JUMP means subscribers own rather than lease their handset, as UK carrier O2 launched for the iPhone 4S last December, and can choose to keep it rather than to trade it in. Phones 4U says it will guarantee a trade-in value of at least £100 for the first twelve months, and customers can throw in up to two more devices to increase their overall trade-in value. Phones must be functional – able to power on, with non-cracked displays, not water damaged and including their battery – but some cosmetic wear is acceptable.

In example, Phones 4U suggests looking at current UK deals for the iPhone 4S. Customers could grab the Apple smartphone and a plan on a single agreement for £35 per month (two-year agreement; no upfront handset fee), or they could pay £37.99 per month on JUMP. However, that £37.99 is actually split into two sections: £15 service fees to a carrier, and £22.99 to the retailer for the iPhone itself.

If you chose to upgrade your phone after six months, you’d trade it – and up to two more devices – in, and that money would be used to offset the remainder of the handset subscription (i.e. 18 months). The new JUMP agreement would be spread over another 24 months, completely separate from the service agreement.

It’s an interesting strategy, and one obviously designed for potential customers who’d like the value of a contract bundle but still want the freedom to change devices more frequently than every two years. It’s probably still cheaper to buy an unlocked handset up front, and get a SIM-only deal, but JUMP at least means there’s no big bill to pay at the start.

[Image credit: Matthijs Rouw]

The Samsung Wave Y S5380 runs on the Bada 2.0 platform, which is designed for low-end handsets. The S5380 is the lowest of those low-end devices, coming in at an unsubsidized price of just $165, at least in the Ukraine. That remains the only country where the LaFleur edition phone is available, at least for the time being.

Among the technical specs of the device are a 3.2-inch HVGA display, HSDPA compatibility, Wi-Fi, GPS, Bluetooth 3.0, a 2-megapixel rear camera, 2 GB of pre-loaded memory, and an NFC chip. There is no word yet on whether this flower-filled gadget will come stateside, but nevertheless it is pretty to look at.

[via Unwired View, image via Rozetka]

Production at the Cluj, Romania plant had actually stopped in November, not long after Nokia World 2011 and the reveal of the company’s newest feature-phones, the Asha range. Earlier today, Nokia revealed it had sold 1.5bn S40 handsets in total, the milestone model being an Asha 303 purchased by a woman in São Paulo, Brazil.

What, specifically, De’ Longhi will do with the Romanian facility is unclear. All Nokia has said is that the new owner sees the plant as “a key part of its development strategy”; ironically, just as the Finns are restructuring their production to a more Asia-biased arrangement, so De’ Longhi is apparently shifting its own balance from the Far East toward Europe.

Nokia will announce its latest financial results on Thursday this week. All eyes are on whether the company will detail exact sales figures of the newest Windows Phone range, the Lumia series, about which there have been conflicting reports in the absence of official numbers. Earlier this week, analysts suggested Nokia could have shipped over 1.3m Windows Phones so far, though contrasting claims of apathy from carriers and consumers have thrown such predictions into doubt.

Nokia notes that the first mobile phone in the 40 Series was the Nokia 7110 back in 1999. None of the devices in the Series 40 range are considered true smartphones; Nokia refers to the latest devices in the range as “smartphone lite.” They sit in the area between smartphones and feature phones.

The latest of the 40 Series devices have Nokia Maps, Nokia Browser, and Web Apps along with Nokia Money and Life tools. Nokia is looking forward to the next billion in sales of the Series 40 devices. Part of the next billion in device sales will be pushed thanks to the recent purchase of Smarterphone OS that already looks better than Symbian.

China has now reached 513 million internet users according to an industry group. Many web users in China access the internet on mobile phones and the number of people that use handheld devices for internet access in the country has grown 17.5% since last year to 365 million users. China is notorious for blocking access to sites the government deems inappropriate.

However, Chinese citizens are apparently encouraged to use the web for education. The total number of mainland China web users is up 12% compared to last year according to a study compiled by the Chinese government. I am sure once Chinese citizens can get their iPhone the number of users will increase more.

[via USA Today]

“North America is our priority market,” revealed Fujitsu’s Senior Executive Vice President Hideyuki Saso in an interview at CES. The company is in the process of regaining full control over its operations, taking back Toshiba’s 19.9% stake in their joint-venture. It makes both Android and Windows Phones, but isn’t sure yet which niche it will target in North America.

“We would like to identify the right way of entering the North American market that would make use of our technology and expertise to make a steady landing”, said Saso. “We don’t want to be just another mobile phone. We want to be special”.

Some of the strengths the company hopes to draw on include its wide range of thin yet durable and waterproof handsets. Its Fujitsu Arrow F-07D smartphone is touted as the thinnest phone in the world at only 6.7mm thin.

[via AllThingsD]

“There’s significant synergies between the multiple groups within Nokia—for example, on decisions around chipsets, on memory, on different display technologies” Elop pointed out. “We gain scale advantages across the entire portfolio of devices that we have.”

That scale has historically seen Nokia corner the market – in developing markets, at least – with low-cost but sturdily made devices. At Nokia World late last year, for instance, the company revealed the Asha series, a line-up of budget devices offering some smartphone-style functionality but at price points as low as €60 ($76) unsubsidized.

Those price points could get even lower, however, with the acquisition of Smarterphone, a dumbphone OS targeting sub-$75 handsets that looks and offers functionality similar to a full smartphone. Elop would only say what Nokia has already confirmed, that the buy was linked to its “Next Billion” strategy, though he did it was likely to sit alongside rather than replace S40.

Earlier today, Nokia’s first Windows Phone in the US went on sale, the T-Mobile Lumia 710, with an affordable $50 price tag (with agreement). This week the firm revealed the Nokia Lumia 900 LTE for AT&T; check out our hands-on with the smartphone here.

Nokia had dominated the mobile phone market for over a decade, but the company has been struggling when it comes to smartphones with the surge of Android and iOS. Nokia’s smartphone sales lost to Apple in the second quarter of 2011 and now the company’s betting on its partnership with Microsoft to launch new Windows Phone devices.

According to Reuters, Nokia expected to sell 418 million mobile phones in 2011 while Samsung expected 320 million. This year that gap has closed to 388 million for Nokia and 359 million for Samsung. Although analysts believe that Samsung could build on its momentum to surpass Nokia this year, many analysts still expect Nokia to keep ahead.

Garnter analyst Carolina Milanesi explains that Nokia is still strong in emerging markets and that’s where analysts are expecting to see the most growth in 2012. Hence, it would be difficult for Samsung to beat Nokia without focusing more on this market. Samsung’s confidence suggests that it believes Nokia will fail miserably in the mature markets.

[via Reuters]

Two of the prototype solar-powered phones were tested in the Arctic Circle, while one was in southern Sweden, one in Kenya, and one on a sailboat in the Baltic Sea. And it turns out that location did play a major role, as the phone had better performance in areas closer to the equator where there was more direct sun. However, the power generated from the built-in solar charger was only able to supply enough energy for the device to be on standby with a very limited talk time.

Other limitations included the small size of the phones, which meant small solar panels. The angle of how light entered the solar panels was also important as was the amount of light that could pass through the phones’ weatherproof casings to get to the solar panels. Also, since the phone constantly needs light to stay charged, the phones can’t be carried around, as most folks do, in a pocket or purse.

[via Nokia]

The promotion is available to new customers that sign up for a two-year service agreement on any Unlimited Value plan with a 2GB or higher data plan. Existing customers that are eligible for an upgrade can also make the switch from a Classic plan to a new qualifying Value plan. To be eligible, you will have already had your current T-Mobile plan for at least 18 months or more.

Some of the qualifying devices include the HTC Amaze 4G, Samsung Galaxy S II, HTC Radar 4G, and the T-Mobile myTouch Q smartphones as well as the Dell Streak 7 and T-Mobile G-Slate tablets. For the full list of eligible devices, you can check out T-Mobile’s promotion page here.

[via Android Community]

Altogether, including the XP3300 Force, Sonim latest lineup boasts four ultra-rugged mobile phones with the addition of the XP1301 Core NFC, XP1330 Core PTT, and the XP3340 Sentinel. All the devices are designed for workers in extreme environments, offering them extended talk time, battery life, light-weight portability, and enterprise support as well as other unique safety-oriented features.

The XP1301 Core NFC model is designed specifically for markets in cleaning, security guarding, facilities management, equipment maintenance, and home visit healthcare. The built-in NFC chip can scan tags placed in various work-site locations to verify activity or attendance. It includes key apps such as Guard Tour Verification, Proof of Activity, and Real Time Attendance.

The XP3340 Sentinel touts the longest GPS tracking time of any mobile phone, up to 29 hours. It’s focus is on man-down worker safety situations and it features a dedicated red panic button and a man-down sensor to detect emergencies and accidents, automatically calling for emergency help.

The XP1330 Core PTT the ability for push-to-talk to enable instant communication among work teams while the the XP3300 Force supports Mobile Resource Management apps, including location tracking, job dispatch, and timecard reporting.

[via Engadget]

This isn’t the first time we’ve heard such news, we mentioned this briefly back in July as a response to other mobile payment systems such as Google Wallet and more. Along with the retail store in Manhattan coming November 1st, Paypal plans to have plenty QR codes out front and nearby for people walking and passing by to scan that will give them more details and reveal all the information right from Paypal.

Paypal isn’t stopping at QR codes and mobile payments either, the new system is expected to allow consumers to check inventory in real-time, and provide location stats and in-store offers from local stores. Just as Paypal mentioned in September, they plan to offer a complete and comprehensive solution for store merchants and owners to support payments from customers whether they are in-store, online, or using a mobile payment solution.

Paypal’s big brother eBay recently purchased the mobile payment company Zong, to give eBay users similar options too. Paypal told TechCrunch they will continue to debut this technology as they can, and have plans to announce a number of partnerships with many retail stores soon. This is a wise move by Paypal as more and more things are moving towards mobile, for now we’ll just have to wait and see what all they have in store.

Whatever the etymology, the rumors are likely to surprise long-time Nokia watchers who have seen the company struggle to find its footing amid the cellphone OS shake-up of the past five years. MeeGo -development  a collaborative effort between Nokia and Intel – supposedly fell well short of what then-new Nokia CEO Stephen Elop felt was required for the company’s smartphone roadmap, and the decision was taken to axe existing plans and throw in with Microsoft’s Windows Phone.

According to arch-insider Eldar Murtazin, Meltemi will use a subset of Nokia’s original Maemo team, with the OS itself using the same UI. However the underlying kernel will be different.

MeeGo has since been swallowed up in the new Tizen project, and Nokia has watched as its position in entry-level and developing markets has been challenged by a growing number of Chinese brands such as ZTE and Huawei. Whether Meltemi can deliver on the cost-effectiveness that cheap smartphones require, as well satisfy as the increasingly sophisticated demands of their audiences, remains to be seen.

Isis has now announced that just about all of the major smartphone vendors on the market are putting the weight behind Isis technology. HTC, LG, Motorola Mobility, RIM, Samsung Mobile and Sony Ericsson have all announced that they will be introducing devices that have Isis NFC technology standards inside. Isis is also going to work with DeviceFidelity to add NFC tech to devices that lack it internally.

Isis NFC will allow consumers to make payments, store loyalty cards for retailers they frequent and use those loyalty cards inside the store without having to keep up with a physical card. I think the key to what tech is able to make it in the market between Google Wallet and Isis will be retailer support and the support of device makers.

According to Motorola’s somewhat nonsensical description, the EX225 is a “product for trendy generation who enjoy connecting to the world anytime, anywhere, and multimedia services on the go, all easy as via a fully personalized UI.” Overall, then, this probably won’t set the world alight – think more Vodafone 555 than HTC ChaCha.

Unwired View also caught glimpse of a different version, the EX226, which lacks the distinctive blue Facebook button but seemingly includes a second SIM slot. No word on when either handset might reach the market, nor indeed which markets it will grace, but we’re guessing this will carry a budget prepay price-tag when it does arrive.

[via Recombu]

The Wave 3 sports a 4-inch Super AMOLED display and packs in a 1.4GHz processor, a VGA front-facing camera, and a 5-megapixel rear-facing camera with auto-focus and LED flash into a 9.9mm thin full metal chassis constructed of anodized aluminum.

The Wave M will be the first to feature Samsung’s just announced ChatON messaging service and sports a 3.65-inch TFT LCD display with mid-range specs, but offers integrated NFC as an option. The Wave Y sports a 3.2-inch HVGA display and entry-level specs and will also work with ChatOn.

Bada version 2.0 was recently announced along with the release of an SDK in hopes of more developer support. New features introduced by Bada 2.0 include NFC, voice recognition, and direct WiFi sharing.

