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Nokia's anemic U.S. sales a low point amid weak Q2 results

The Finnish smartphone maker has yet to crack this market, suggesting that exclusives may not be the best bet for the company.

Maybe the Lumia 1020 will turn things around?
Sarah Tew/CNET

Well, it didn't long for the good will built up by the introduction of the Lumia 1020 to wear off.

Nokia posted disappointing second-quarter results early Thursday, with revenue and unit sales that fell below analyst expectations. Its revenue fell 24 percent from a year ago to 5.7 billion euros ($7.5 billion), while its mobile device unit sales also dropped by more than a quarter to 61.1 million.

Nokia shipped 7.4 million Lumia smartphones in the second quarter, also below analyst expectations but not disastrous. In fact, that figure tops the 6.8 million BlackBerrys shipped in that company's last reported quarter, which includes 2.7 million BlackBerry 10 devices, an indication of which platform has taken the lead in the race for No. 3 behind Android and iOS.

But focus a bit further on North America, and things continue to look grim. The company only shipped 500,000 units in the quarter, a 17 percent decline from a year ago, although an uptick from the 400,000 units shipped in the first quarter. U.S. sales likely made up a large chunk of that small number.

The results underscore a continued problem for Nokia: its weak brand and inability to generate any momentum in North America. In a quarter when it finally added a Lumia device to Verizon Wireless's lineup, it still saw muted progress.

And in case anyone doesn't think Nokia doesn't care about the U.S. market, note that the Lumia 1020 launch was held in New York, just like its previous flagship device, the Lumia 920. The company has poured money into splashy launches and loud campaigns here, to little effect.

The continued stateside stagnation also calls into question Nokia's long-standing partnership with AT&T, and whether that has benefited the Finnish smartphone maker. At the tail-end of the Lumia 1020 launch, an audience member called AT&T a "crappy partner" and asked how it would ensure better treatment.

Nokia CEO Stephen Elop said the Lumia 1020 would receive a more aggressive push from AT&T and Microsoft, and in an interview with CNET, he further defended the practice of sticking with exclusive deals.

"We're very much having to make decisions where we place our bets and where we concentrate our resources," he said. "It's more effective to go with a specific partner."

But after more than a year of exclusives, primarily with AT&T, Nokia still doesn't have much to show for it.

AT&T Mobility CEO Ralph de la Vega at the Lumia 1020 launch. Sarah Tew/CNET

The problem is the constant one-upmanship found in its own lineup. AT&T had the lock of the Lumia 920 and its unique low-light camera. When Verizon Wireless finally got its own, thinner version, the Lumia 928, Nokia unveiled an all-metallic version -- the Lumia 925 -- that would be an exclusive to T-Mobile.

Two months later, Nokia showed off the Lumia 1020, which again is an exclusive to AT&T. With the best device on AT&T, how aggressively will Verizon and T-Mobile market their own Lumia products?

Nokia insists that the exclusive strategy is the best one to get carriers interested in marketing the product, but the lack of parity between devices offers little incentive to the carriers with the inferior products to get to enthusiastic.

Even as exclusives persist, the top-selling phones -- the Apple iPhone 5, Samsung Galaxy S4, and HTC One -- are all widely available on multiple carriers.

Hopefully, Nokia eventually follows the same path and gives everyone a crack at its best smartphones. Clearly, staying on the exclusive track hasn't panned out.