Analysts have slashed sales forecasts of Nokia's Microsoft Windows Phone-based handsets, the linchpin to the Finnish mobile maker's fight back to reclaim its lost smartphone crown.
The clouds started to gather when Pacific Crest analyst James Faucette wrote in a research note that the market had high hopes for the launch due to strong backing from mobile phone carriers.
However, Faucette said:
“We had expected that the company could ship as many as 2 million units into the six targeted markets for the holidays; however, we now believe that those shipments are likely to be less than 1 million for the quarter.”
When he says, less than 1 million, he actually said that based on “sell-through” checks, sales might only be 500,000 for the December quarter.
As Juliette Garside of The Guardian points out, if those estimates are accurate then Nokia will sell fewer Lumia phones in a quarter than Apple did in one day of pre-orders.
Bernstein Research analyst Pierre Ferragu painted a dark picture not just for Nokia but also for partner Microsoft as the software giant continues its long battle to crack the mobile phone market. Ferragu slated the Nokia phones saying that are “unlikely to get traction in a highly concentrated high-end”, adding that he didn't believe they were competitively priced.
Ferragu also thought it was unlikely that Windows Phone “can gain critical mass against Android and iOS”.
Although it didn't release specific numbers, Nokia hit back at the reports of soft sales, saying in a statement that in terms of the UK market, “Based on earliest data the sales start of the Lumia 800 is the best ever first week of Nokia smartphone sales in the U.K. in recent history.”
However, as Tero Kuittinen notes in Forbes, it is too early to write off Nokia's new Windows Phone based line up when key carriers in Spain and Hong Kong have yet to launch the phones.
Kuittinen says that in the UK, Nokia's Windows Phone-based “Lumia 800 seems to be outselling the new Blackberry, Samsung and HTC devices”. As he added, “This is a notably stronger showing than any of the Nokia Symbian smartphones managed to pull off in 2010 or early 2011.”
Customers wait for more power
One thing cutting into Windows Phone sales from Nokia and other vendors might also be down to the perception that they are not as powerful as their Android and Apple competitors.
Android handset makers have been shipping dual-core phones for much of 2011, and the iPhone 4S took Apple to dual-core chips in their flagship handset. Nokia's greatly anticipated Windows Phone handsets are all single-core.
WMPoweruser says that Microsoft held back other partners such as HTC and Samsung from selling dual-core phones to give its premier partner, Nokia, the “first to market” advantage.
Nokia couldn't ship a dual-core phone in time for the critical holiday season because its engineers were still getting up to speed with chips from Qualcomm, which were new to the company.
It will be interesting to see if Microsoft confirms, denies or refuses to comment on the leak. It doesn't matter, consumers had other reasons to wait for 2012 to buy their Nokia Windows Phone handset.
In widely reported remarks by French Nokia head Paul Amsellem, he compared the Lumia line up to BMWs models, saying that the Lumia 800 was like the BMW 5 series with BMW 3 and 7 series to come. Nokia, channelling their inner Apple, refused to comment.
Just as consumers dented Apple's sales waiting for the iPhone 5 that didn't come, Nokia fans might be waiting for the Ferrari phone, the high-end monster mobile, that is sure to come.
For a company wanting to put two terrible years behind it, it doesn't have the luxury of waiting. Fortunately, Nokia isn't entirely reliant on the high-end smartphone market to help its turnaround.
After years of coasting on its Windows and Office cash cows, Microsoft also seems to finally be getting its product line in shape. Nokia supremo Stephen Elop wouldn't confirm another one of Amsellem's unguarded comments that Nokia is planning a Windows 8 tablet. However, Elop did point out similarities between the interface of Windows 8 and Windows Phone, the tiled Metro interface that will come to Microsoft's wildly successful XBox 360 on 6 December.
Windows Phone still has a long, uphill battle especially as Android solidifies its dominance of the global smartphone market.
That being said. It's too early to write Nokia and Windows off, and we're still less than a year into Nokia's turnaround plan. Microsoft is starting to knit together Windows, XBox and Windows Phone, and that will help both Microsoft and Nokia.