All three models will be on display at IFA 2011, which we’ll be covering live, so stay tuned on SlashGear. Also, here’s a preview of what to expect from this year’s event.

[via Samsung]

From earlier today, we already know that Apple blew past Nokia to be the number one smartphone manufacturer, according to Strategy Analytics. Holding an 18.5 percent market share, Apple is followed by Samsung with a 17.5 percent share and then Nokia with 15.2 percent. But that’s looking at unit shipments, wait till you take a look at profit comparisons.

From what Dediu has gathered, the latest quarter saw a decline overall in the profits of the mobile phone sector, with four of the major vendors—Nokia, Motorola, Sony-Ericsson, and LG—all reporting losses. Of the other vendors that did see gains, Apple chomped 66.3 percent of the pie, followed by Samsung with 15 percent, RIM with 11 percent, and HTC at 7.4 percent.

[via Asymco]

The deal also has a multi-year earn-out that could cost EA an additional $343 million if the upper end of the earn-out target is met. Other money spent for the purchase also includes $50 million that will be given in long-term retention awards for Popcap employees to be paid over four years. EA hopes to complete the purchase in August, but notes the deal is subject to closing conditions and to regulatory approvals.

EA expects the purchase to make for a loss of five to 15 cents per share in fiscal 2012. The bulk of the purchase was funded via an unsecured bridge facility of $550 million from a number of investors including Morgan Stanley Senior Funding, JP Morgan Securities, and J.P. Morgan Chase Bank among others.

[via Android Community]

That first place is looking ever more tenuous, however, according to IDC’s figures. Nokia’s market share is down from 34.7-percent a year ago to 29.2-percent in Q1 2011, with shipment volumes climbing by less than one million units to 108.5m. Samsung too dropped share, down from 20.7-percent to 18.8-percent, as did LG, down from 8.7-percent to 6.6-percent. Only LG, however, actually saw a reduction in volumes shipped, sliding from 27.1m in Q1 2010 to 24.5m in Q1 2011.

That’s the third quarter that LG has seen declining shipments, with IDC suggesting that the company’s smartphones have not yet been able to offset their dwindling featurephone sales. Apple’s growth was helped in no small part by the CDMA iPhone 4 on Verizon.

Press Release:

Worldwide Mobile Phone Market Grew Nearly 20% in the First Quarter; Smartphones and Vendors Outside the Top 5 Keys to Growth, According to IDC

28 Apr 2011
FRAMINGHAM, Mass. April 28, 2011 – The worldwide mobile phone market grew 19.8% year over year in the first quarter of 2011 (1Q11) fueled by high smartphone growth, especially in emerging markets, and gains made by market challengers. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 371.8 million units in 1Q11 compared to 310.5 million units in the first quarter of 2010.

Smartphone growth worldwide, particularly in Asia/Pacific (excluding Japan), Middle East and Africa (MEA), and Latin America, helped lift the overall market to a new first-quarter high. Increasingly, mobile phone makers and carriers are making smartphones affordable to a wider variety of people, which has helped drive the market to new heights. Smartphone-specific vendors, such as HTC, continue to grow sales at a steady clip as a result of this trend.

“Several notable vendors, including feature phone makers, outpaced the overall market, which contributed to share losses of some top suppliers,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “The growth of companies outside the top 5 vendors – vendors in the ‘Others’ category, such as Micromax, TCL-Alcatel, Huawei, and Research In Motion – shows that the overall market is still very much ripe for share gains.”

“At the same time, feature phones have represented the majority of mobile phone shipments, but still are under tremendous pressure from smartphones,” adds Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends team. “Even popular quick-messaging devices (phones with a QWERTY keyboard), once a bright spot within the feature phone market, appear to be losing steam as smartphones gain popularity. Still, IDC does not expect feature phones to disappear quickly as there is still strong demand across the globe.”

Market Outlook

Nonetheless, IDC expects almost all of the worldwide mobile phone market’s growth to be driven by smartphones throughout the forecast, which goes to 2015. “Increasingly smartphones will drive market growth. This means feature phone makers will either need to become smartphone dependent or consolidate that part of the market,” noted Restivo.

Regional Analysis

The Asia/Pacific market grew thanks in part to strong mobile phone shipments to Greater China despite the seasonally slow quarter. Smartphone shipment growth was exceptional despite some key product launch delays. In Japan, the market underperformed IDC’s forecast due to the impact of the earthquake and tsunami. Japan’s largest mobile operators ordered fewer phones than expected in March.
In Western Europe, Android-based phones and iPhones helped grow the market in the seasonally slow quarter. New devices from HTC, Samsung, and Sony Ericsson sold well in most countries in the high-end tiers. Alcatel, Huawei, and ZTE Android devices helped drive mid-tier segment sales volume. Meanwhile, feature phone shipments receded as more smartphones hit the market. The CEMA markets performed well on a year-over-year basis despite civil unrest in some Gulf countries, such as Egypt, where sales were negatively impacted by the turbulence. Nokia and Research In Motion performed well in the regions overall.
In the United States last quarter, Apple’s iPhone and the LTE-enabled HTC Thunderbolt were two smartphones introduced at Verizon Wireless that helped keep the category front and center of the overall mobile phone market. Feature phones, including once popular quick messaging devices, continued to lose ground. Similarly, in Canada, the market grew thanks to smartphones. BlackBerry, iPhone, and Android devices were best sellers.
The Latin America market growth continued last quarter as the gap between smartphones and feature phones narrowed. Smartphone shipments were aided by carriers, who are moving customers to 3G networks while vendors shipped more touchscreen and QWERTY models. New Android and Windows Phone devices were launched too, which helped drive smartphone growth. The average selling prices also declined in the region, thanks to aggressive expansion by Chinese vendors.
Top Five Mobile Phone Vendors

Nokia laid out its transformation strategy during the quarter, one that will embrace Windows Phone as its primary smartphone operating system, introduce further enhancements to its mobile phones, and invest in future disruptions to the mobile phone market. Until that strategy is fully realized, the company will rely on its current platforms to compete in the market. Its Symbian-powered smartphones continued to find a warm reception, and the company introduced the E6 and X7, both running on the new Symbian Anna software. In mobile phones, Nokia ramped up shipments of its C3 and X201 from last year and announced a dual-SIM phone with the C2. What remains to be seen is how quickly Nokia will introduce new phones as competition intensifies.

Samsung having posted a record Q1 shipment volume, further closed the gap against market leader Nokia and extended its lead ahead of third place vendor LG Electronics. Although feature phones comprised the majority of its shipments, smartphones represented a greater share from a year ago, nearly a fifth of its total volumes. Samsung appears well poised to reach its goal of 50 million smartphones shipped this year, as new models, including the Galaxy S II, 4G smartphones, and more mass-market smartphones are expected to reach the market later on.

LG unit shipments declined on a year-over-year basis for the third straight quarter. The phone shipment drop off was most noticeable in Europe and the CIS countries where shipments on a combined basis declined. The company hopes to deliver a better second quarter performance with the introduction of products such as the Revolution, which will run on the LTE network of Verizon Wireless, and the Big. The question for LG will be whether feature phone declines in emerging and other markets can be offset by smartphone gains in future.

Apple maintained its number 4 spot on IDC’s Top 5 list thanks to a record quarter for unit shipments. The company posted the highest growth rate of the worldwide leaders. Apple’s results were buoyed by strong sales on Verizon Wireless and additional carrier deals; the company is now on 186 carriers operating in 90 countries. The iPhone once again sold particularly well in developed economic regions of the world, such as North America and Western Europe.

ZTE held on to the number 5 slot in the rankings thanks to strong year-over-year growth in countries and regions where it does particularly well, such as China and Latin America. ZTE primarily sells low-cost feature phones but the company is making a concerted effort to ship more smartphones, which are based on the Android operating system, this year. The company has said it will try to create brand awareness and sell more devices in developed markets, such as the U.S., this year.

Last we heard, Nokia’s first Windows Phone handsets aren’t expected to arrive in bulk until early 2012, with various models based on the existing X7 and N8 among others. However the company is still aiming to break Windows Phone ground in 2011, according to the official blog. In the process, Nokia will get investment measured in billions of dollars from Microsoft.

More pressing, perhaps, is the drop in sales in key trend-leading markets such as North America and Europe, where Nokia’s market share has dipped by 56-percent and 2-percent year-on-year respectively. Smartphone share overall is down to 26-percent, from 41-percent a year ago, and operating profit – although at the high end of estimates, at €690m – was still down 17-percent from Q1 2010.

Nokia CEO Stephen Elop describes Q1 2011 as “solid” but is looking to a “roadmap of mobile phones and Symbian smartphones, which we will ship through the balance of the year.” Nokia is “fully focused on delivering the needed accountability, speed and results to positively drive our future financial performance” he claims, something it will need to have in spades if it is to turn things around.

Press Release:

Nokia Q1 2011 net sales EUR 10.4 billion, non-IFRS EPS EUR 0.13 (reported EPS EUR 0.09)

Published April 21, 2011
- 9.8% Devices & Services non-IFRS operating margin at top end of outlook range
- Microsoft definitive agreement signed
- Shifting from developing strategy to executing strategy

April 21, 2011 at 13.00 (CET+1)
This is a summary of the first quarter 2011 interim report published today. The complete first quarter 2011 interim report with tables is available at http://www.nokia.com/results/Nokia_results2011Q1e.pdf. Investors should not rely on summaries of our interim reports only, but should review the complete interim reports with tables.

Non-IFRS first quarter 2011 results1
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Net sales 10 400 9 522 9% 12 653 -18%
Devices & Services 7 088 6 663 6% 8 501 -17%
NAVTEQ 232 189 23% 309 -25%
Nokia Siemens Networks 3 171 2 718 17% 3 961 -20%

Operating profit 704 820 -14% 1090 -35%
Devices & Services 694 804 -14% 961 -28%
NAVTEQ 54 41 32% 100 -46%
Nokia Siemens Networks 3 15 -80% 145 -98%

Operating margin 6.8% 8.6%
8.6%

Devices & Services 9.8% 12.1%
11.3%

NAVTEQ 23.3% 21.7%
32.4%

Nokia Siemens Networks 0.1% 0.6%
3.7%

EPS, EUR Diluted 0.13 0.14 -7% 0.22 -41%

Reported first quarter 2011 results
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Net sales 10 399 9 522 9% 12 651 -18%
Devices & Services 7 087 6 663 6% 8 499 -17%
NAVTEQ 232 189 23% 309 -25%
Nokia Siemens Networks 3 171 2 718 17% 3 961 -20%

Operating profit 439 488 -10% 884 -50%
Devices & Services 690 831 -17% 1 018 -32%
NAVTEQ -62 -77
-19

