Wall Street consensus in early 2013 was for Nokia NOK +2.61% to sell 66 M feature phones in 1Q 2013. The company sold only 56 M units. This was the central mystery of the March quarter. The most likely explanation is that the 200 and 300 series Asha models lost their competitive edge in Africa and Asia as low-end Android prices dropped below $100. That February Wall Street consensus also called for 68 M feature phones for 2Q 2013. The handset market dynamics have changed so radically that 54 M units might now count as a defensive victory for the June quarter.
This is an exceptionally difficult juncture to forecast Nokia’s handset volume trends. The smartphone volume for 2Q 2013 is likely going to be in line with Wall Street consensus. The cheap new 500-series Lumia models have traction in Europe and Asia and should boost the smartphone volume to 7.5 – 8 M unit range. But the feature phone division is a huge mystery. Estimating sales in Africa and most parts of Asia is hard under the best of circumstances. But right now, there is a radical transformation going on as low-end Android models suddenly erode Nokia’s budget device sales much faster than in 2012. Nokia actually beat Wall Street consensus for basic phone sales handsomely in 2Q 2012 and 2Q 2012 – it was only in 1Q 2013 when the trend suddenly turned. Will the feature phone unit continue its scary contraction or stabilize somewhat with new summer product launches? This is an issue that has suddenly become hugely important.
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