Nokia's booming Windows Phone sales set a world record. So why is Lumia dying in the U.S?

Nokia had its best quarter ever for its Lumia Windows Phone line, with 7.4 million devices sold worldwide. But North American sales are lagging -- in fact, they haven't budged since at least late 2011. What does this mean for the future of Windows Phone?

Nokia's second-quarter earnings report for 2013 was a classic good news/bad news one. On the upside, sales of its Lumia line of Windows Phones is booming -- an all-time high of 7.4 million, well over the 5.6 million it sold in first quarter of the year, and the 4.4 million it sold a year ago. On the other hand, Nokia lost $150 million in the quarter. That's well below the massive losses of 2012. Still, no company can be happy losing $150 million in a quarter.

The worst news may be the lagging North American performance of Lumia Windows Phone devices, with sales of only 500,000. That's a jump over the previous quarter of 400,000. But that increase is misleading, because in the fourth quarter of 2012 North American sales were up to 700,000. Way back on the fourth quarter of 2011, Lumia sales were at 500,000. Since then, sales have essentially been static, ranging from 300,000 per quarter to 700,000 per quarter.

Reasons for the lagging sales are hard to come by. First-time, budget-minded buyers are Windows Phone's sweet spot, according to Kantar Worldpanel ComTech analyst Mary-Ann Parlato, and there seem to be plenty of them. She said recently:

"Windows strength appears to be the ability to attract first time smartphone buyers, upgrading from a featurephone. Of those who changed their phone over the last year to a Windows smartphone, 52% had previously owned a featurephone...with over half of the US market still owning a featurephone, it's likely that many will upgrade over the coming year, which will ultimately contribute to more growth for the Windows brand."

Her prediction doesn't match Lumia's actual sales for the quarter, so perhaps she's simply wrong, or there's some time lag before what she predicts will actually kick in.

Whatever the cause, the latest Nokia report doesn't bode well for the future of Windows Phone in the U.S. Next quarter may well tell the tale of the operating system's future in North America.

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