Nokia Siemens Networks -142 -226
1

Operating margin 4.2% 5.1%
7.0%

Devices & Services 9.7% 12.5%
12.0%

NAVTEQ -26.7% -40.7%
-6.1%

Nokia Siemens Networks -4.5% -8.3%
0.0%

EPS, EUR Diluted 0.09 0.09 0% 0.20 -55%
Note 1 relating to non-IFRS results: Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008. More specific information about the exclusions from the non-IFRS results may be found in our complete interim report with tables for the first quarter 2011 on pages 3-4, 15-17 and 19.
Nokia believes that these non-IFRS financial measures provide meaningful supplemental information to both management and investors regarding Nokia’s performance by excluding the above-described items that may not be indicative of Nokia’s business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results. A reconciliation of the non-IFRS results to our reported results for Q1 2011 and Q1 2010 can be found in the tables on pages 13 and 15-19 of our complete interim report with tables. A reconciliation of our Q4 2010 non-IFRS results can be found on pages 11-12 and 14-18 of our complete Q4 2010 interim report with tables which was published on January 27, 2011.
FIRST QUARTER 2011 HIGHLIGHTS
- Nokia net sales of EUR 10.4 billion in Q1 2011, up 9% year-on-year and down 18% sequentially (up 4% and down 18% at constant currency).
- Devices & Services net sales of EUR 7.1 billion in Q1 2011, up 6% year-on-year and down 17% sequentially (up 1% and down 16% at constant currency).
- Services net sales of EUR 211 million in Q1 2011, up 43% year-on-year and 5% sequentially; billings of EUR 338 million, up 48% year-on-year and down 4% sequentially.
- Nokia total mobile device volumes of 108.5 million units in Q1 2011, up 1% year-on-year and down 12% sequentially.
- Nokia converged mobile device (smartphone and mobile computer) volumes of 24.2 million units in Q1 2011, up 13% year-on-year and down 14% sequentially.
- Nokia mobile device ASP (including services revenue) of EUR 65 in Q1 2011, up from EUR 62 in Q1 2010 and down from EUR 69 in Q4 2010.
- Devices & Services gross margin of 29.1% in Q1 2011, down from 32.4% in Q1 2010 and 29.2% in Q4 2010.
- Devices & Services non-IFRS operating margin of 9.8% in Q1 2011, down from 12.1% in Q1 2010 and 11.3% in Q4 2010.
- NAVTEQ net sales of EUR 232 million in Q1 2011, up 23% year-on-year and down 25% sequentially (up 20% and down 26% at constant currency).
- Nokia Siemens Networks net sales of EUR 3.2 billion in Q1 2011, up 17% year-on-year and down 20% sequentially (up 15% and down 21% at constant currency).
- Nokia Siemens Networks non-IFRS operating margin of 0.1% in Q1 2011, down from 0.6% in Q1 2010 and 3.7% in Q4 2010.
- Nokia operating cash flow of negative EUR 173 million and cash generated from operations of EUR 182 million in Q1 2011.
- Total cash and other liquid assets of EUR 11.1 billion and net cash and other liquid assets of EUR 6.4 billion at the end of Q1 2011.
- Nokia taxes continued to be unfavorably impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia Siemens Networks deferred tax items. In Q1, this was partially offset by favorable profit mix both in Devices & Services and in Nokia Siemens Networks taxes. If Nokia’s estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately 0.4 Euro cents higher in Q1 2011.
STEPHEN ELOP, NOKIA CEO:
“In the first quarter, we shifted from defining our strategy to executing our strategy. On this front, I am pleased to report that we signed our definitive agreement with Microsoft and already our product design and engineering work is well under way.
Following a solid first quarter, we expect a more challenging second quarter. However, we are encouraged by our roadmap of mobile phones and Symbian smartphones, which we will ship through the balance of the year. We are fully focused on delivering the needed accountability, speed and results to positively drive our future financial performance.”
NOKIA OUTLOOK
- Nokia expects Devices & Services net sales to be between EUR 6.1 billion and EUR 6.6 billion in the second quarter 2011.
- Nokia expects its non-IFRS operating margin in Devices & Services to be between 6% and 9% in the second quarter 2011.
- Nokia targets its net sales in Devices & Services to be at approximately the same level in the third quarter 2011 as in the second quarter 2011, and targets its net sales in Devices & Services to be seasonally higher in the fourth quarter 2011, compared to the third quarter 2011.
- Nokia targets its non-IFRS operating margin in Devices & Services to be between 6% and 9% in 2011.
- Nokia targets to reduce Devices & Services’ non-IFRS operating expenses by EUR 1 billion for the full year 2013, compared to the full year 2010 Devices & Services non-IFRS operating expenses of EUR 5.65 billion.
- Nokia and Nokia Siemens Networks expect Nokia Siemens Networks’ net sales to be between EUR 3.2 billion and EUR 3.5 billion in the second quarter 2011.
- Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia Siemens Networks to be between 1% and 4% in the second quarter 2011.
- Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks net sales to grow faster than the market in 2011.
- Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks non-IFRS operating margin to be above breakeven in 2011.
- Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to reduce its non-IFRS annualized operating expenses and production overheads by EUR 500 million by the end of 2011, compared to the end of 2009
- All items relating to Nokia Siemens Networks exclude the impacts of the planned acquisition of Motorola Solutions’ network assets.
The outlook for Devices & Services net sales and non-IFRS operating margin for the second quarter 2011 is based on our expectations regarding a number of factors, including:
- Receipt of approximately EUR 150 million of royalty income related to earlier periods;
- Competitive industry dynamics and our planned tactical pricing actions;
- Greater impact from the tragic events in Japan than we experienced in the first quarter 2011, particularly relating to component supply visibility for certain devices and other logistics disruptions related to suppliers located in Japan. We expect these factors and their negative impact on our mobile devices volumes to continue not only during the second quarter 2011 but also through the third quarter 2011, at least.
- Greater impact from our lack of dual-SIM devices than we experienced in the first quarter 2011; and
- A lower contribution from new products in the second quarter 2011 compared to the first quarter 2011 as we plan to start shipping the majority of our new products in the second half of the year.
FIRST QUARTER 2011 FINANCIAL HIGHLIGHTS
The non-IFRS results exclusions
Q1 2011 – EUR 265 million consisting of:
- EUR 28 million restructuring charge and other associated items in Nokia Siemens Networks
- EUR 117 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
- EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
- EUR 4 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications, Novarra and Motally in Devices & Services
Q1 2010 – EUR 332 million (net) consisting of:
- EUR 125 million restructuring charge and other one-time items in Nokia Siemens Networks.
- EUR 29 million gain on sale of assets and a business in Devices & Services.
- EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks.
- EUR 118 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ.
- EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications in Devices & Services.
Q4 2010 – EUR 206 million (net) consisting of:
- EUR 28 million restructuring charge and other associated items in Nokia Siemens Networks
- EUR 85 million restructuring charges in Devices & Services
- EUR 147 million gain on sale of wireless modem business in Devices & Services
- EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
- EUR 119 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
- EUR 5 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications, Novarra and Motally in Devices & Services
Q4 2010 taxes – EUR 52 million non-cash tax benefit from reassessment of recoverability deferred tax assets in Nokia Siemens Networks
Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008.
Nokia Group
Nokia’s first quarter 2011 net sales increased 9% to EUR 10.4 billion, compared with EUR 9.5 billion in the first quarter 2010, and decreased 18% compared with EUR 12.7 billion in the fourth quarter 2010. At constant currency, group net sales would have increased 4% year-on-year and decreased 18% sequentially.
The following chart sets out the year-on-year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated.
FIRST QUARTER 2011 NET SALES, REPORTED & CONSTANT CURRENCY1

YoY Change QoQ Change
Group net sales – reported 9% -18%
Group net sales – constant currency1 4% -18%
Devices & Services net sales – reported 6% -17%
Devices & Services net sales – constant currency1 1% -16%
NAVTEQ net sales – reported 23% -25%
NAVTEQ net sales – constant currency1 20% -26%
Nokia Siemens Networks net sales – reported 17% -20%
Nokia Siemens Networks net sales – constant currency1 15% -21%
Note 1: Change in net sales at constant currency excludes the impact of changes in exchange rates in comparison to the Euro, our reporting currency.
Nokia’s first quarter 2011 reported operating profit was EUR 439 million, compared with an operating profit of EUR 488 million in the first quarter 2010 and an operating profit of EUR 884 million in the fourth quarter 2010. Nokia’s first quarter 2011 reported operating margin was 4.2%, compared with 5.1% in the first quarter 2010 and 7.0% in the fourth quarter 2010. Nokia’s first quarter 2011 non-IFRS operating profit was EUR 704 million, compared with EUR 820 million in the first quarter 2010 and EUR 1 090 million in the fourth quarter 2010. Nokia’s first quarter 2011 non-IFRS operating margin was 6.8%, compared with 8.6% in the first quarter 2010 and 8.6% in the fourth quarter 2010. The year-on-year decrease in Nokia’s non-IFRS operating margin resulted from a decline in non-IFRS operating margins in Devices & Services and Nokia Siemens Networks. The sequential decrease in Nokia’s non-IFRS operating margin resulted from a decline in non-IFRS operating margins in all reportable segments.
The following chart sets out Nokia Group’s cash flow (for the periods indicated) and financial position (at the end of the periods indicated), as well as the year-on-year and sequential growth rates.
NOKIA GROUP CASH FLOW AND FINANCIAL POSITION
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Cash generated from operations 182 1 181 -85% 2 492 -93%
Operating cash flow1 -173 955
2 436

Total cash and other liquid assets 11 056 9 701 14% 12 275 -10%
Net cash and other liquid assets2 6 372 4 952 29% 6 996 -9%
Net debt-equity ratio (gearing) -40% -31%
-43%

Note 1: Net cash from operating activities.
Note 2: Total cash and other liquid assets minus interest-bearing liabilities.
Year-on-year, the decrease in operating cash flow in the first quarter 2011 was due to negative net working capital impacts offset to some extent by lower income taxes paid. Sequentially, the decrease in operating cash flow in the first quarter 2011 was due to negative net working capital impacts as well as lower underlying profitability. Additionally, on a sequential basis, operating cash flow was negatively impacted by the timing of certain customer payments and value-added tax refunds, as approximately EUR 600 million of net working capital improvements were received in the fourth quarter 2010. In addition to these factors, in the first quarter 2011 we experienced cash outflows related to foreign exchange hedging activities, both operative as well as balance sheet, and this led to year-on-year and sequential declines in operating cash flow.
Both total as well as net cash and other liquid assets in the first quarter 2011 were higher compared to the first quarter 2010 due to positive overall cash generation. Sequentially, total cash and other liquid assets decreased due to repayments of short-term borrowings as well as negative overall cash generation. On a sequential basis, net cash and other liquid assets decreased due to the depreciation of certain currencies against the Euro as well as negative overall cash generation.
The following discussion of our reportable segments reflects our operational structure through March 31, 2011. As previously reported, starting April 1, 2011 we have a new operational structure, which features two distinct business units in our Devices & Services business – Smart Devices and Mobile Phones – and we will present our financial information and segment discussion in line with the new organizational structure commencing with our Q2 2011 interim report.
Devices & Services
Net Sales. The following chart sets out our Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by category.
DEVICES & SERVICES NET SALES BY CATEGORY
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Mobile phones1 3 532 3 325 6% 4 092 -14%
Converged mobile devices2 3 555 3 338 6% 4 407 -19%
Total 7 087 6 663 6% 8 499 -17%
Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.
The following chart sets out Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.
DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Europe 2 082 2 186 -5% 3 088 -33%
Middle East & Africa 1 088 1 005 8% 1 177 -8%
Greater China 1 902 1 458 30% 1 682 13%
Asia-Pacific 1 317 1 363 -3% 1 603 -18%
North America 140 219 -36% 233 -40%
Latin America 558 432 29% 715 -22%
Total 7 087 6 663 6% 8 499 -17%

Year-on-year, the 6% net sales increase resulted primarily from higher ASPs. Sequentially, the 17% net sales decrease reflected lower ASPs, as well as lower device volumes in most regions. At constant currency, Devices & Services net sales would have increased 1% year-on-year and decreased 16% sequentially.
Of our total Devices & Services net sales, services contributed EUR 211 million in the first quarter 2011, compared with EUR 148 million in the first quarter 2010 and EUR 201 million in the fourth quarter 2010. Services billings in the first quarter 2011 were EUR 338 million, compared with EUR 228 million in the first quarter 2010 and EUR 352 million in the fourth quarter 2010.
Volume and Market Share. The following chart sets out our Devices & Services volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by category.
DEVICES & SERVICES MOBILE DEVICE VOLUMES BY CATEGORY
million units Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Mobile phones1 84.3 86.3 -2% 95.4 -12%
Converged mobile devices2 24.2 21.5 13% 28.3 -14%
Total 108.5 107.8 1% 123.7 -12%
Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.
In the first quarter 2011, the overall industry mobile device volumes were 374 million units, based on Nokia’s preliminary estimate, representing an increase of 16% year-on-year and a decrease of 7% sequentially. Nokia’s preliminary estimated mobile device market share was 29% in the first quarter 2011, down from an estimated 33% in the first quarter 2010 and an estimated 31% in the fourth quarter 2010.
Of the total industry mobile device volumes, converged mobile device industry volumes in the first quarter 2011 increased to 92.3 million units, based on Nokia’s preliminary estimate, representing an increase of 68% year-on-year and 2% sequentially. Nokia’s preliminary estimated share of the converged mobile device market was 26% in the first quarter 2011, compared with an estimated 41% in the first quarter 2010 and an estimated 31% in the fourth quarter 2010.
The following chart sets out our mobile device volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.
DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA
million units Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Europe 23.4 23.9 -2% 33.5 -30%
Middle East & Africa 22.2 22.2 0% 22.2 0%
Greater China 23.9 21.1 13% 21.9 9%
Asia-Pacific 27.3 29.2 -7% 31.3 -13%
North America 1.2 2.7 -56% 2.6 -54%
Latin America 10.5 8.7 21% 12.2 -14%
Total 108.5 107.8 1% 123.7 -12%

