Financials: Lumia is growing and Microsoft doing just fine for now

This calendar week the 2 biggest components of the Windows Phone ecosystem reported financial results. Microsoft and Nokia both printed decent numbers.

I won't spend much time on Microsoft. It was a fairly tedious quarter. The Redmond giant came in with results that were in line with analyst results. They've now sold a grand total of 60 million Windows viii licenses, but this includes licenses sold to Dell and other manufacturers. And so it's hard to pin down exactly how many boxes consumers are actually buying with the latest and greatest Windows OS.

In the state of mobile, Microsoft won't say how many Surface tablets they've sold. I can't say I arraign them. If they revealed numbers they'd only be compared to iPad and Samsung Galaxy Tab sales. Why would Microsoft want to give people more than reason to print negative headlines?

The bottom line, to WIndows Telephone people, is that Microsoft is holding its own. They posted small growth in a declining PC market. They're well positioned to hang onto the enterprise market. They're greenbacks rich and greenbacks period positive. They can afford to push like hell on Windows Phone. They have to. They need information technology to succeed.

Nokia results were more interesting. As those of yous who follow the story closely will recollect, Nokia has been losing coin for a while now. They've been busy restructuring the concern around Windows Phone (Lumia brand) and the S40-powered Asha brand.

So the financial markets were surprised to meet Nokia actually post a assisting quarter yesterday. Not only profitable, just respectable. Operating margin in the devices and services sectionalisation was 7.two%, and Nokia shipped 4.iv 1000000 Lumia phones in the quarter. That's up from 2.9 million in the prior quarter.

Nokia's stock performance: six months

Not too shabby, Nokia. Neat at all.

Nokia actually sold 6.6 million smartphones with an average selling price of 186 EUR (about $250). The vast majority of Nokia's device volume is still exterior of the smartphone market. They however sell a lot of dumb phones. Virtually 80 million of the last quarter, to be specific. They sell for an average price of 31 EUR, or $42. That's a lot of cheap phones.

My large worry on Nokia has been the imminent decline of these dumb phones. Information technology's difficult to compete with a $42 phone, but on the really low finish, Android hardware is closing in. Fifty-fifty in the most emerging markets effectually the world, people will salvage to upgrade to a full smartphone operating organisation in society to go all of the benefits they bring. I don't think Nokia can compete hither.

But Nokia's dumb phone sales accept been shrinking. The more than they compress, the less future risk they represent. And Lumia sales take been increasing. Obviously Lumia phones have better margins too. That'south proficient for Nokia.

Microsoft acknowledges that the Windows Phone shop still has holes. They're working to fill them. Android and iOS don't take these holes. BlackBerry 10 certainly may nonetheless have holes. And so it'southward a big fight between Microsoft and RIM to solidify that 3rd identify spot in the smartphone platform market. Yes, RIM has that spot for now. But they earned the spot on the sometime BlackBerry Os, and they will have to go along information technology with BlackBerry ten. In the same way, Microsoft will have to displace them with Windows Phone.

As far as the stocks: If Nokia tin become its Lumia book up towards x-12 one thousand thousand per quarter, I think people (including me) will terminate talking about the adventure of declining dumb phone sales. They'll have created a sustainable position with Windows Phone, and they'll be nicely profitable. The stock likely keeps rise if that happens.

MSFT stock performance: 6 months

Microsoft? I'm less excited. Even if Surface sales selection up and other vendors so a reasonable job of selling Windows eight tablet hardware, I think Apple is going to steal away a lot of market share as the PC market sees cannibalization from tablets. It's not and so much a knock against Microsoft as it is a result of old-world (desktop Bone) market place shares. Microsoft won that war, and if they don't win the #one spot in mobile, they lose share. End of story.

(Chris Umiastowski is a contributing financial writer to the Mobile Nation network. You tin can run into the balance of his posts here at AndroidCentral, iMore and CrackBerry.)

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