In today's Microsoft (MSFT) shareholder's meeting, Steve Ballmer said Microsoft's Windows Phone sales are four times higher than they were last year. Although we don't have the precise timeframe this alludes to, we can still speculate what this might mean for Nokia (NOK).
Nokia's Share Of Windows Phone and Windows Phone Market Size
Per a recent study by Localytics, Nokia had around 22% of the Windows Phone market as of January 2012. As recently as July 2012, it had around 60%.
We also know that in Q4 2011, Nokia sold around 1.1 million Lumia phones; it sold 2.2 million during Q1 2012; 4 million during Q2 2012 and 2.9 million during Q3 2012 (the drop occurred because the news got out that the existing Lumia range wouldn't be upgradable to Windows Phone 8).
With these numbers, we can establish a rough estimate for the size of the Windows Phone market up until July 2012. First, we estimate Nokia's monthly accumulated sales by adding the previous sales (1 million from 2011) to 1/3 of the respective quarter's sales. Then, knowing Nokia's relative usage from the Localytics study, we can estimate the total (installed) size of the Windows Phone market:
This estimate is roughly comparable to Gartner's 8.4 million estimated Windows Phone sales up until December 2011 (though here we arrive at 8.3 million during January -- one month later). Gartner also estimated Windows Phone sold 2.75 million units during Q4 2011, of which around 1.1 million, or 40%, would have been Nokia Lumias.
The Implication Of Ballmer's Words
With Ballmer saying that Microsoft's Windows Phone 8 sales were running at four times its previous sales, this would imply sales of around 11 million units for Q4 2012.
Although HTC has entered the WP8 market more aggressively, it's likely that the lion's share of those sales would still have been from Nokia -- perhaps as much as 50-60% of the sales, if past share is any guide. If so, this would imply 5.5-6.6 million Lumia units, up from 2.9 million the quarter before, 4 million in Q2 2012, and 1 million during Q4 2011. This would be a huge improvement, even if far from the 48+ million Apple (AAPL) iPhones that should ship during the same quarter.
This 5.5-6.6 million unit estimate is also somewhat above the 5.4 million Street estimate being bandied about. So at this point, Ballmer's words are seemingly positive for Nokia.
As far as I can tell, Ballmer's words imply that Nokia should be tracking somewhat ahead of what the Street expects Lumia sales to be. Ballmer's words imply Nokia selling in the 5.5-6.6 million Lumia units, versus the 5.4 million Street consensus. These estimates would be realized if Nokia keeps a 50-60% share of the WP8 market.
It's hard to say how significant this might be for NOK stock. We have reason to believe Nokia's Lumia sales are tracking ahead of expectations, but Nokia's "legacy" feature phone and Symbian sales could still spring a bad surprise. Still, Nokia's future is tied up to its Windows Phone venture, so overall, it would seem that this development is a net positive.