The 1% year-on-year increase in our global mobile device volumes during the first quarter 2011 was driven primarily by an improvement in overall market conditions, offset by an intense competitive environment and tight component availability for certain products. On a sequential basis, the 12% decrease in our global mobile device volumes was primarily due to lower seasonal demand for our devices and an intense competitive environment, offset to some extent by improved component availability. We expect shortages of certain components to continue to impact our mobile device volumes at least through the second quarter and third quarters of 2011.
Average Selling Price. The following chart sets out our Devices & Services ASP for the periods indicated, as well as the year-on-year and sequential growth rates, by category.
DEVICES & SERVICES AVERAGE SELLING PRICE BY CATEGORY
EUR Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Mobile phones1 42 39 9% 43 -2%
Converged mobile devices2 147 155 -6% 156 -6%
Total 65 62 6% 69 -5%
Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.
The year-on-year 6% increase in our ASP was primarily due to converged mobile devices representing a greater proportion of our overall mobile device sales and the appreciation of certain currencies against the Euro, offset to some extent by general price erosion. On a sequential basis, the 5% decrease in our ASP was primarily driven by general price erosion, an increased proportion of sales of lower-priced converged mobile devices, converged mobile devices representing a smaller proportion of our overall mobile device sales, and foreign exchange hedging, offset to some extent by the appreciation of certain currencies against the Euro and an increased proportion of sales of higher-priced mobile phones.
The 6% year-on-year and sequential decline in our converged mobile devices ASPs was primarily driven by general price erosion and an increase in the proportion of lower-priced converged mobile devices sales during the first quarter 2011. The 9% year-on-year increase in our mobile phones ASPs was primarily driven by an increased proportion of sales of higher-priced mobile phones, offset to some extent by general price erosion. The 2% sequential decrease in our mobile phones ASPs was primarily driven by general price erosion, offset to some extent by an increased proportion of sales of higher-priced mobile phones.
Profitability. Devices & Services gross profit (reported and non-IFRS) decreased 4% to EUR 2.1 billion, compared with EUR 2.2 billion in the first quarter 2010, and decreased 17% compared to EUR 2.5 billion in the fourth quarter 2010. The gross margin (reported and non-IFRS) was 29.1% in the first quarter 2011, compared with 32.4% in the first quarter 2010 and 29.2% in the fourth quarter 2010. The year-on-year gross margin decline was primarily due to the appreciation of certain currencies against the Euro, as well as the absence of a positive impact from foreign exchange hedging, which improved our gross margin in the first quarter 2010. The impact of these factors was offset to some extent by an increased proportion of sales of higher margin mobile devices in the first quarter 2011, compared with the first quarter 2010. Sequentially, the gross margin decline was primarily due to general price erosion being higher than cost erosion, offset to a large extent by the smaller negative one-quarter impact from foreign exchange hedging as well as an increased proportion of sales of higher margin mobile devices in the first quarter 2011.
Devices & Services reported operating profit decreased 17% to EUR 690 million, compared with EUR 831 million in the first quarter 2010, and decreased 32% compared with EUR 1 018 million in the fourth quarter 2010. The reported operating margin was 9.7% in the first quarter 2011, compared with 12.5% in the first quarter 2010 and 12.0% in the fourth quarter 2010. Devices & Services non-IFRS operating profit decreased 14% to EUR 694 million compared with EUR 804 million in the first quarter 2010, and decreased 28% compared with EUR 961 million in the fourth quarter 2010. The non-IFRS operating margin was 9.8% in the first quarter 2011, compared with 12.1% in the first quarter 2010 and 11.3% in the fourth quarter 2010. The year-on-year decrease in non-IFRS operating profit was driven primarily by the lower gross margin. Sequentially, the decrease in non-IFRS operating profit was primarily due to lower net sales, offset to some extent by lower operating expenses.
We are targeting to reduce our Devices & Services non-IFRS operating expenses by EUR 1 billion for the full year 2013, compared to the full year 2010 Devices & Services non-IFRS operating expenses of EUR 5.65 billion. This reduction is expected to come from a variety of different sources and initiatives, including a reduction in the number of employees and normal personnel attrition, a reduction in the use of outsourced professionals, reductions in facility costs, and various improvements in efficiencies. Due to the transition process, generally all current employees can stay on the payroll through the end of the year 2011, even those possibly impacted by the reductions.
NAVTEQ
Net Sales. First quarter 2011 NAVTEQ reported net sales increased 23% year-on-year to EUR 232 million, compared with EUR 189 million in the first quarter 2010, and decreased 25% compared to EUR 309 million in the fourth quarter 2010. The year-on-year increase in net sales was primarily driven by improved sales of map licenses to mobile device customers as well as improved vehicle sales and higher navigation uptake rates in the automotive industry offset to some extent by lower personal navigation devices (PNDs) sales. Sequentially, the decrease in net sales was primarily driven by lower seasonal sales in all business segments. At constant currency, NAVTEQ net sales would have increased 20% year-on-year and decreased 26% sequentially.
Profitability. In the first quarter 2011, NAVTEQ’s gross profit (reported and non-IFRS) increased 22% to EUR 195 million, compared with EUR 160 million in the first quarter 2010, and decreased 28% compared with EUR 271 million in the fourth quarter 2010. NAVTEQ’s gross margin (reported and non-IFRS) decreased to 84.1%, compared to (reported and non-IFRS) 84.7% in the first quarter 2010, and a reported and non-IFRS gross margin of 87.7% in the fourth quarter 2010. Sequentially, the non-IFRS gross margin decline was due to a higher proportion of sales to lower-margin automotive and wireless customers in the first quarter 2011.
In the first quarter 2011, NAVTEQ’s reported operating loss was EUR 62 million, compared with a EUR 77 million loss in the first quarter 2010 and a EUR 19 million loss in the fourth quarter 2010. The reported operating margin was -26.7% in the first quarter 2011, compared with -40.7% in the first quarter 2010 and -6.1% in the fourth quarter 2010. NAVTEQ’s non-IFRS operating profit was EUR 54 million, compared with EUR 41 million in the first quarter 2010 and EUR 100 million in the fourth quarter 2010. The non-IFRS operating margin was 23.3% in the first quarter 2011, compared with 21.7% in the first quarter 2010 and 32.4% in the fourth quarter 2010. The year-on-year increase in NAVTEQ’s non-IFRS operating margin was primarily due to higher net sales, offset to some extent by higher operating expenses. Sequentially, the decrease in NAVTEQ’s non-IFRS operating margin was primarily driven by lower net sales and gross margin, offset to some extent by lower operating expenses.
Nokia Siemens Networks
Net Sales. The following chart sets out Nokia Siemens Networks net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.
NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA
EUR million Q1/2011 Q1/2010 YoY Change Q4/2010 QoQ Change
Europe 1 001 1 065 -6% 1 357 -26%
Middle East & Africa 307 297 3% 423 -27%
Greater China 322 275 17% 508 -37%
Asia-Pacific 988 632 56% 978 1%
North America 169 153 10% 226 -25%
Latin America 384 296 30% 469 -18%
Total 3 171 2 718 17% 3 961 -20%

The year-on-year 17% increase in net sales was primarily driven by growth in both the product and services businesses in most regions. The sequential 20% decrease in net sales was primarily driven by a seasonally weaker infrastructure market in the first quarter 2011. Of total Nokia Siemens Networks net sales, services contributed EUR 1.6 billion in the first quarter 2011, compared to EUR 1.3 billion in the first quarter 2010 and EUR 1.8 billion in the fourth quarter 2010. At constant currency, Nokia Siemens Networks net sales would have increased 15% year-on-year and decreased 21% sequentially.
Profitability. Nokia Siemens Networks reported gross profit increased 8% to EUR 847 million compared with EUR 782 million in the first quarter 2010, and decreased 19% compared with EUR 1 042 million in the fourth quarter 2010. The reported gross margin was 26.7% in the first quarter 2011, compared with 28.8% in the first quarter 2010 and 26.3% in the fourth quarter 2010. Nokia Siemens Networks non-IFRS gross profit in the first quarter 2011 increased to EUR 854 million, marginally higher compared with EUR 853 million in the first quarter 2010, and down 18% compared with EUR 1 045 million in the fourth quarter 2010. The non-IFRS gross margin was 26.9% in the first quarter 2011, compared with 31.4% in the first quarter 2010 and 26.4% in the fourth quarter 2010. The lower year-on-year non-IFRS gross margin in the first quarter 2011 was primarily due to a continued intense pricing environment in the infrastructure market, particularly in relation to network infrastructure modernization projects. The higher sequential non-IFRS gross margin in the first quarter 2011 was primarily due to improved efficiency in project execution and a more favorable regional mix, somewhat offset by seasonally weaker net sales.
Nokia Siemens Networks first quarter 2011 reported operating loss was EUR 142 million, compared with a reported operating loss of EUR 226 million in the first quarter 2010 and a reported operating profit of EUR 1 million in the fourth quarter 2010. The reported operating margin was -4.5% in the first quarter 2011, compared with -8.3% in the first quarter 2010 and 0.0% in the fourth quarter 2010. Nokia Siemens Networks non-IFRS operating profit was EUR 3 million in the first quarter 2011, compared with a non-IFRS operating profit of EUR 15 million in the first quarter 2010 and a non-IFRS operating profit of EUR 145 million in the fourth quarter 2010. The non-IFRS operating margin was 0.1% in the first quarter 2011, compared with 0.6% in the first quarter 2010 and 3.7% in the fourth quarter 2010. The year-on-year decline in Nokia Siemens Networks non-IFRS operating profit was primarily due to the lower gross margin, which was offset to some extent by higher net sales. The sequential decrease in Nokia Siemens Networks non-IFRS operating profit was primarily due to lower net sales, offset to some extent by lower operating expenses in the first quarter 2011.
Q1 2011 OPERATING HIGHLIGHTS
Nokia/Devices & Services
- On February 11, 2011, we announced a new strategy, including changes to our leadership and operational structure designed to accelerate our speed of execution in an intensely competitive mobile products market. The main elements of our new strategy are as follows.
- Smartphones: We are forming a broad strategic partnership with Microsoft to combine our respective complementary assets and expertise with the ambition to build a new global mobile ecosystem for smartphones. Under our strategic agreement with Microsoft, the signing of which was announced on April 21, 2011, we plan to adopt, and license from Microsoft, Windows Phone as our primary smartphone platform. We expect the transition to Windows Phone as our primary smartphone platform to take about two years. During the transition, we will continue to leverage our investment in our Symbian platform for the benefit of Nokia, our customers and consumers, as well as developers.
- Mobile phones: In mobile phones, we are renewing our strategy to focus on capturing volume and value growth by leveraging our innovation and strength in developing growth markets to connect the next billion people to their first Internet and application experience. Nokia recognizes that there is a significant opportunity to bring people everywhere affordable mobile products that enable simple and efficient web browsing, as well as give access to maps and other applications and innovations.
- Next-generation disruptive technologies: Under our new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences.
- Nokia’s new strategy is supported by changes in Nokia’s leadership, operational structure and approach to focus on speed, accountability and results.
- Effective February 11, 2011, the Nokia Leadership Team replaced the Group Executive Board and consists of the following members: Stephen Elop (Chief Executive Officer), Esko Aho (Corporate Relations and Responsibility), Juha Akras (Human Resources), Jerri DeVard (Chief Marketing Officer), Colin Giles (Sales), Richard Green (Chief Technology Officer), Jo Harlow (Smart Devices), Timo Ihamuotila (Chief Financial Officer), Mary McDowell (Mobile Phones), Kai Oistamo (Chief Development Officer), Tero Ojanpera (Services & Developer Experience, acting), Louise Pentland (Chief Legal Officer) and Niklas Savander (Markets).
- The first quarter 2011 was the last under our old operational structure. As of April 1, 2011, Nokia has a new operational structure, which features two distinct business units in Devices & Services business: Smart Devices and Mobile Phones. They are focusing on Nokia’s key business areas: smartphones and mass-market mobile phones. Each unit has profit-and-loss responsibility and end-to-end accountability for the full consumer experience.
- Nokia announced the Nokia X1-00, an affordable Series 30-based, music-centric mobile phone equipped with a memory card slot and offering up to 61 days standby time on a single charge. Shipments started during April 2011.
- Nokia announced the Nokia Astound, a sleek stainless-steel design featuring an 8-megapixel camera with dual-LED flash and 720p HD video capture, a 3.5-inch capacitive touch AMOLED display and free turn-by-turn navigation. The Nokia Astound became available exclusively from T-Mobile USA in early April, 2011.
- Nokia started shipments of the Nokia E7, a business smartphone equipped with a full keyboard and 4 inch touchscreen display featuring Nokia ClearBlack technology for improved outdoor visibility.
- Since the end of the quarter, Nokia has announced the Nokia E6 and the Nokia X7, two new smartphones aimed at business people and entertainment enthusiasts respectively. The two devices are the first Nokia smartphones shipping with Symbian Anna, the latest version of the Symbian software featuring new icons and usability enhancements such as improved text input, a faster browser and refreshed Ovi Maps.
- Nokia continued to develop its Ovi services. Highlights for the quarter included:
- Store continued to see increased downloads of applications and content. In early April 2011 the Store reached up to 5 million downloads a day, compared with more than 4 million a day reported in January 2011, boosted by downloads on the latest Symbian devices. Increased demand for apps from the approximate 200-million-strong Symbian consumer base has seen the Ovi Store catalog grow to more than 40 000 apps, with about 1 000 added per week. This momentum has resulted in 158 developers from 41 countries now each surpassing the one million download milestone for their apps. Nokia’s new monetization opportunities for developers are tailored for local markets and include integrated operator billing with 112 operators in 36 markets, more than 25 times more operator billing integrations than Nokia’s nearest competitor.
- Maps continued to scale, driven by the release of a new version of Maps during February 2011 and the increasing number of Nokia smartphones in the market enabled for free navigation. In particular, owners of Nokia smartphones with the new Symbian software – the Nokia N8, Nokia C6-01, Nokia C7 and Nokia E7 – are spending more time navigating online. Online usage of Maps was highest among our consumers in China, India and Russia.
- Nokia announced plans to establish a new manufacturing site near Hanoi in northern Vietnam. Nokia plans an initial investment of approximately EUR 200 million, with further sizeable investments thereafter. The site would further expand Nokia’s manufacturing network, which currently consists of ten major facilities in nine countries.
NAVTEQ
- NAVTEQ announced an expansion of the NAVTEQ LocationPoint Advertising network with new publishers worldwide including Appello, Co-Pilot Live, NAVIGON, Ndrive, Poynt, RIM, Samsung and Telmap.
- NAVTEQ launched real-time traffic for United Arab Emirates, bringing the scope of the company’s NAVTEQ Traffic offering to 23 countries on 5 continents.
- NAVTEQ announced its selection by Nissan to provide specialized location content, such as electric charging stations, for the company’s 100% electric Nissan Leaf.
- NAVTEQ announced that Hyundai chose NAVTEQ’s Advanced Driver Assistance System (ADAS) content for its new navigation platform allowing it to provide a “green” routing option in addition to the traditional shortest and fastest routes.
- NAVTEQ launched NAVTEQ Destination Maps, which enable orientation, routing and guidance in interior spaces.
- NAVTEQ extended its relationship with Panasonic, powering their newest line of LINUX series digital cameras which uses POI data from the NAVTEQ map allowing users to geotag photos and images
- NAVTEQ announced its selection to power the first line-fit navigation system in India with the Tata Aria.
Nokia Siemens Networks
- Nokia Siemens Networks announced that a new purchase price of USD 975 million has been agreed for the sale of Motorola Solutions’ network assets to Nokia Siemens Networks. All necessary regulatory approvals have been received, including unconditional approval from the Ministry of Commerce in China, and Nokia Siemens Networks aims to close the transaction on April 29, 2011.
- Nokia Siemens Networks launched Liquid Radio at CTIA in US, a unique radio access architecture, involving the deployment of Active Antennae, which enables a more economic use of network resources through sharing and redistributing capacity based on user demand. It is supported by the new Single RAN Advanced, Smart WLAN as well as LTE-Advanced carrier aggregation.
- In mobile broadband, Nokia Siemens Networks announced LTE-technology partnership with Telefónica O2 Germany as well as agreements to provide an LTE radio network and services to SK Telecom in Korea, 7 000 LTE base stations to Telecom Italia and an LTE solution to Mosaic Telecom in US.
- Nokia Siemens Networks was the first to demonstrate easy upgrade to 400G optical transport and one of the first telecommunications equipment vendors to participate in the large-scale TD-LTE trial with China Mobile.
- In services, Nokia Siemens Networks announced the expansion of its Global Network Solutions Center in Chennai, India, increasing the number of subscribers it supports ten-fold. Additionally, Nokia Siemens Networks won a combined network and energy management deal with Vodafone Tanzania and renewed its contract with Protelindo in Indonesia.
- In the customer experience management field, Nokia Siemens Networks won deals with Zain Kuwait for subscriber data management, with Telenor Hungary for automated mobile device setting and with Vodafone Malta for bill shock prevention.
- Nokia Siemens Networks presented several new cloud-based solutions including an application development platform provided to Indosat in Indonesia and a communication platform to Cubio in Finland.
For more information on the operating highlights mentioned above, please refer to related press announcements at the following links: www.nokia.com/press, www.navteq.com/about/press.html, www.nokiasiemensnetworks.com/press

