Nokia's smartphone sales continued to take a hit in the third quarter, as the Finnish company struggles to make its Windows Phone handsets a serious contender to Apple's iPhone and Samsung's Galaxy S III.
In an earnings report released Thursday, Nokia reported net sales of $9.48 billion, marking a 19 percent year-over-year drop compared to the nearly $12 billion in sales it reported during the third quarter of 2011. The company also posted an operating loss of $754 million, which is down from the $93 million loss it reported during the same quarter last year.
Nokia's Devices and Services unit, which accounts for both its feature phones and smartphones, saw net sales drop 34 percent year-over-year to $4.7 billion. Sales of its flagship Lumia smartphones, based on Microsoft's Windows Phone operating system, slipped to 2.9 million units, compared to the 4 million units that sold during the second quarter.
Nokia CEO Stephen Elop pointed to the company's new Lumia smartphones, the Lumia 820 and Lumia 920, as a means to boost sales moving forward. The new phones, which are slated to launch in November, run Microsoft's upcoming Windows Phone 8 operating system and, according to Elop, initial responses to the devices have been positive.
"As I referenced just last month, we announced two new devices built on the Windows Phone 8 operating system. The Lumia 820 and the Lumia 920," Elop said Thursday during a conference call with analysts. "Both devices are introducing experiences that are distinctly Nokia and, on this basis, we believe the Lumia 920 is the most innovative smartphone to date. Operators, retailers and, most importantly, consumers are expressing strong interest in the new experiences Lumia will deliver."
Apart from running the new Windows Phone 8 operating system, the Lumia 820 and Lumia 920 deliver a number of other new features, including City Lens, a navigation tool that uses the camera in the phones to allow users to point down city streets to see the names of restaurants, shops and other sites digitally laid over the images. The new phones also have new capabilities for wireless charging and a more sophisticated PureView camera.
Elop said Nokia and Microsoft have jointly helped grow the Windows Phone ecosystem from 7,000 apps to more than 100,000 apps since their partnership was first announced in February 2011. Still, Microsoft's new mobile OS will face an uphill battle against Apple's iOS and Google's Android, which each host more than 500,000 apps.
According to Elop, both Nokia and Microsoft are readying a major marketing push for the Lumia 820 and Lumia 920.
"Together with Microsoft and our operator partners, we are investing more in campaigns to increase the awareness of the Windows Phone operating system," Elop said in the call. "We are driving marketing campaigns and demos tailored for both general retail stores and operator-specific stores."
Looking ahead, Nokia said it still expects a challenging fourth quarter, due primarily to product transitions and the ramp-up time for the Lumia 820 and Lumia 920.
PUBLISHED OCT. 18, 2012