Nokia shows signs of life, but North America market still a blip

Sales remain small -- albeit growing -- in region despite a strong push by AT&T and its phones showing up at Verizon Wireless.

The Lumia smartphones on display at the flagship Nokia store in Helsinki, Finland. Roger Cheng/CNET

Nokia's got a pulse again, but it will take a lot more juice to fully jolt the company back to life.

The Finnish mobile device maker today reported its fourth-quarter results , and the signs are encouraging. After several quarters of losses, the company returned to profitability. Its Lumia smartphone brand, which features the Windows Phone operating system, appears to be taking hold, with the company selling 4.4 million units worldwide in the period.

Stlil, Nokia has a lot of more work to do. While it made steady progress in North America, this remains a relatively small market for Nokia. And that's despite AT&T's flagship push of the Lumia 920 and Verizon Wireless selling a Nokia phone for the first time in several years. The scant numbers basically underscore the difficulties the Finnish company faces as it attempts to breach the smartphone market.

Regardless of its nascent presence in North America, this was one of the few markets that showed growth. Its revenue in the region nearly quadrupled to 196 million euros ($261.5 million), although unit sales only rose to 700,000 from 500,000 a year ago, when the Lumia smartphones hadn't yet launched in the U.S.

While Nokia's sales in North America were positive, they were dwarfed by sales in other regions, highlighting the intense competition in the U.S. market. In 2012, Nokia went big early with a splashy launch of the Lumia 900, and then rode the coattails of Microsoft's Windows 8 push in the second half of the year.

Most of the sales in the U.S. likely came from AT&T, which has touted the Lumia 920 as its exclusive flagship smartphone. It's unlikely that the Lumia 820 at Verizon made much of an impact, with so much of Verizon's sales going to Androids and iPhones and with the Lumia 820 receiving little marketing or sales support.

Nokia CEO Stephen Elop has talked about slow and steady progress, and the company at least appears on track for that. This year could be better with Elop hinting at a possible flagship phone for Verizon Wireless , which would pair well with another expected strong offering at AT&T.

"It's still a struggle for Nokia in North America, yet they are making some progress," said Mark Sue, an analyst at RBC Capital. "There's a lot of inertia at the carriers. There seems to be some fatigue factor with the popular brands which may give those with something new and something different and a more attractive price point a small window of opportunity."

Read more: Nokia on the edge -- inside an icon's fight for survival

But in the U.S., it's still unclear whether the Windows Phone brand will take hold. At least for the early part of the year, the carriers appear to be preparing to put their resources behind Research In Motion's BlackBerry 10 operating system, which debuts next week. Nokia is also still competing with HTC's Windows Phone 8X, which Microsoft anointed its flagship device for Windows Phone 8.

And while the 4.4 million Lumia smartphones sold around the world mark a sign of progress, it's a tiny percentage of the massive number of Androids and iPhones sold each quarter. Apple, for instance, sold 47.8 million iPhones in the October-December quarter.

Thus, despite getting back to profitability, Nokia must continue to act with a sense of urgency.

Updated at 6:56 a.m. and 8:47 a.m. PT to add the revenue in euros and dollars, and to add comment from an analyst.

 

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