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back to article Nokia ‘giving away phones at cost’

Nokia's financial results for the second quarter of 2011 are due tomorrow, and the company has already warned investors of very bad news coming. Yesterday, it issued a peek into just how tough things have got in 2011. Nokia said its smartphone profit margins were down to 6.2 per cent in Q1 2011, with margins of 16.4 per cent on …

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As Steve Ballmer says to his mini-me(Elop),

My plan is working peeeerfectly.

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The UK will probably not be taking the N9

Looks like I'll not be shopping Nokia again then. Given up on Symbian,

Maemo rocks. I was waiting to see what folks thought of the N9 before making a descision but it seems that has been taken out of my hands.

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@Bodestone

Don't panic just yet Bodestone!

All of this "not coming to the UK" speculation (FUD) is based on the Nokia online availability checker which relates to Nokia Online stores, and Nokia no longer have a UK online store (closed down at the end of June, along with many others in Europe that also "won't be getting the N9"). It makes perfect sense that the N9 would not be present in their availability checker when they couldn't sell it to you (this would, equally, apply to any Nokia WP7 device if they were to be announced any time soon).

But this has nothing to do with retail, and several UK retailers are already offering the N9 on pre-order (play.com, expansys.com, mobilefun.co.uk) - the N9 is definitely coming to the UK, but you won't get it direct from Nokia as they can no longer sell anything online.

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Cheap phones make Nokia number 1

"In other words, Nokia's bargain basement models, sold to emerging markets and typically making use of very old technology, make it more money than its premium "flagship" models which boast its "state of the art" features."

Surely everyone knew that Nokia is the global market leader in cellular telephones (almost a third of the global market) and that smartphone manufacturers each have only about a tenth of Nokia's market share? Smartphones may be very sexy but most users just want to be able to make calls and send texts - especially in developing countries (e.g. China, Philippines) where most people only have a mobile phone and no landline. That's why this Elop guy, obsessing about Microsoft OS, is taking Nokia to an early grave.

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Anonymous Coward

Brave Nokia

Yes indeed, the greatest mobile manufactuter the world has seen, supplying 66% of the world's phones for how long ? 20 years? Excellent engineering, very effiicient coding and now they are reduced to slumming it with the comapny who has never made more than about 8% of the global market. No doubt MS hoped that buying them would help them progress - and if it did not work they would have a handy scapegoat - a foreign company too!

It looks like a serious mistake for Nokia, they will have to work extremely hard to drag MS into a decent position. People apparently about the appearance of the Nokia UI, but at least it is attractively designed unlike the totally boring, uninspired tiles of MS that a child could have produced!

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FAIL

Re: Brave Nokia

"Excellent engineering, very effiicient coding..."

You're kidding right? How come it takes my N73 over five seconds (on average) to reactivate the screen when I press a button? How come it takes two to three seconds to switch to an incoming text message after I've pressed the 'show' button? I could go on, but well... what's the point?

I don't care how well you think the engineering quality is, the code is garbage. Complete and utter garbage.

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Have you been to asia?

My old nokia "builder's phone" was the laughing stock of the rural bus stations. As the locals merrily watched live TV on their smartphones or caught up on the latest news.

I once had my phone given back to me by a street robber, right in front of me just after it was pick pocketed.

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Nokia joins Motorola

Motorola had the same dominant position in the market before Nokia took over and have you seen them lately? I think they have 4% globally or something. It doesn't take much to lose 80% marketshare when you do one stupid thing after another.

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Re: Have you been to asia?

Yes. Try going to the rural areas of the Philippines and you'll meet people who don't have well paid jobs and don't have money to waste on the latest tech.

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Stop

All going to plan then

I had envisioned 24 months before Nokia went to the dogs, but now I suspect it will be sooner, Microsoft will get their pickings (which is not a great deal, as Windows 7 is utter shite compared to iOS and Android), and Nokia will be cast aside like a used condom.

Microsoft destroys another great company in persuit of their own riches.

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@SteveBalmer

If you think Windows Phone 7 is utter shite compared to iOS and Android you have obviously not used it.

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Trollface

Of course he hasn't

"SteveBalmer" only comes to the Register to say all Microsoft products are shit. They must be, right? Microsoft make them so they must be shit.

Seriously, go find a story with some consumer hardware running anything by MS on it and there's "SteveBalmer" to tell us how shit it is, without ever having any actual knowledge of it. Except when he claims that he did buy it and it was shit as he had predicted previous to buying it.

Trololololol.

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Holmes

Microsoft can prop up Nokia?

