If the results from Nokia are any indication, Stephen Elop is in a tight spot – and unless the Lumia launches in Q4, 2012 reap a rich harvest, Elop may be under a huge pressure. Nokia has reported a third-quarter net loss of $1.27 billion as revenue plunged 19% and sales of its flagship Windows Phone fell to 2.9 million units. Revenue dropped to $9.45 billion and furthermore, Nokia has given a grim outlook for the rest of the year. While the numbers seem to have reversed as against Q2, 2012, Nokia is now pinning all its hopes on the Lumias – a desperate and a dire situation to be in. Given the dominance of the iPhone5 and the Androids, Nokia’s comeback kid, Lumia may risk a lukewarm response which may not re-kindle the comeback hopes for Nokia.
Nearly 20 months after the announcement of the Windows smartphone polarization, Stephen Elop really hasn’t much to show in terms of smartphone numbers. While Nokia’s reliance on the strategy of third platform option against Apple and Android is definitely true, but Elop just seems to be talking more Microsoft. As a phone maker, Windows has not really turned things around for Nokia. Has it? Instead over the last 2 years, Elop has steadily and unfailing ditched every other promising option – be it Meego, Maemo, Meltemi and now Symbian Belle in favour of Microsoft Windows.
So, Q4 is now the crunch quarter – Nokia will have to our perform with the Lumias – make it a smashing success. Anything less than smashing success will not inspire anyone. Given the Apple iPhone5’s 58 million numbers and the march of Samsung Android’s, it is difficult to imagine customer interest and instore-purchase of Nokia Lumias to be moonbound in the 1st quarter of its launch. What really beats me – is that Nokia has now put Symbian in maintenance mode and all the future roadmap of Symbian is cancelled. Nokia Symbian devices still outsells Windows-powered Lumias, by 3.4 million to 2.9 million, in Q3, 2012. Pulling the (investment and development effort) plug on your cash cow isnt the wisest thing – is it?
About 3 months back, I had been musing about the change that was afoot at Microsoft – The 30 year old OS centric company was for the first time shedding its old feathers to look, feel and compete with the new kid on the block – Google and a resurgent old rival – Apple. Ballmer’s letters to Microsoft share holders clearly signals that Microsoft is moving away from its make the OS & the service, let the partner handle the device model, which is what Ballmer terms as “significant shift, both in what we do and how we sees ourselves”. This is clearly necessitated by Internet and cloud centric business models, which puts the Microsoft traditional server, desktop and OS centric model. Given the momentum that Apple has now in mobile workforce and cloud space and the initial cold shrugs that Microsoft’s high price tablets have seen, Micorosft will take more batter before they get better. Also, the head start that Apple and Android have in the mobility space can be hard to overcome. Microsoft has to play the game changer and it needs its OEMs to support it while it does so. However the device route would mean that it will expend itself trying to integrate things into the user experience and the device. May be Google and Apple are doing this bit – but Microsoft will have to really execl to take the game away from Google and Apple.
The Windows centricity still remains as per Ballmer the intent to “firmly establishing one platform, Windows, across the PC, tablet, phone, server and cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advancements to market.” With Windows8, Microsoft is pushing to have unified messaging across all platforms. More than just sharing the same name, the various versions of Windows for different devices will now share a common foundation. It’s a move not dissimilar to what Apple does with OS X and iOS and its an essential part of making it easy for developers to target specific platforms.
Ballmer closes his shareholder letter by noting that “it truly is a new era at Microsoft ” and that the company has “an unprecedented amount of opportunity for both this year and the long term.” However given the number of competitors that it has to contend with, and the umbrage of the OEM makers who see Microsoft’s device designs as a challenge to their own competencies – it will be a complex equation, making the revenue and profits strategy work in a dynamic environment. Already the new game that Microsoft is playing itself is hurting itself as it suffered its worst loss ever in its 26 year old history in April-June quarter 2012.
However, it does make sense for a possible take over a beleaguered Nokia by Microsoft. Doesn’t it?
Fall in Entry level pricing has been instrumental in driving tablet sales in India which peaked at 5.5 lakh units in the second quarter of 2012, growing 59% over Q1, 2012 as per CMR report. This is a 6 fold increase against the Q2, 2012 numbers and it is in line with my expectations of 2.5 million tablet units to be sold in india in CY 2012.
Micromax emerges as the surprise number.1 beating the fancied Samsung and Apple – Micromax cornered 18.4% of the market compared to Samsung’s 13.3% and Apple 12.3%. During 2Q 2012, 47.4 per cent of tablet sales were from new entrants in the market with a strong focus on addressing application areas in the Education and Entertainment segments. This trend demonstrates clearly that vendors are positioning their devices at India’s youth. Close to 90 vendors launched their tablets till 2Q 2012.The average selling value (ASV) of the tablets in 2Q 2012 has dropped to little above Rs 13,000 from Rs 26,000 in 1Q 2012, as a majority of vendors in early 2012 launched their products in the Rs 5,000-10,000 price range.
The major feature ternds include WiFi connectivity, 7″ form factor, Android OS as the de-fault, 1GHz processor speeds and 512MB RAM.
Indian tablet personal computer (PC) market will touch 7.3 million units by 2015-16 from around 1.7 million units in the current year (CMR Data). My estimates put tablet numbers in India to touch upwards of 2 million units in CY2012. The developing ecosystem of this device will also ensure adoption by many users.
In contrast to tablets, desktop sales grew only 11% and notebook sales grew 26% in last 12 months and will slow down given the cannibalization by tablets category. Also a lot of government effort is twards driving Tablet adoption based on use-case specific internet applications.