Microsoft ships record 10.5M Lumia phones in four quarter. Integration of Nokia on target
Just when you thought that the Nokia brand was as dead as the Palm brand before it, news comes out from Microsoft's latest quarterly results that the renamed Lumia brand sold 10.5 million units in the third quarter alone. Surprise! As Alcatel clearly felt about the Palm name, there is still value in older phone brands if you approach it the right way.
Still Some Pain Experienced With Nokia Integration
The integration is not over for Microsoft yet as the overhang from Nokia devices and business services has been slow to fully merge successfully with Microsoft operations. The move to support Android and the switch to a bevy of new phones using the latest Windows 10 for Mobile will take time to deal with. Back in July 2014 Microsoft announced job cuts of 18,000 which included 12,500 from the Nokia side of things and this has driven a lot of the change across the entire organization.
Lumia Brand Generated $2.6 billion in Revenues in Q4
The Lumia line of devices generated a healthy $2.3 billion in revenue in the last quarter. Microsoft was finding success in the lower-end of the market with its Lumia 500 and 600 series which combined a familiar Windows mobile environment coupled with decent specifications and an attractive price which was catching the eye of consumers. The CEO Satya Nadella commented in a recent earnings conference call that they planned to “build a beachhead” in that segment of the market.
Software Licensing Fees Removed For Some Devices
Microsoft continues to push forward with their plan for the Lumia line aiming at the lower end of the market. The plan is similar to the one used with the Windows Phone models. A focus has been on reducing the cost of chipsets bought through Qualcomm and encouraging OEM partners to develop cheaper phones by eliminating the software licensing fees to reduce the overall price point.
The company clearly wants to take a leaf out of the Google playbook where they successfully managed to get Android on to over a billion devices so far by making their mobile OS more affordable than others.
Sales of phone models that were not Lumia branded were still healthy at 39 million units historically, the product portfolio is being modified to grow market share, create profitability and integrate the Windows 10 for Mobile operating system in an exciting new line of products for consumers.
Over $1 Billion in Cost Savings So Far With Nokia Integration
The Nokia integration and restructuring is ongoing but has already realized over $1 billion in cost efficiencies inside the phone unit with more efficiencies to follow. The new quarter is expected to hit at least $1.4 billion in revenues with growth compared to the previous year evident in a year over year comparison as each new quarter is completed. Lumia units will likely be the driving force, with non-Lumia branded phones expected to become less substantial volumes and sold at lower cost.
Rebooting Mobile With Lumia and Windows 10 for Mobile
Microsoft hope that by unifying the new Windows 10 operating system across phone, tablet, laptop and desktop the company will be successful in encouraging app developers to create modern apps that will look good on any size Windows device. With the potential revenue gains to developers who succeed in this attempt, the company hopes that this will help improve their weak position in both the tablet and smart phone markets presently. The CEO also mentioned that on the hardware side, they are commited to bringing to market some excellent devices which will compete well with other manufacturers.