You reminded me of how Microsoft induced Palm to commit suicide. However, I'm not sure how they are planning to play it this time. It's possible that Microsoft is planning to pump up Nokia enough to make them appear viable. If so, they might actually resort to some kind of negative discount, actually PAYING Nokia for each phone shipped with their garbage OS. To make it look legal, I think they'd need to disguise it somehow. Perhaps they could claim it is part of a purchase of Nokia's once-valuable IP? Right now I wouldn't give you 2 cents for anything Nokia owns, but that's no reason Microsoft might not give $2 billion.

However, I'm not sure what would really be in it for Microsoft. I do think that Palm was a real threat and perhaps Microsoft needed to take them down by any means, but I also think that Google has positioned Android in such a way that there's no clean target available. It seems the best Microsoft can do is harass with IP lawsuits--and it also seems Microsoft might as well be satisfied in getting a cut of the pie for nothing.

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FAIL

Yes I have

A family friend accidentally bought a HTC phone, thinking it was Android, but it was a Windows 7 Mobile (Mozart), it was indeed utter shite, so he took it back to the store and swapped it for a HTC Desire HD, and is more than happy again...

I think the phone store were desperate to shift them to unsuspecting punters in the hope they never found out what they got lumbered with.

Anyone know if multi-tasking, copy and paste or user-ringtones are available in Windows 7 Mobile yet, or is it still pretending to be a really bad iOS from 2006?

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Go

so?

I have a desire Z for my personal phone. Ive never used copy and paste on it.

My work W7 has user ring tones (per contact) and multitasks too. Not sure what your point is.

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"Anyone know if"

"Anyone know if multi-tasking, copy and paste or user-ringtones are available in Windows 7 Mobile yet, or is it still pretending to be a really bad iOS from 2006?"

Yes, all three are available.

Now fuck off.

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Stop

Err

With the figures you've quoted you can't say nokia makes more from basic phones than smartphones. You just can't compare different percentages like that.

Ie

6.2% of 100 is 6.2

16% of 10 is 1.6.

6.2>1.6 even though 16>6.2

Not saying nokia necessarily makes more cash from smartphones than basic phones, just that your figures don't say what you say they do.

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Boffin

except

Its pretty obvious (given the context), that Nokia are selling vastly more dumb-phones than smart-phones right now.

If they are making more of a margin as a percentage on each dumb-phone, then even if the total profit per unit, is less on a dumb-phone, then I would still expect them to be making most of there profit on dumb-phones, in particular if they assigned the bulk of R&D software costs to smart-phones. Not a given that the total profit per unit is less on dumbphones though - your example, the base cost was 10x larger.. I suspect a smart phone does not cost that much more to make, and if (as the story says) the margin approaches 0 %, then yes, the profit on basic mid-range phones will be greater per unit as well as a percentage.

i.e. the cost of developing a Nokia 1100 or 2300 is sunk cost, so sales will be profitable in large numbers,

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120 million < 20 million

True smart phones cost more but they make 10x as many feature phones than smart phones. I don't know if it's 10x (I looked it up last time) but it may be 6x.

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Facepalm

Sunk cost

The cost of developing ANY phone is a sunk cost because the money has already been spent.

Margin is the difference between manufacturing cost and sales price. The smart phones are evidently rather more expensive to produce than el cheapos. Despite the opportunities for economies of scale, which should drop their input costs, Nokia is evidently failing to capitalise on that and has a remarkably high input cost in relation to the sales price of high-end phones. That spells trouble.

A 6% margin is still a margin, quite a nice one (as any retailer will tell you) so this is hardly "selling at cost". That said, it is still pretty clear that Nokia is going to hell in a hand-basket.

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Stop

@All going to plan then

Nokia has been slowly destroying itself long before MS came on the scene.

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Alert

Facts?

Whats with the "The "contractual obligation" Meego device won raves from bloggers who hadn't seen it"?

There are plenty of sites that have had hands-on with the n9 and have raved about it, check engadget or slashgear. A Reg hardware review would be nice!

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I'm sure El Reg would love to

Except that it looks very likely that the N9 will never be seen in the UK.

Nokia seem to have decided not to sell it here, and just sell a very small number of them in a very limited fashion.

Whether that's because they actually want it to fail (thus avoiding the need for any semblance of support) or because they expect the market for it to be extremely small is unclear.

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Go

Nokia won't be selling the N9 in the UK because...

they no longer have a UK online store. They won't be selling the WP7 device in the UK either, for the same reason.

Third party retail is another matter though, and the N9 is already available pre-order from several UK retailers.

