is receiving in support payments.
Other potential wrenches in the Nokia’s potential earnings from their Lumia devices include the continued possibility that Microsoft might make a Surface phone sometime this year. While I’m personally doubting this move– especially considering Microsoft’s limited success with tablets so far – it still remains a potentially possible roadblock for Nokia.
What do you think, will 2013 end in major success for Nokia or are they still a long ways away from recovery at this point?
