Nokia said it sold 4 million Lumia smartphones in the company's second quarter -- twice the number that the handset maker had previously shipped in the first three months of 2012. Growth was driven by the expanded availability of the Lumia 900 and the Lumia 610 across markets, Nokia CEO Stephen Elop said Thursday.
However, industry observers believe that Microsoft's coming transition to the new Windows 8 and Windows Phone 8 platforms, which will not debut until late October, will have an impact on Lumia shipments during the third quarter. The current Lumia models run Windows Phone 7.5, and Microsoft has announced no current Windows Phone models will be upgradable.
"Lumia activations have been flat to up in the weeks following the announcement of Windows Phone 8," Elop told investors during a conference call. "Thus, leading up to the introduction of the Windows Phone 8 products, we plan to introduce tactical measures and promotional campaigns."
We asked Francisco Jeronimo, an IDC research manager based in Europe, about what Nokia should do between now and the end of October.
"They will need to slash prices to be able to keep volumes higher and sell out old stock," Jeronimo said.
Nevertheless, Jeronimo believes many wireless carriers will be reluctant to heavily promote Nokia's current Lumia models.
"There's no point for them to push devices to consumers that are not able to be upgraded to the new platform later on," Jeronimo told us. "Nokia will continue to suffer until its Windows Phone 8 [lineup] is launched."
A Halo Effect For Lumia
Still, Elop noted that the Lumia handsets that it has already placed in the hands of consumers have been well received.
"Last week, a Nielsen survey confirmed how satisfied Nokia Lumia 900 owners in the U.S. are with their devices," Elop said. "The Lumia 900 earned a net promoter score of 63 -- with 96 percent of voters extremely or somewhat satisfied and 95 percent willing to recommend the device to others."
Nokia also expects to benefit from its close relationship with Microsoft and the Windows Phone platform in the long run.
"We anticipate that Microsoft will launch a bold and aggressive marketing campaign for Windows 8, which we believe will have a halo effect for Lumia," Elop said.
Nokia also intends to broaden the pricing range of Lumia devices to price points which are both higher for better gross margins and lower for boosting volume.
"And as we look ahead, we expect the launch of Windows 8 for PCs and tablets, plus the launch of Windows Phone 8, to be a catalyst for Lumia," Elop said.
Feature Phone Stability
Elop also told industry analysts Thursday that the turmoil in the company's feature phone business appears to have stabilized. Second-quarter unit shipments were in excess of 73 million -- up in comparison with the prior three months.
"We plan to improve our competitiveness and profitability in this space by further developing Series 40 and Series 30 devices," Elop said.
Jeronimo said the feature phones segment represents about 60 percent of total shipments on a global basis -- and the improvements that Nokia has made to the company's dual-SIM portfolio and Asha devices are now paying off.
"The company's Asha devices support some of the most important applications consumers like on smartphones, such as Facebook, Twitter, e-mail, browsing, maps, and Exchange ActiveSync," Jeronimo said. "These features are particularly important in emerging markets, where fast network connections are not available and users cannot afford high-end smartphones."
So overall, IDC believes Nokia is moving along on the right track.
"The company took a long-term strategy, compromising short-term results," Jeronimo said. "The clock is ticking, however, and if sales don't wake up from the fourth quarter this year, Nokia and Stephen Elop will have to come up with a magical plan."