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Nokia still has a lot of cash, but does it have the drive to get out of this slump?

Nokia Oyj. (HEX:NOK1V) took way too long to release its first Windows Phones.  But the results -- like the Lumia 900 LTE -- looked distinctive, lending hope that the phonemaker's approach was merely meticulousness, not sloth.  Initial sales of the Lumia 900 looked promising.

I. Nokia's Recovery Stalls in Q2 

But the wheels fell off the train somewhat in the last quarter.  Sales stalled to 600,000 units in the U.S., including 330,000 Lumia 900s.  That's down 60 percent in unit sales since last year.  And it's way off the roughly 6 million units Nokia moved per quarter in 2006.

One factor slowing sales may be the recent announcement that there will be no full upgrade path for Windows Phone 7 devices to Windows Phone 8.

Revenue wasn't quite so bad for the North American region, as the higher revenue from the Lumia 900 and other models offset lower sales.  But globally the financials were quite bad as well.  Writes Nokia, "All regions showed a significant year-on-year decline in the second quarter 2012 except for North America where the sharp decline in sales of Symbian devices was more than offset by sales of our Lumia devices."

Globally, Nokia sold 4 million Lumia Windows Phones.  That means that roughly 40 percent of Nokia's 10.2 million smartphones sold are Windows Phones.  The rest are the soon-to-be defunct Symbian.  

Nokia white Lumia phones
Nokia's stylish Lumia Windows Phones have been unable to right Nokia's ship, thus far.
[Images Source: Engadget]

Those numbers reflect on just how lackadaisical Nokia's transition pace remains.  It's been nearly a year and a half since Nokia announced that it would be moving entirely to Windows Phone.  A year and a half later it's not even halfway there.

Overall feature phone sales did manage to grow slightly jumping from 71.8 million units last year to 73.5 million units.  Still, Nokia now trails Samsung Electronics Comp., Ltd. (KSC:005930) in feature phone sales.

Losses for the quarter tucked in at €826M ($1.01B USD) on revenue of €7.52B ($9.22B USD).  Sales were down nearly 20 percent since last year, while the loss almost doubled.  Nokia has committed to big layoffs to try to offset the sinking sales.

With money losses mounting and the Windows Phone transition far from over, all three major credit agencies have downgraded Nokia's credit to "junk" status.  Nokia is only fortunate that it is sitting on a pile of cash -- €3.5B ($4.29B USD), to be precise.  That's slightly more of a cushion than some struggling rivals like Research in Motion, Ltd. (TSE:RIM) have.

All of this is the same old story for Nokia and none of it is terribly surprising.  The company is still lingering around, but the concern is that after a couple of intriguing device announcements, it seems back to its old ways, continuing its slow slide down the hill.

II. Nokia Almost Released iPhone, iPad Look-Alikes in 2000

About the most interesting thing to come out of the earnings hoopla was a report in The Wall Street Journal, which released details of an iPhone and iPad-like device developed by Nokia researchers in the 1990s, but never released.  The smartphone had a color touch-screen at a time when most phones were keyboard-driven units with tiny black-and-white pixel displays.  And most notably it had a single round button beneath the touch-screen -- just like the iPhone.
 
Apple iPhone
Nokia reportedly was testing a device nearly identical to the iPhone, seven years before Apple. [Source: David Paul Morris/Getty Images]
Likewise Nokia had a tablet computer that was built around a large touch screen and a wireless connection.  Unlike many other Windows tablets of the time it lacked buttons.

Nokia may deserve some credit for conceiving the iPad and iPhone designs over seven years before the original iPhone, but it has no profits to show for that creativity.  About the only positive value to come from the innovation was a $6B USD trove of patented ideas, most of which Nokia never succeeded in bringing to market.

Comments CEO Stephen Elop, "If only they had been landed in products.  I think Nokia would have been in a different place."

Instead he's left to ponder selling some of those memories of past innovation squandered to try to stay afloat.  Nokia is also actively suing rivals to try to generate revenue.

Source: Nokia



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This article is over a month old, voting and posting comments is disabled

By Chaser on 7/19/2012 6:25:51 PM , Rating: 4
I bought the Lumia 900 3 weeks ago. And I wanted my investment to succeed for me. My money and time was at stake. But over time I grew disappointed with it.

The good:
1. U/I Simplicity. You need something? No pawing through menu after menu. W7P has it there for you quick.
2. Live tiles. If the app is written to take advantage of them it's a very nice touch.
3. Voice texts. Your texts are read to you and you can reply by voice. It's implemented quite well.

The bad:

1. Browser. Unlike Android you're stuck with only one. And compared to the Android competition W7P browser needs a lot of work. I can't save a podcast from a link directly to the phone. It will only stream. And also unlike most Android browsers it won't remember my login credentials on several sites. I have to enter them in each time I try to access them.

2. Snycing music from a PC: you gotta use Zune and it's copying method is archaic. I guess W7P is trying to be like iTunes. A Windows device that can't be recognized as an external storage device on Windows? Complete fail.

3. No different tones for separate email accounts. Maybe coming to W8P I heard?

4. No alternative keypads. No swift keys, or even Swype? Fail.

App support: Many that I used are not available on W7P. It gets frustrating after a while.

Sure no phone is perfect. But the downsides of W7P were too much for me.

Now I am on GSIII. The interface has so many options, features and touches. Amazing phone. So is the HTC One X.

Very glad to be back with Android and even more glad I was within the 30 day return Window.





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