Google does search, what are they doing on my phone?

Google may be best known for its search engine – and its place as many people’s homepage – but the company has plenty of other side-projects going on. Android has grown to be one of the biggest, freely-available software for manufacturers to put on mobile phones, tablets, set-top boxes (such as for cable or satellite TV) and other gadgets.

The core Android technology was bought when Google acquired the company responsible – and secured the services of its co-founder Andy Rubin, who is now heading the whole project as a Google senior vice-president – back in 2005. Although rumors suggested the search giant was planning a so-called “Google Phone”, in actual fact the ambition was much bigger: a whole platform for phones cheap and expensive, as well as all manner of other electronics, to use.

“Today’s announcement is more ambitious than any single ‘Google Phone’ that the press has been speculating about over the past few weeks. Our vision is that the powerful platform we’re unveiling will power thousands of different phone models” Eric Schmidt, Google

Google’s argument is that by having a standardized, core platform, phones can be created quicker and manufacturers can spend less tinkering on software and thus make their handsets cheaper and more cost-effective. Meanwhile, those people creating apps – distributed through the Android Market, Google’s equivalent of the iPhone’s App store – have a much bigger target audience to appeal to.

So who’s involved?

Rather than go it alone, Google needed manufacturers (and the suppliers who provide them with components for cellphones) to sign up to the Android ethos. The end result is the Open Handset Alliance (OHA), a consortium of several companies including manufacturers, carriers, software providers, component suppliers and more.

Currently, Motorola, HTC, Samsung, LG and Sony Ericsson are perhaps the best-known handset makers involved in the OHA, while network operators such as Sprint, Vodafone and T-Mobile are all onboard too. While collectively they’ve agreed to help drive Android and promote its adoption, they’ve also agreed not to break its consistency by tinkering too much with the software, despite the fact that Android is considered “open”.

What do you mean, open?

“Open”, or “open-source”, means that the underlying software which Android uses is accessible to anybody interested in taking a look. If you’re a manufacturer, that means you don’t have to ask Google (or indeed pay Google) to use Android on your gadget; if you’re creating software, you don’t have to pay to get access in order to make your apps work. Google’s engineers take responsibility for each Android update, but they include public submissions deemed worthy of being made official, suggestions from manufacturers and others, and everything is documented and released (eventually) online for all to see.

In that way, Android differs significantly from most of the other major mobile phone software platforms popular today. Apple won’t let anybody else use iOS as on the iPhone, for instance, and RIM won’t let anybody use its BlackBerry software. Microsoft gets paid by manufacturers wanting to use its Windows Phone software, and limits what changes can be made to the code.

So the experience on every Android phone is the same?

Not at all. While the core software may be the same, manufacturers are free to make all manner of tweaks to Android as they see fit. Considering the fast pace of the mobile phone segment today, those changes are often done to better differentiate one handset from another. They can vary from a few minor amendments so that the homescreen – the main page of the phone – looks different from everyone else’s, to broad changes that dig deep into the underlying software and make the handset significantly different to use.

That act of changing Android to suit an individual company’s market intentions has led to what’s known as fragmentation, or divergences to “pure” Android as Google releases it. Google has certain limits it insists manufacturers abide by if they want to use its premium software – such as the Gmail app, or getting access to the Android Market of third-party apps – which include the minimum specifications of the phone and what tweaks to the software have been made.

Even within those limits, however, manufacturers have pushed their own ideas and left big differences in the overall Android experience moving from device to device. Pick up an HTC-made Android phone, for instance, and it’s a very different look and feel to, say, a Motorola-made phone. Experts disagree on how dangerous this fragmentation will be to Android’s progression, though a rough rule of thumb is that the more changes a manufacturer makes, the longer it takes for them to push out software updates when Google amends the underlying Android code.

What’s next?

Although manufacturers have experimented with putting Android on devices other than phones, Google’s next “official” push is tablets. These have bigger touchscreens and so lend themselves to a different on-screen layout and features. Google has begun a separate strand of Android development, known as “Honeycomb”, which is intended specifically for tablets, as manufacturers like Motorola, HTC, Samsung, LG and others attempt to take on Apple’s iPad. We’ll cover Android Honeycomb in more depth in a future SlashGear 101.

For more information on Android, check out our sibling site and the bustling forums at Android Community!

Speaking to CNN, the outspoken gaming exec suggested phones lack the imagination and interest Nintendo buyers expect. “We don’t want to be in the phone business,” Fils-Aime said. “We don’t see that as an opportunity. Phones are utilities. Phones are not by definition entertainment devices.”

The Nintendo 3DS was originally tipped to have integrated 3G, with some speculation around a bundled data package (though not voice connectivity) that would have allowed gaming while on the move. Instead, Nintendo stuck with WiFi, and added the peer-to-peer StreetPass system which can create ad-hoc network connections between consoles. A deal with AT&T in the US will see the 3DS logging on to the carrier’s range of WiFi hotspots this summer.

Software pricing is another sticking point. Nintendo president Satoru Iwata has recently struck out at smartphone game prices, suggesting that developers and publishers are putting too little value on the cost of software. “Is maintaining high value games a top priority, or not?” he asked at GDC 2011 last month. ”When I look at retailers and I see the $1 and free software, I have to determine that the owner doesn’t care about the high value of software at all.”

Nonetheless, gaming phones haven’t always been anathema at Nintendo. The company worked with Nokia at one point on a gaming handset project that reached the prototype stage, though was cancelled by the Japanese company’s board before ever getting near the market.

MetroPCS, in its annual filing with the SEC, expressed some worry that its costs could go up if the carriers whose networks it leases decide to raise prices: “In some instances, large national wireless broadband mobile services carriers have been reluctant to enter into roaming agreements at attractive rates with smaller and mid-tier national carriers like us, which limits our ability to serve certain market segments, and recent FCC actions to promote automatic roaming do not resolve these difficulties.”

Meanwhile, MetroPCS looks like a great deal if you live in the urban areas it serves. And if you are a T-Mobile customer, you might just be looking their way.
[via Fortune]

It’s not the first time we’ve heard of charger ubiquity, of course. MicroUSB was adopted as the European standard late last year, with Apple, Nokia, Sony Ericsson, Samsung and others all agreeing to comply.

£14.95 ($24) gets you a pre-pay Alcatel One Touch with a Union Jack fascia and the wedding date – along with Kate & William’s initials – on the back. That’s not all, though; Royalist cockles can be suitably warmed with William & Kate customised wall paper and a special “Wedding March” ringtone.

Beautiful stuff, we’re sure you’ll agree, though it’s worth remembering that you can get the same handset, in basic grey, for £0.01 as the Carphone Warehouse 1p Phone.

Press Release:

CALLING ALL ROYAL WEDDING FANS…

Celebratory Special Edition Royal Wedding mobile phone launches exclusively at The Carphone Warehouse and Best Buy
From 22nd March 2011, The Carphone Warehouse and Best Buy will be offering customers the chance to get in the spirit for the wedding of the year, with a Special Edition Royal Wedding phone. The Alcatel One Touch model is a slim, stylish candy bar with a patriotic Union Jack casing and the royal couple’s initials and wedding date inscribed on the reverse. The phone also features a Prince William and Catherine customised wallpaper and a special one-off ringtone to celebrate this memorable occasion, Felix Mendelssohn’s “Wedding March”. At £14.95 on Pay As You Go, the phone represents great value for money, making it the perfect gift for those who will be joining the celebrations this April.
The Special Edition Royal Wedding phone also boasts a 1.5 inch colour screen and weighs only 68g, while coming equipped with an impressive battery life that offers up to 4.5 hours talk time and up to 13 days standby time. Plus there’s also an FM radio, 64 polyphonic ringtones, a clock with alarm and calculator.
Mark Eastham, Commercial Director for The Carphone Warehouse and Best Buy said, “We are delighted to offer this fun, limited edition, Royal Wedding – themed phone to our customers. It’s great to offer a product which really taps into the national spirit over the coming months, and is still an affordable option for customers”.

Although it’s Opera’s name on the app store, it’s Appia’s tech behind it. In beta testing last month, the companies reckon over 15m users accessed the store, for a total of more than 700,000 downloads per day.

You can browse the catalog by visiting mobilestore.opera.com (even if you don’t have Opera installed) and while the UI isn’t exactly the most inspiring we’ve seen, there’s a decent range of apps on offer. More details for developers here.