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@SteveBalmer

The point was made before....in capitalism a company does not get "taken over" or enter into deals that are not "beneficial to it", unless they have to. "They have" is defined as "keeping their profitability", in this case. It's easy to blame M$ if we dismiss the larger picture. For a better understanding of that, head to http://www.realityinfo.org . Peace.

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FAIL

The "reality" is that 80% of all statistics are made up on the spot

That is all there is to day about realityinfo.barff

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Stop

Bollocks

Microsoft were inserting high ranking execs into Nokia long before the deal, all of which facilitated the Microsoft deal.

The real killer blow for Nokia fans, is that had that not happend, then we really might have been treated to a Nokia Android phone, and the turn-around of an ailing company that lost it's way in the smartphone race.

Infact had Nokia gone Android, i'm sure they would have had products on the market by now.

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Nokia Plan B

Hands up who thinks it would have worked? Symbian 3's had a semidecent facelift and MeeGo's received favourable hands on reviews from people who have had their hands on it. Qt would have unified the two platforms.

It seems every decision taken so far has been to destroy Nokia's value as a company. Why would that be?

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Joke

Looks like it's back to making Wellies, then

Nice while it lasted.

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Happy

Still got mine

If you look in the cupboard under the stairs you will find a pair of brown wellies with a yellow strip, inside at the top is the Nokia label. You'd be surprised at the number of people who don't believe it is the same company.

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FAIL

It's like they don't want to sell any phones

X1-01, C2-00 and N950 are three nokia phones that have caught my eye recently and I can't buy them anywhere. When my N900 dies it was going to be a toss up between N9 and another N900. Why go to the bother of creating phones people want if they make them impossible to buy?

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So sell basic phones

I would pay $100 for a Nokia 1100 that worked in N America.

1 week battery life, waterproof, indestructible, no camera, a keypad with numbers on it!

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I have three of these

Unfortunately they are locked to TracFone. We have another three we use for US trips. And I agree, I liked them so much I have two more in the UK we put into the glovebox for emergencies. The batteries hold their charge for months. Just take them out every six moths, make a call to keep the SIM alive and recharge the battery.

And don't forget the built-in torch.

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Gimp

N900 not good enough

I was given a free N900 by Nokia to test in Spring 2010. Browser, keyboard and multi-tasking were quite good but could not get it to work with Exchange and no apps. I sold it to Envirofone and now am very happy with my iPhone 4 which works very well with Exchange and Yahoo! and plenty of apps. I was a loyal Nokia buyer and now am with Apple, tells the story really.

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Raz
Gimp

@Jon182

+1, except mine was bought, not gifted, and I got it in December 2010, not Spring. I sold it a month later for the same reason: no Exchange sync. I got an Android phone (T-Mobile G2 aka HTC Desire Z) and I never looked back. I don't see myself ever buying Nokia again.

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User error

I have an n900 (1.3) and it works just fine with exchange.

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Same here

No problem with Exchange sync here either. In fact it worked rather too well -- I could do without being reminded of work meetings when I'm on holiday.

-A.

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Raz
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None offered

It's not user error. Check the N900 forums, how many people can sync with Exchange 2003. The fact that you can sync with Exchange 2007 or 2010 does not mean it works with all Exchanges. Again, it was down to Nokia to implement syncing with more versions of Excel than the latest one. They choose not to do it, I choose not to buy Nokia again. How come iOS and Android can sync with Exchange 2003, but Maemo could not? N900 was abandoned as soon as it was released.

I followed Nitdroid and Meego to see if something will come up, but no. Shame on you Nokia, you lost a customer forever.

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Anonymous Coward

Mail For Exchange

"Mail For Exchange" up and running flawlessy since at least 13th May 2010 ( that's the oldest mail in the sent folder at any rate ).

Bad workmen always blames their tools...

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WTF?

One of the many things I don understand

Is exactly this, is Nokia dropping out completely of the lower end market? I hear all the time how it's not very profitable, that it'll be commoditized by cheap chinese android phones, etc, etc, but I live in Brazil.

A *lot* of people here don't have the spare cash to buy smartphones that cost three or four times the monthly minimal wage, but still do want and need to communicate, so they buy cheaper and simpler phones. We are talking many tens of millions of units here.

Even though the middle class is possibly migrating to more sophisticated phones, it seems that there are a lot more people entering the market for cheaper phones or replacing their existing phones with equally simple cheap phones.

Surely Nokia does not expect to sell winphones to these people.

I would think the situation in China, India and most other developing coutries to be similar.

I see a lot of samsung phones, but I still do see *a lot*, and I mean a *really fucking big lot* of simpler nokias being used.

