19th June was a big day for Huawei, which became the third largest smartphone vendor in the world recently. In addition to the announcement of its all-new Ascend P6 smartphone, the company was also linked to a possible acquisition of Nokia. Experts joke about this prospect, claiming that this speculation is merely a part of a summer time ritual where different companies are linked to acquiring Nokia. The very ideology of most of these companies is flawed, according to a certain expert. This is because most of them are interested in Nokia as a smartphone vendor. However, Nokia is still a feature phone company that is slowly making a transition towards the smartphone market.
Numbers from the latest quarter showed that Nokia’s feature phone sales totalled to 56 million units worldwide, while the smartphone shipments stood at a mere 6 million. Feature phones made a total of 1.6 billion Euro in revenue for the manufacturer, in comparison to the $1.2 billion Euro through smartphone sales. Although the aforementioned figures provide a strong reason for keeping away from acquiring Nokia, this is not the biggest impediment either. The biggest problem for Nokia lies in its consistently declining revenue. Feature phone revenues declined by 31% for the quarter which ended in March. The scenario was no different for the smartphone segment either, as revenue dropped by 32%. Nokia’s transition from a feature phone company to a smartphone company has certainly been a difficult one.
Predicting the future of the Finnish company has always been an arduous task for analysts. In Q2 and Q3 last year, Nokia delivered two quarters of consecutive growth in feature phone sales, beating expectations of sequential declines in the process. This positive result came from a surge in the sale of feature phones in the Indian market. Two consecutive quarters of growth forced analysts to reverse their expectations.
However, trends reversed and Nokia reported a stunning decline of 24 million units in the next two quarters that followed. These wild swings in the feature phone market can be attributed to competitiveness of the Asha range of feature phones which competes against the likes of lower end Android smartphones. No analyst predicted the company would implode as it did near the end of 2011 and most of 2012. Until Nokia continues to produce consistent numbers in a particular direction, one couldn’t possibly expect a company to come forward with a plan to acquire the once-dominant Finnish giant.
