Can Nokia's blowout quarter of Lumia sales save Windows Phone?

Nokia sold a record number of Lumia Windows Phones in the third quarter, including a nearly 400% jump in sales in the U.S. and North America. Is that enough to save Windows Phone, or is Microsoft's smartphone platform doomed to fail?

The news certainly seems encouraging. Nokia reported that in the third quarter, it sold 8.8 million Lumia phones, an increase of 19% compared to the previous quarter when it sold 7.4 million, and a 40% jump compared to the quarter a year ago, when it sold 6.3 million.

In the U.S. and North America, the news was even better. It sold 1.4 million Lumia phones in the third quarter, an increase of 180% compared to the previous quarter when it sold a half a million, and a 367% increase compared to a year ago, when it sold 300,000.

Nokia said that much of that growth was due to sales of the inexpensive Lumia 520, not the costly, higher-end devices. That should be no surprise. Windows Phone's strength has primarily been among the budget-conscious upgrading to Windows Phone from a feature phone. Kantar Worldpanel ComTech analyst Mary-Ann said earlier this year:

"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."

The 8.8 million worldwide sales sounds impressive until you compare it to the competition. Apple just announced that it sold 33.8 million iPhones in the quarter and Samsung sold 88.4 million smartphone. Nokia wasn't among the top five smartphone vendors in the quarter, according to IDC. Windows Phone only has a 3.2% market share in the U.S. market, according to Comshare. Analysts had to search deep for something to praise in Nokia's results. Neil Mawston, executive director at Strategy Analytics, told Computerworld:

"The number of handsets it sold is on the low side, but the smartphone number is heading in the right direction."

That's certainly damning with faint praise.

Windows Phone won't take off until it closes the app gap it has compared to iOS and Android. In August, Garter reported that the app gap is seriously hurting Windows Phone's chance to gain market share. And Bloomberg recently reported that developers are avoiding Windows Phone because there's so little payoff writing for it. Bloomberg noted:

Interviews with more than a dozen developers show that the odds remain stacked against Microsoft -- even with the Nokia deal, which is set to close in the first quarter of 2014. Developers said that while Nokia's handset business gives Microsoft a ready pipeline of Windows Phone devices, it isn't enough to overcome a lack of users, or the cost and confusion related to the technical specifications of writing for the company’s phone and tablet devices.

So while Nokia's numbers were good, they weren't nearly good enough. And until the app gap closes, Windows Phone will remain an also-ran.

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