I don't know the numbers, but really, to someone watching from the outside, abandoning this market looks crazy.

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Facepalm

Like they care

I have a 6300 that can't sync since they have a bug in their address book code that keeps it from doing a basic list and transfer. This has been around for at least a year yet there is no patch. Incompetent companies deserve to die.

The worst bit is they wasted the billions the US govt gave them to use a mobile phone company as research to hide other research from the USSR.

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Holmes

You need to practise your Google-Fu

Looks like the answer's here...

http://discussions.europe.nokia.com/t5/PC-and-Mac-Software/6300-Unable-to-sync-contacts-quot-Data-transfer-not-possible/td-p/109672

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Anonymous Coward

Nokia Products aren't that bad...

Seriously. I'm a long standing Blackberry user, but recently I've had some hands on time with the Symbian^3 handsets. They aren't as bad as people think. Symbian Anna is quicker, and looks nicer as well.

I gave up on Nokia after the N95, they produced some horrible crap, but the newer S^3 handsets are actually for the most part quite nice.

I've had a Galaxy-S, iPhone 4 and WM handset in the past few months for various reasons, and they each have their plus points. I'm actually looking forward to the addition of WM to Nokia handsets. They are unlikely to totally dump Symbian on the lower end, because they won't want to pay the costs for WM licenses on handsets that will cost less than what they would have to pay MS. WM is panned by people who haven't used it. Yes it has a few slightly annoying quirks, but anyone who thinks their OS is perfect needs to remember that Every OS Sucks. The level of suckage varies however.

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What idiot

Closed the online store?

Talk about making a bad situation worse

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FAIL

Horses for courses, but it's not great.

I had a Nokia E series phone lent to me by a friend for a few weeks whilst mine was off to be fixed. The biggest thing that put me off was the bugginess of the phone, and more to the point, the Exchange app. Phoning and texting features were good, appstore left a bit to be desired, radio was acceptable, keyboard was nice to type on.

Exchange support isn't built in, you have to download an app to do it, and secondly, the app is buggy as hell, even though it is written by Nokia themselves.

It wasn't any good for dealing with large amounts of email (more than a few thousand items in the inbox) and very frequently at random it would reset all the settings to out of the box on the exchange app on its own accord, and I'd then have to re-enter all of the settings and re-download all of the mail again.

Also each time, it would try and redownload the address book from exchange and sync it back, the result, a load of duplicated entries in my exchange account address book.

PIN codes was also a problem, i have one enforced on the exchange account and once I'd set it up i kept entering my code (as set up on account), but phone would reject it. Hadn't bricked the phone after all, and after much frantic googling, it turns out that the phone was set to the default pin ... where's the logic in that?!

No problems with the iPhone, however, the exchange intergration is seamless (despite it being a Microsoft product, I thought it would've kicked and screamed with the iPhone, but no).

Then again the iPhone has its own caveats, you can't attach anything through the mail client on the phone, battery life is questionable after a day's use, notifications are pants etc. But the experience is much more pleasant and polished.

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Well, it's kind of inevitable

Symbian is a dead platform. They've announced as much with the Windows Mobile move. Why would you buy into it now? The answer is, as we're seeing, that you wouldn't. You might as well buy an Amiga for your general computing needs as buy a Symbian phone now. It'll work but there's no future in it and there are options which are so very obviously better out there.

It really was a terrible, terrible idea to go whole-hog on Windows, announcing the death of their existing platform by implication, with such a long lead time between the announcement and an actual end product.

Of course, none of this matters when it comes to the basic phone range where phone calls, text messages, and an address book are all you really need or care about. The OS there matters about as much as the OS in your microwave or fridge.

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Anonymous Coward

Maybe there's hope yet:

if the patent trolls screw Android manufacturers for enough bucks per unit...

Although all in all I'm just sad to read Andrew's story, I think the care with which Nokia have made many of their phones (with exceptions I know) has been awe-inspiring, just as the waste on Ovi and all that rubbish is staggering also, it feels tragic.

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hrm?

"there's little sign of change until Microsoft-based phones appear"

Ok, I'll bite: is there a sign of change AFTER the MS based phones appear?

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Microsoft has been doing the same thing for years

... and it hasn't worked out so bad for them.

It's not particularly unusual, it's yer basic cross-subsidy - take money from one part of the business that's doing well, and use it to prop up another part that's not currently doing so well, but you hope to make more out of in future. MS's XBox division bled cash for at least eight years, but MS supported it anyway.

Of course Nokia is not quite as well balanced for it, but it looks like they're still making plenty of revenues. Unless they go nuts with the R&D spending, they should pull through.

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