Press Release:

Opera launches the Opera Mobile Store, available in over 200 Countries

Oslo, Norway – March 8, 2011

Opera Software, the leading provider of mobile browsers around the world, today announced that the Opera Mobile Store is now open and available at mobilestore.opera.com. This storefront is a featured Speed Dial link in the Opera Mini and Opera Mobile browsers, which makes the storefront immediately accessible by more than 100 million people who use an Opera browser on their mobile phones. The Opera Mobile Store has been built and delivered through a strategic partnership with Appia, the leading provider of open application marketplace technology. The Opera Mobile Store offers both free and paid applications for virtually any mobile platform and device. The Opera Mobile Store is available to Opera users and users of other mobile browsers, on all popular mobile phone platforms in more than 200 countries. The Opera Mobile Store uses Appia’s storefront commerce technology and leverages a wide catalog of applications for phones with Java, Symbian, BlackBerry and Android operating systems. The storefront experience is customized to each user’s phone, providing a tailored catalog based on the phone’s operating system, local language and currency.

“The launch of the Opera Mobile Store supports Opera’s core belief in an open, cross-platform mobile Internet experience by providing Opera users with an integrated storefront of mobile applications,” said Mahi de Silva, EVP, Consumer Mobile, Opera Software. “Our partnership with Appia delivers to all Opera Mobile and Opera Mini users easy access to a wide variety of great content, on any device, all over the world.”

To support the Opera Mobile Store, Opera Software has also launched the Opera Publisher Portal, providing developers with an easy way to get their applications onto the Opera Mobile Store and in front of millions of Opera users every month. In its pre-launch state, the Opera Mobile Store attracted more than 15 million users in February, from 200 countries, achieving more than 700,000 downloads per day. These metrics establish the Opera Mobile Store as a top 10 mobile application store around the world.

“The Opera Mobile Store presents a remarkable opportunity for mobile application developers to distribute localized content through a single, far-reaching marketplace,” said Jud Bowman, CEO of Appia. “Appia is thrilled to partner with Opera to deliver an incredible storefront of applications to Opera users and beyond.”

As before, the concept is to give users a sense of the physical presence of the person they’re communicating with, with cameras and motion-capture systems tracking each party and the Elfoid on the other end replicating their movements and gestures. The initial prototypes can’t actually move themselves, but future versions will get motors and shape-memory components allowing them to move facially and twitch their rudimentary limbs.

The keypad is built into the chest, but there’ll be a voice and gesture based control system for more complex feature navigation. Other hardware includes a temperature sensor and accelerometer. A fully-working model is expected to be finished within five years.

[via Pink Tentacle]

The carrier blames the competitive mobile market and more intensive credit standards fro the dips, with prepaid churn predominantly responsible for a 3.6-percent blended churn figure in the quarter. Operating Income Before Depreciation And Amortization (OIBDA) actually fell year-on-year – $1.34bn in 2010 versus $1.38bn in 2009 – because of a greater number of users stepping up to smartphones, which cost T-Mobile more in subsidies.

Still, that increased smartphone use helped buoy the carrier’s service revenues, a 0.9-percent rise to $4.69bn. Unfortunately lower device sales meant overall revenues were lower. “High contract churn and significant contract customer losses in the fourth quarter of 2010 indicate that we still have a fair amount of work ahead of us” Philipp Humm, President and CEO of T-Mobile USA says, warning that “any turnaround will take time.”

Press Release:

T-MOBILE USA REPORTS FOURTH QUARTER 2010 RESULTS

Service revenues in the fourth quarter of 2010 at $4.69 billion, up 0.9% compared to the fourth quarter of 2009
Blended data ARPU of $12.80 in the fourth quarter of 2010, up 25.5% from the fourth quarter of 2009
8.2 million customers using 3G/4G smartphones as of the fourth quarter, a net increase of 1 million customers in the fourth quarter of 2010
OIBDA of $1.34 billion in the fourth quarter of 2010 was comparable to $1.38 billion in the fourth quarter of 2009
America’s largest 4G network: T-Mobile USA’s national HSPA+ network now covers 200 million people delivering 4G speeds

BELLEVUE, Wash., February 25, 2011 — T-Mobile USA, Inc. (“T-Mobile USA”) today reported fourth quarter of 2010 results. In the fourth quarter of 2010, T-Mobile USA reported service revenues of $4.69 billion compared to $4.65 billion in the fourth quarter of 2009, and OIBDA of $1.34 billion compared to $1.38 billion reported in the fourth quarter of 2009. The number of customers using smartphones continued to increase significantly during the quarter, driving growth in blended data ARPU. Blended data ARPU in the fourth quarter of 2010 was $12.80, up 25.5% from the fourth quarter of 2009. Net customer losses were 23,000 in the fourth quarter of 2010 compared to 371,000 net customer additions in the fourth quarter of 2009.

“Our service revenues increased year-on-year in the fourth quarter. Data ARPU growth rates are outperforming our main competitors as we leverage our 4G network and provide rich and compelling smartphones and data plans. However, high contract churn and significant contract customer losses in the fourth quarter of 2010 indicate that we still have a fair amount of work ahead of us and that any turnaround will take time. With the ongoing implementation of our challenger strategy we are laying the foundation for improved performance going forward,” said Philipp Humm, President and CEO of T-Mobile USA.

“I am pleased with the increase in smartphone adoption and our ongoing improvement in data ARPU. Data growth in the U.S. mobile market continues to accelerate and with the largest 4G network T-Mobile USA is well-positioned to differentiate itself and grow consumer usage. We are not satisfied with contract churn, but we expect that the measures presented at the T-Mobile USA Investor Day in January will lead to improvements in 2011,” said René Obermann, CEO of Deutsche Telekom.

Customers
T-Mobile USA served 33.73 million customers (as defined in Note 3 to the Selected Data, below) at the end of the fourth quarter of 2010, down from 33.76 million at the end of the third quarter of 2010 and 33.79 million at the end of the fourth quarter of 2009.
In the fourth quarter of 2010, net customer losses were 23,000, compared to net additions of 137,000 in the third quarter of 2010 and 371,000 in the fourth quarter of 2009.
Contract customers were the primary driver for the sequential and year-on-year change in net customers.
Contract net customer losses were 318,000 in the fourth quarter of 2010, compared to 60,000 net contract customer losses in the third quarter of 2010, and 117,000 net contract customer losses in the fourth quarter of 2009.
Sequentially and year-on-year, the decline in net contract customers was driven primarily by fewer contract gross customer additions. Traditional postpay gross customer additions decreased in the fourth quarter of 2010 driven primarily by revised credit standards and competitive intensity. FlexPaySM contract gross customer additions also decreased related to competitive intensity.
Connected device net customer additions, included within contract customers (as defined in Note 3 to the Selected Data, below), were lower in the fourth quarter of 2010 than in the third quarter of 2010 and now total 1.9 million at December 31, 2010.
Prepaid net customer additions, including MVNO customers (as defined in Note 3 to the Selected Data, below), were 295,000 in the fourth quarter of 2010, compared to 197,000 in the third quarter of 2010 and 488,000 in the fourth quarter of 2009.
MVNO customer additions were the primary driver of prepaid net customer additions. MVNO customers totaled 2.8 million at December 31, 2010.
Year-on-year, FlexPay No-Contract net customer losses were the primary reason for the decrease in prepaid net customer additions.

Churn
Blended churn (as defined in Note 2 to the Selected Data, below), including both contract and prepaid customers, was 3.6% in the fourth quarter of 2010, up from 3.4% in the third quarter of 2010 and 3.3% in the fourth quarter of 2009.
The sequential and year-on-year increase was driven primarily by prepaid churn.
Contract churn was 2.5% in the fourth quarter of 2010, up from 2.4% in the third quarter of 2010 and consistent with the fourth quarter of 2009.
The sequential increase in contract churn was due primarily to higher churn of connected devices in the fourth quarter of 2010 and competitive intensity.
Prepaid churn increased in the fourth quarter of 2010 to 7.5% from 7.2% in the third quarter of 2010 and 6.8% in the fourth quarter of 2009.
The sequential and year-on-year increase in prepaid churn was driven primarily by MVNO customers.

OIBDA and Net Income
T-Mobile USA reported OIBDA (as defined in Note 6 to the Selected Data, below) of $1.34 billion in the fourth quarter of 2010, consistent with $1.32 billion in the third quarter of 2010 and $1.38 billion in the fourth quarter of 2009.
Compared to the fourth quarter of 2009, OIBDA decreased slightly due primarily to a higher equipment subsidy loss from more customers upgrading to smartphones (as defined in Note 11 to the Selected Data, below).
OIBDA margin (as defined in Note 7 to the Selected Data, below) was 29% in the fourth quarter of 2010, up from 28% in the third quarter of 2010 but down from 30% in the fourth quarter of 2009.
Net income in the fourth quarter of 2010 was $268 million, compared to $320 million in the third quarter of 2010 and $306 million in the fourth quarter of 2009.

Revenue
Service revenues (as defined in Note 1 to the Selected Data, below) were $4.69 billion in the fourth quarter of 2010, consistent with $4.71 billion in the third quarter of 2010 and up slightly from $4.65 billion in the fourth quarter of 2009.
Service revenues in the fourth quarter of 2010 were positively impacted by data revenue growth, driven by the adoption of mobile broadband data plans, the revenue contribution from providing handset insurance services, and higher prepaid revenues from the growth of unlimited usage plans. In the fourth quarter of 2010, T-Mobile USA began directly providing handset insurance services which had previously been provided by a third party.
Year-on-year, quarterly service revenues increased due primarily to data revenue growth and from directly providing handset insurance services which more than offset voice revenue declines. The 0.9% increase in quarterly service revenues year-on-year in the fourth quarter of 2010 was an improvement from the 0.5% year-on-year decrease in the third quarter of 2010.
Total revenues, including service, equipment, and other revenues were $5.36 billion in the fourth quarter of 2010, consistent with $5.35 billion in the third quarter of 2010 but down slightly from $5.41 billion in the fourth quarter of 2009.
Equipment revenues decreased year-on-year due primarily to lower sales volumes.

ARPU
Blended Average Revenue Per User (“ARPU” as defined in Note 1 to the Selected Data, below) was $46 in the fourth quarter of 2010, down slightly from $47 in the third quarter of 2010 but consistent with the fourth quarter of 2009.
Contract ARPU was $52 in the fourth quarter of 2010, consistent with the third quarter of 2010 and up slightly from $51 in the fourth quarter of 2009.
Year-on-year contract ARPU increased as data revenue growth and handset insurance revenues more than offset lower voice revenue.
Prepaid ARPU was $19 in the fourth quarter of 2010, consistent with the third quarter of 2010 and up from $18 in the fourth quarter of 2009.
The increase in prepaid ARPU compared to the fourth quarter of 2009 was due primarily to the growth of customers on unlimited usage plans.
Data service revenues (as defined in Note 1 to the Selected Data, below) were $1.29 billion in the fourth quarter of 2010, up 25% from the fourth quarter of 2009. Data service revenues in the fourth quarter of 2010 represented 28% of blended ARPU, or $12.80 per customer, up from 27% of blended ARPU, or $12.40 per customer in the third quarter of 2010, and 22% of blended ARPU, or $10.20 per customer in the fourth quarter of 2009.
8.2 million customers were using smartphones enabled for the T-Mobile USA UMTS/HSPA/HSPA+ network (as defined in Note 11 to the Selected Data, below) such as the T-Mobile® myTouch® 4G, T-Mobile G2TM with GoogleTM and the Samsung VibrantTM at the end of the fourth quarter of 2010. This was a net increase of 14% or 1 million customers using smartphones from the third quarter of 2010 and more than double the 3.9 million customers as of the fourth quarter of 2009. 3G/4G smartphone customers now account for 24% of total customers, up from 21% in the third quarter of 2010 and 12% in the fourth quarter of 2009.
While messaging continues to be a significant component of blended data ARPU, the increase in the number of customers using smartphones and the continued upgrade of the network are driving Internet access revenue growth with the increasing adoption of mobile broadband data plans.

CPGA and CCPU
The average cost of acquiring a customer, Cost Per Gross Add (“CPGA” as defined in Note 5 to the Selected Data, below) was $290 in the fourth quarter of 2010, consistent with the third quarter of 2010 but down from $300 in the fourth quarter of 2009.
Year-on-year, CPGA decreased in the fourth quarter of 2010 due primarily to the shift in customer base towards MVNO customers and connected devices.
The average cash cost of serving customers, Cash Cost Per User (“CCPU” as defined in Note 4 to the Selected Data, below), was $24 per customer per month in the fourth quarter of 2010, consistent with the third quarter of 2010 and up from $22 in the fourth quarter of 2009.
Year-on-year, CCPU was higher due primarily to a higher equipment subsidy loss as more customers upgraded to smartphones and the cost of directly providing handset insurance services.

