Nokia’s caution may have caused it to miss one of year’s biggest sales opportunities

February 7, 2013
February 7, 2013

Nokia might have squandered its stroke of good luck. Last December the world’s largest phone carrier, China Mobile, chose the Finnish firm’s newest model, the Lumia 920T, over the iPhone 5 as its flagship product. It was a seal of approval for a device that Nokia had created to compete with the iPhone in the top-end smartphone market. But now Bloomberg reports that most China Mobile outlets will not carry the 920T during the crucial Chinese New Year shopping season, which starts this weekend, due to a supply shortage. The report says that while China Mobile ordered 90,000 920T models during January, Nokia only shipped 30,000.

The Finnish company declined to comment to Bloomberg about the reasons for the shortage. But it doesn’t seem to be a deliberate marketing ploy of making the new phone scarce. Instead, it appears Nokia did not have enough faith in a model that has been more popular than most analysts had forecast.

Short supply seems to have dogged the phone since its launch in America and Europe in November. The company’s CEO, Stephen Elop, said last month Nokia had been “deliberate” and “thoughtful” about the 920 rollout—which could be read as meaning Nokia wanted to avoid flooding the market with unwanted phones.

The company’s reticence is understandable; it has had a rough time recently, with many (including some at Quartz) doubting that the new phone could pull it out of a steady decline. But in the last quarter it posted operating profits of €439 million ($593 million), a huge recovery from its €954 million loss in the same quarter a year earlier. And the good performance came largely on the back of strong Lumia sales, though admittedly there is reason to think that most of them were of older model Lumias sold at a discount (the company didn’t specify how many 920s it sold).

Not getting enough phones in the shops for Chinese New Year is a huge missed opportunity. It’s a sign of a company that behaves like it is still managing decline, rather than one that is investing in growth. In its fourth quarter results presentation, Nokia highlighted it had added €800 million to its net cash, which stands at a massive €4.4 billion.

It used to be fashionable for analysts to fret that Nokia would burn through its cash pile as its fortunes continued to fail. But the success of its Lumia range means the company should swap hoarding cash for investing in adequate supplies, especially in China. It would be a shame if the company’s defensive management strategy derailed its turnaround.

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