WSJ: Nokia to close half their sales offices in China

china

According to a report in The Wall Street Journal, Nokia is going to close two of their four sales offices in China. To be more specific, the offices in Chengdu and Shanghai will be shut down and people will get laid off. Nokia isn’t saying how many people will lose their jobs, or when the offices are closing, but they did say that their two remaining offices in Beijing and Guangzhou will increase in size. Oddly enough, The Wall Street Journal report goes on to say that these closures were announced less than one month after Olivier Puech, President of the Nokia’s Asia-Pacific operations, said that the Finnish handset maker would “invest heavily” in Asian product development. To paint you a picture of just how bad Nokia is doing in China, the company’s Q1 2012 financial results [PDF file] revealed that sales collapsed 70% compared to the same quarter a year ago. When you look at Q4 2011 versus Q1 2012, sales fell by a dramatic 40%. In terms of unit shipments, in Q1 2011 there were 23.9 million Nokia phones sold in China. One year later that number fell to 9.2 million.

Why is Nokia doing so bad in China? Simple, it’s the rise of the 1,000 Chinese yuan smartphone. That’s roughly $155. Nokia doesn’t have any Windows Phones that are that cheap. The Symbian phones that they sell in that price range are laughably ancient compared to what you can get if you went with Android. And as for feature phones … who the hell buys feature phones anymore?

So what’s Nokia going to do to fix their China problem? We were on the Q1 2012 financial results conference call and the company’s CEO, Stephen Elop, said that we’re going to see a Windows Phone hit the market that’s even cheaper than the Lumia 610. The problem is that no one really likes the 610 since apps take forever to load, the screen is woefully bad, and the design just screams cheap plastic.

  • Anonymous

    All things being equal, assuming the sales collapse continued at the same rate into Q2, then Nokia sales must now be rapidly approaching zero. We’ll find out on 19 July.

    Whichever way anyone wants to look at it, the Elop strategy of binning the cash-cow Symbian and switching to the now obsolete Windows Phone 7 is not paying off. Nokia can now kiss the entire China market goodbye for 2012, and there’s a good chance they won’t be around for 2013. And from the latest Nielsen figures it doesn’t look like they’ve even made a dent in the US market either.

    Elop and his premature strategy of switching to Windows Phone has been an unmitigated disaster for Nokia and it’s employees. I’m not saying that selling Windows Phone devices per se was a bad idea, but dumping everything in Feb 11 is now looking more and more like one of the worst business moves by any CEO for quite some time.

    • http://twitter.com/SirKneeland John Kneeland

       Oh please. Symbian sales would be tanking no matter what Elop said; I own lots of Symbian and Android devices. Even as someone predisposed to like Nokia, Symbian is simply uncompetitive–even in its latest Belle incarnation. The writing was on the wall in 2010. Android was exploding

      • Anonymous

        Symbian sales, even though they were declining steadily, would still have been a worthwhile source of income to Nokia had Elop not taken a dump on the platform and all of it’s customers, who ran screaming to Android rather than remain loyal to Nokia as the Nokia execs naiively expected them to.

        The Symbian sales that were in steady decline (although Symbian saw a decent uptick in Q4/10) fell off a cliff immediately after the Feb 2011 announcement, with Elop essentially pushing them over the edge.

        He orchestrated a catalogue of strategy errors that have lead directly to Nokia being starved of cash just when it needed it most as it had no Windows Phone devices to sell for another 6+ months, and even when they did become available the sales were (and continue to be to this day) abysmal.

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