Capital Expenditures
Cash capital expenditures (as defined in Note 8 to the Selected Data, below) were $2.8 billion in 2010, compared to $3.7 billion in 2009.
The primary reason for lower cash capital expenditures relates to the 2009 build-out of the national UMTS/HSPA network. In 2010 cash capital expenditures were driven by continued network investment including coverage expansion and the upgrade to HSPA+.
Cash capital expenditures were $828 million in the fourth quarter of 2010, compared to $643 million in the third quarter of 2010 and $697 million in the fourth quarter of 2009.
Sequentially, the increase in cash capital expenditures was due primarily to the build out of the network, including new cell sites and the HSPA+-enabled 4G network upgrade (as defined in Note 10 to the Selected Data, below). With the latest expansion, T-Mobile USA’s 4G network is available in more than 100 major metropolitan areas, reaching 200 million people at the end of 2010.
Year-on-year, the increase in cash capital expenditures was due primarily to payment timing differences.

T-Mobile USA Recent Highlights
On January 20, 2011 T-Mobile USA and Samsung Telecommunications America (Samsung Mobile) revealed the Galaxy S™ 4G. Powered by Android™ 2.2, the Galaxy S 4G is T-Mobile USA’s first smartphone capable of delivering theoretical peak download speeds of up to 21 Mbps, delivering rich entertainment experiences on T-Mobile USA’s 4G network (previous 4G smartphones, such as the myTouch 4G and the G2, were enabled for 14.4 Mbps). The Samsung Galaxy S 4G is exclusive to T-Mobile USA and went on sale on February 23.
On February 1, 2011 T-Mobile USA announced that it will introduce the T-Mobile Global for BusinessTM plan, a unique approach to international voice and data roaming that reinforces the company’s commitment to support multinational corporations, as well as government agencies and U.S. enterprises conducting business internationally.
On February 2, 2011 T-Mobile USA and LG Mobile Phones unveiled their Android™ 3.0 (Honeycomb)-powered tablet, the T-Mobile® G-Slate™ with Google™ by LG. With a brilliant, high-definition (8.9-inch, 3D-capable multi-touch display, the T-Mobile G-Slate delivers a groundbreaking mobile entertainment experience, including the ability to record 3D and full HD video. The tablet is expected to be available this spring. T-Mobile USA’s 4G network, America’s largest 4G network™, is currently available in more than 100 major metropolitan areas, reaching 200 million people nationwide. With aggressive plans to expand and double the speed of its 4G network in 2011, T-Mobile USA expects that 140 million Americans in 25 major metropolitan areas will have access to increased 4G speeds (HSPA+ 42 Mbps) by mid-year 2011.
On February 3, 2011 T-Mobile USA was awarded the highest ranking for the second consecutive time (and the 11th time in the last 13 surveys) in J.D. Power and Associates’ 2011 Wireless Customer Care Performance StudySM — Volume 1.
On February 17, 2011 T-Mobile USA continued its streak of recognition for excellence in customer satisfaction with the fourth consecutive highest ranking in J.D. Power and Associates’ 2011 Wireless Retail Sales Satisfaction StudySM— Volume 1 results. T‑Mobile USA ranked not only highest overall, but the highest in each area for which the study measured customer satisfaction.

T-Mobile USA is the U.S. wireless operation of Deutsche Telekom AG (OTCQX: DTEGY). In order to provide comparability with the results of other US wireless carriers, all financial amounts are in US dollars and are based on accounting principles generally accepted in the United States (“GAAP”). T-Mobile USA results are included in the consolidated results of Deutsche Telekom, but differ from the information contained herein as Deutsche Telekom reports financial results in Euros and in accordance with International Financial Reporting Standards (IFRS).

This press release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations from the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below following Selected Data and the financial statements.

Credit: Liane Yvkoff/CNET

It does plug into the cigarette lighter, so it doesn’ t look all that different from a standard car charging system, but since the charger mounts on the windshield, it puts the phone more at eye level for easier access to navigation apps. For every smartphone you want to charge, you will need to purchase a Powermat Battery Door separately ($19-$29).

Powermat will be releasing other wireless charging products for the home and office in 2011, such as a rechargeable backup battery and a rechargeable travel mat. They are also marketing a line of Powermat integrated furniture, like tables, that we may see in airports or cafes (Starbucks?). The wireless car charger is expected to be released in the third quarter of 2011, and will sell for $59.

[via CNET]

Nokia’s executives and board may be convinced that Windows Phone and Microsoft is the best way forward, but a lot of the company’s fanbase isn’t. Asked whether Nokia was potentially behind OEMs with an established history of producing hardware for other company’s OSes, or even worse whether Nokia faced losing control over its own destiny, Elop denied that the relationship with Microsoft is either one thing or the other. It’s a “unique relationship” he argued, “with joint assets, services and joint responsibility for building an ecosystem … we placed a big bet on them, they placed a big bet on us.” Still, though, he admitted it was a considerably change for the company. “This is a shift for Nokia; the elements over which we do or do not have absolute control.”

Elop made headlines by arguing that Android was Nokia’s primary competitor, not other Windows Phone OEMs, and the outspoken CEO stands by that assertion. “Even if a company today makes money with Android, the risk of commoditization is high, margins come under increasing pressure” he explained.

“In joining the Windows Phone ecosystem, looking at the economics, there are margins available … if we create a three horse race, the economic construct of the industry will be better for handset manufacturers and for operators” Stephen Elop, CEO, Nokia

Despite arguments that Nokia’s privileged relationship with Microsoft might leave other OEMs at a disadvantage, Elop insists that the company’s involvement will only improve the platform’s potential as a whole. “It’s an important point, our most important competitor is Android and Google” he told us, “as we entered into discussions with Microsoft, the question was what can we do to strengthen the ecosystem. Success will attract more competition; if we’re more successful with the platform then internal competition within Windows Phone becomes important.”

That added developmental investment in Windows Phone will only partially benefit OEMs like HTC, Samsung and LG, however. Nokia will keep some “exclusive differentiators” and make some generally available; so, it could push the photography side of its devices, aiming to make Nokia Windows Phones the de-facto choice for those focused on images. Elop also argued that the current range of skins – like HTC’s Sense, Samsung’s TouchWiz and others – aren’t really true differentiation, and that they’re not deep enough. Instead, Nokia will be looking to leverage hardware and services, “experiences we can build that are differentiated within the framework of Windows Phone.” That could include location-based services, local-based ads and augmented reality.

So, if Symbian is being phased out, why should anybody continue buying handsets? “We are in the environment of new devices every month” Elop pointed out, “but the rest of the world doesn’t work like that.” Instead, he argued, people choose a device based on their needs at the time. “If you go into a store and listen to a conversation” he suggested, “it’s about the quality of the hardware, user experience, quality of the brand – that matters a great deal in the purchase decision.”

Still, even if the migration away from Symbian won’t change overnight, Nokia is looking to pave the way for a shift of users from the old platform to Windows Phone. “We have to do a good job of managing that transition” Elop agreed, suggesting that Nokia is investing in efforts to make sure users can bring their data and other aspects of their current mobile experience to the Microsoft OS.

The path for developers perhaps won’t be so clear. Elop defended the decision not to port Qt to Windows Phone, suggesting that “if we create an alternative development platform, we risk an environment of mixed development.” It’s “architecturally possible but creates challenges” he argued, “we’re going to spend a tonne of money attracting developers, are we going to promote two platforms?” That would create forking from a messaging perspective and from a mindshare perspective, and it would lead to questions at every Windows Phone OS update as to whether Qt developers were being left one step behind.

Still, the question Elop suggests we should be asking is when Qt will be put onto mobile phones, not smartphones. “The vast volume of phones aren’t smartphones, but mobile phones” he says, “renewed innovation actually means whether you are putting Qt down into mobile phones.” Still, Nokia hasn’t made that decision yet, but MeeGo will be Qt-enabled – even though there’s only one device on the roadmap for 2011 – and there will be a quarter of a billion Qt-compatible devices in the market in the months and years ahead, so he disagrees that the platform is a closed avenue for developers. Whether coders with limited resources will agree that Qt has the legs ahead of it to warrant investment of time and energy remains to be seen, however.

As for conspiracy theories that Elop’s past at Microsoft saw him injected into Nokia to pave the way for Windows Phone’s adoption, the CEO denied there was any conflict of interest. “We went through a process of evaluating options – Symbian and MeeGo, Android or Windows Phone – and we made sure we had the whole executive team involved in that process” he told us. “When they had to make a recommendation to the board, the team was unanimous – after months of work, assessing internal details, our own problems within Nokia – and the whole management team presented to the board” Elop said, “they could all interact, then the board made the final decision on Thursday night.”

The Nokia board then made the final checks and balances, and came to a decision the night before Elop’s presentation on Friday morning in London. With it all so last minute – and with Steve Ballmer, Microsoft CEO, actually making the trip to the UK for the event – we did ask whether Google had Andy Rubin on standby, had the board opted for Android instead. Elop wouldn’t tell us, quoting confidentiality agreements, but he did point to the “tweetbomb” Rubin dropped earlier in the week as a suggestion that it “might have correlated with a sense that they were not in the winning seat.”

Finally, Elop had some comments on the reaction of the Nokia faithful, both employees and those users still devoted to the company and surprised by its decision. “I’ve spent four and a half months looking at the pros and cons, but I’ve also had an emotional journey” he explained, “employees have only had three days.” There’s equal focus being placed on making sure Microsoft and Nokia engineers can work together well; “you can’t build products unless you have a group of people who can sit in a room and love each other” Elop said. As for how the Seattle-based Microsoft team and the Finland-based Nokia team found their common interests, well, even with a Canadian at the helm some old company traditions die hard: the two teams met in the middle, in Reykjavik, and climbed into hot baths together.

“We don’t have bad relationships with carriers, we spoke throughout this process with them” he told us. “We have an obligation to put competitive products into the marketplace – we had a Symbian device which co-operatively we had worked with the AT&T folks” he suggested, likely referring to the leaked Nokia X7, “[AT&T] didn’t think it was competitive, relative to iPhone and Android; the indication from them was “you’re not going to get a lot of love, sorry” so we faced the decision, do we throw money at this or do we rethink?”

In the end, Nokia axed its plans but is “considering everything” moving forward: that could include CDMA devices, and Elop has been in talks with all of the major US carriers. Last week, the CEO said that the reaction of carriers to the news of Nokia adopting Windows Phone had been broadly positive.

And he quickly determined that MeeGo would take too much effort and investment on their part to get developers on-board and create their own ecosystem around this mobile OS. While Intel was a formidable partner, their business model did not allow them to be as aggressive in pushing MeeGo and developers in a direction that would make MeeGo as competitive as it needed to be in order to compete with Android and IOS. With Nokia backing away from MeeGo its future is uncertain.

And of course, licensing iOS and HP’s webOS were out, and that left just Microsoft as the only real choice he had when it came to re-crafting Nokia’s future. He needed a solid OS and the ability to tap into an ecosystem that had potential to grow. The fact that he was a former Microsoft exec made it easier to go to Steve Ballmer and cut a deal that was more favorable and gives them additional flexibility within the license agreement to actually create smartphones that could be differentiated.

Given those stark realities, Microsoft was the only mobile OS that would allow Elop to try and put Nokia back on track and even give them a fighting chance against iOS and Android. The operative word here is “fighting-chance.” This is still a big gamble. One cannot emphasize enough the head start that Apple and Google have in the smartphone market. And the momentum they have with the developer community would seem almost insurmountable.

However, Microsoft and Nokia are still powerful forces and together they could do some interesting things. If Nokia can really tweak Windows Phone 7 to add their own custom touches and it still works with the Windows Phone software ecosystem, they could ride this toward some interesting ways to differentiate. This will be especially true if they are able to find ways to make an optimized UI that is tied to various devices across full featured phones, smartphones, tablets, netbooks and even laptops and PCs. Imagine having a single UI across all of these devices that sync with each other and have applications on each platform that scale and work together seamlessly. They could not do this with an Android solution, but with Microsoft, they could use this OS and partnership to really set them apart from the competition.

In fact, if you read much about the HP webOS launch this week you know that similar thinking is going on there. They see webOS running on every device across their range of products and using Synergy to tie them all together seamlessly. Or, at least, that is their vision. And I believe that Nokia and Microsoft are hatching a similar vision. In fact, I believe that this is really at the heart of this partnership. While Windows Phone 7 is at the center of their agreement, Nokia now has a way to extend their reach in many directions.

Also, it would be wrong to judge the success of this deal through a US centric viewpoint. While the US is important for Microsoft and Windows Phone 7, I believe Microsoft will push their current partners to enhance their position in this market. But Nokia offers Microsoft the world. This deal has much more to do about Microsoft expanding their mobile platforms around the world and leveraging Nokia’s worldwide position to do this.

From the developer’s standpoint, this now gives them a solid third mobile OS to back. The promise of tens of millions of Nokia’s smartphones selling worldwide should be quite attractive for software developers. This is especially true when it comes to localized markets. Nokia knows these local markets well and if Nokia and Microsoft do their job right and help developers create localized apps for these markets around the world, this partnership has a real chance to succeed.

Although this took a serious leap of faith for Stephen Elop and the Nokia management, it was the only one that would allow them to still deliver Nokia flavored solutions and also tap into their already strong position in these world markets. And when you look at this deal/partnership, think worldwide and beyond the smartphone. I am convinced there is a much broader strategy in place that involves many devices, not just phones.

Yes, Elop was backed into a corner. But while it is way too early to tell whether they can pull it off, this most likely gives him and Nokia at least a chance to keep Nokia relevant and part of the mobile landscape of the future.

Asked how Nokia expects to cope with the ongoing impact of low-cost device manufacturers, Elop said that the company’s engineers are already looking at new chipset and other designs which will keep them competitive. ”There’s no reason that we believe we can’t believe with the Shenzhen ecosystem in a variety of ways” Elop suggested, “[We have the] ability to do much more in the mobile phone space, but it requires more investment.”

However, as part of Nokia’s “web for the next billion” strategy, the company will continue to focus on the Mobile Phone space and the “billions of aspirational consumers” in developing markets.

Symbian won’t die instantly either; Nokia is expecting sales in the region of 150m in 2011, and potentially more. The OS will live on as a “franchise platform” beyond that ,while MeeGo will be treated as a development platform for exploring future platform possibilities.

“We need to be in the United States in one way, shape or form, we have to have a viable way to reopen doors” he commented, suggesting that – despite many opinions otherwise – the US is where the pace of the smartphone market is set. That might make MeeGo a difficult sell, despite Intel’s investment in the project; “For it to be a valid ecosystem, that also implies other (phone makers), our competitors–would be attracted to it as well,” Elop explained, pointing out that without collaboration the OS might lack “credibility.”

“The combination of Android’s existing market share plus the market share that Nokia could bring to the Android ecosystem is a very large number and would signal a very substantial shift in the dynamics of the mobile operating system market” Stephen Elop, CEO, Nokia

As for Android and Windows Phone 7, the CEO only had positive things to say, though that may have changed in the meantime after Google VP Vic Gundotra’s sarcastic snipe earlier this week.

“Windows Phone is in its early formative stages in terms of getting customer traction and so forth. It’s a beautiful product and I say that as as someone who is competing with it” Stephen Elop, CEO, Nokia

It seems Elop will look to different strategies at the low end of the market, too, where the leaked memo believed to be written by the CEO highlighted the danger of cheap Chinese manufacturing. SlashGear will be at Nokia’s capital markets day tomorrow, Friday February 11, so expect all the news – whatever surprises Elop announces – here.

Android had been one of the persistent suggestions – alongside Windows Phone 7 – for a potential OS switch for Nokia, on the back of CEO Stephen Elop’s comments that the company has to do better in the ongoing ecosystem war. Whether this is Gundotra’s attempt to criticise both Nokia and Microsoft, or Nokia’s two existing platforms Symbian and MeeGo, remains to be seen.

“The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience” Elop admits, going on to highlight that “Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes.” As for MeeGo, the CEO suggests that despite the fanfare, “at this rate, by the end of 2011, we might have only one MeeGo product in the market.”

“This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally”

Elop blames Nokia’s insistence on trying to challenge rivals on a device-by-device basis, clinging to Symbian when its competitors are focused on whole ecosystems. “Nokia, our platform is burning” he concludes, pointing to the Capital Markets Day event on Friday – which SlashGear will be attending – for when employees and Nokia fans alike will hear the first stages of a “huge effort to transform our company.”

It’s worth noting that not everybody believes the memo to be legitimate, however. Former Nokia exec Tomi Ahonen believes it to be “a well-written hoax” that “reads more like a US analyst, who is trying to influence the discussion, who knows much of the Nokia story, but not the whole story.”

The exact content of the memo is yet to leak, but according to sources it breaks down the three elements of Elop’s platform comments – to “build, catalyse or join” – into three software directions Nokia could take. “Build” refers to Symbian and MeeGo, it’s suggested, while “catalyse” refers to Windows Phone 7 and “join” to Android. TechCrunch’s sources suggest that a Windows Phone 7 adoption is most likely, though not until 2012 as Nokia attempts to better penetrate the North American market.

That, it’s rumored, leaves MeeGo “on life support”, while Symbian continues its descent into Nokia’s more basic ranges. SlashGear has heard separately that Nokia’s big announcement this Friday and at MWC 2011 next week is indeed platform-related, rather than addressing specific hardware; Elop is said to be weighing “how much drama” he wants to create at the Friday financial event.

Nokia’s plans for the near future are currently hotly argued, after Elop admitted that the company “must build, catalyse or join a competitive ecosystem” and prompted speculation it would consider platforms other than Symbian and MeeGo. On Friday, rumors circulated that Nokia might adopt Windows Phone 7 in an attempt to jump ahead in the US market; the company’s investors meeting in London, UK, this coming Friday is expected to see a significant announcement made, while SlashGear has heard that there will be a similarly important platform announcement at Mobile World Congress 2011 the following week.

WirtschaftsWoche’s sources tell the magazine that Nokia has headhunters looking for execs with international software experience to rebuild the company’s structure and hopefully set them back on track in the face of Android, iOS and other platforms.

If true, the restructuring could be some of the most considerable seen in Nokia’s history. We’ve reached out to Nokia for official comment, and will update when we know more.

Update: Nokia has told us it “does not comment on speculation and rumor.” Guess we’ll have to wait and see for the potential fall-out on Friday February 11.

[via mobilesguruji]

Overall, IDC reckons the global mobile phone market grew 17.9-percent in the last quarter of 2010, exceeding 401m units of shipped devices. Altogether that makes 1.39bn shipments in 2010 as a whole, an 18.5-percent increase over 2009. ZTE’s success – the first time in IDC’s rankings that the company has broken into the top five – is put down to its low-cost portfolio of feature phones and smartphones, increasingly popular as developing users upgrade to affordable data-capable devices.

Samsung’s success echoes the company’s financial results, published earlier today, in which the company announced over 80m devices sold in Q4 2010. IDC’s smartphone-specific research is due to be published next week.

Press Release:

Mobile Phone Market Grows 17.9% in Fourth Quarter, According to IDC

27 Jan 2011

FRAMINGHAM, Mass. Jan. 27, 2010 – The worldwide mobile phone market grew 17.9% in the fourth quarter of 2010 (4Q10), a new quarterly high driven by smartphones. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 401.4 million units in 4Q10 compared to 340.5 million units in the fourth quarter of 2009. Vendors shipped a total of 1.39 billion units on a cumulative worldwide basis in 2010, up 18.5% from the 1.17 billion units shipped in 2009.

The strong quarterly and annual growth comes after a weak 2009, which saw the market decline by 1.6%. A stronger economy and a wider array of increasingly affordable smartphones helped lift the market to its highest annual growth rate since 2006 when it grew 22.6%.

“The mobile phone market has the wind behind its sails,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “Mobile phone users are eager to swap out older devices for ones that handle data as well as voice, which is driving growth and replacement cycles.”

It’s not just smartphone-focused suppliers that capitalized on the mobile phone market’s renewed growth last year. ZTE, a company that sells primarily lower-cost feature phones in emerging markets, moved into the number 4 position worldwide in 4Q10. It is the first quarter the Chinese handset maker finished among IDC’s Top 5 vendors.

“Change-up among the number four and five vendors could be a regular occurrence this year,” added Ramon Llamas, senior research analyst with IDC’s Mobile Devices Technology and Trends team. “Motorola, Research In Motion, and Sony Ericsson, all vendors with a tight focus on the fast-growing smartphone market who had ranked among the top five worldwide vendors during 2010 are well within striking distance to move back into the top five list.”

Market Outlook

IDC believes the worldwide mobile phone market will be driven largely by smartphone growth through the end of 2014. “Feature phone users looking to do more with their devices will flock to smartphones in the years to come,” noted Restivo. “This trend will help drive smartphone sub-market to grow 43.7% year over year in 2011.”

Regional Analysis

The Asia/Pacific mobile phone landscape was driven by low-cost and high-end devices in 4Q10. Domestic brands in India like G-Five, Micromax, and Karbonn grew with aggressive advertising and branding activities for entry-level phones, while ZTE and Huawei worked closely with carriers to push low-cost Android smartphones in China. High-end smartphones, however, were equally well-received, resulting in higher shipments from Apple, Samsung, and HTC in 4Q10. Korea had the biggest smartphone appetite accounting for two-thirds of phones shipped in 4Q10, up from one-eighth a year ago.

In Western Europe, carrier smartphone promotions motivated more users to scrap their feature phones, resulting in strong smartphone sales. The iPhone 4, HTC Desire, Nokia N8, Samsung Galaxy S, and Blackberry 8520, which were among the region’s top sellers, contributed to the overall market’s growth. Consequently, the feature phones experienced their sharpest decline ever. In CEMA, quarterly volumes breached the 70 million unit threshold for the first time, marked by an influx of Chinese and unbranded handsets. Meanwhile, smartphones experienced brisk growth due to falling prices and more Android-powered devices.

The United States mobile phone market closed out the year with more vendors becoming more active in this space. Market leaders RIM and Apple maintained a healthy lead, while newcomers Dell, Huawei, Kyocera, and Sanyo launched their first smartphones to the U.S. market. In addition, 4G took another step forward with the commercial launch of Verizon Wireless’ LTE network. Similarly, in Canada, the focus was on smartphones. Android-powered devices from multiple players, along with incumbent vendors RIM and Apple, pushed shipment volumes to a new record level.

In Latin America, sustained user interest in smartphones drove the market, resulting in strong results for Nokia, RIM, and Samsung as well as relative newcomer Huawei. Smartphones, as well as QWERTY-enabled feature phones, helped boost social networking and messaging, two fast-growing trends in the market. Finally, Alcatel and ZTE once again thrived in the inexpensive entry-level device market.

Top Five Mobile Phone Vendors

Nokia overall unit volume slipped 2.4% in the fourth quarter, which the vendor attributed to the “intense competitive” environment and component shortages. The result was lower feature phone shipments. The company did, however, grow smartphone volume by 38% compared to the same prior-year quarter. Nokia launched the C7 and the C6-01 touchscreen smartphones as well as the C3 combination touchscreen & QWERTY device in the fourth quarter. Still, smartphone ASPs dropped 16% on a year-over-year basis.

Samsung reached a new milestone in 4Q10, pushing through the 80 million unit threshold for the first time in the company’s history and improving its profit margins for the second straight quarter. Driving shipment volumes was the continued success of its Galaxy S smartphones, of which the company sold nearly ten million units worldwide for the year. Similarly, Samsung’s mass-market and touch-screen phones earned a strong following in emerging markets.

LG crossed the 30 million unit mark for the quarter, due in part to the success of Optimus One smartphone sales across multiple regions. LG’s smartphone strategy is paying off; the company sold more than a million units in the first month of availability, and newer versions (Optimus 2X, Optimus Black) are expected later this year. Meanwhile, LG’s feature phones comprised the majority of shipments, but an aging portfolio and lower prices within emerging markets left the company vulnerable to the competition.

ZTE finished the quarter in the number four position with shipments steadily spreading from its home country of China to developing regions such as Africa and Latin America. ZTE has also recently made inroads in developed markets such as Western Europe and the U.S. as well as Japan. While most of its shipments have historically concentrated on entry-level and mid-range devices, some of its recent success is directly attributable to its rapidly expanding smartphone line, such as the Android-based Blade and Racer devices. Meanwhile, its S- and C-series entry-level feature phones provided additional competition within emerging markets.

Apple The iPhone maker slipped to the number 5 position despite a record quarter for unit shipments and the departure soon thereafter of CEO Steve Jobs on medical leave. It was the company’s second straight quarter on IDC’s Top 5 list. The iPhone sold particularly well in developed regions of the world, such as North America and Western Europe. Apple, which said it could have sold more iPhones last quarter had it been able to make more, is set to introduce the touchscreen device on Verizon next month.