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Bernstein Research: People don’t want Windows Phones

Updated Dec 19th, 2018 8:34PM EST
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Nokia’s (NOK) stock got a big boost recently as investors identified positive trends despite three consecutive billion-dollar quarterly losses. According to Bernstein Research analyst Pierre Ferragu, however, Nokia’s second big Windows Phone push is destined to fail. “Nokia’s stock almost doubled since 2Q results, with in our view no visible improvement in fundamentals,” the analyst wrote in a research note on Wednesday. “We believe the time is therefore right to initiate a short position in Nokia, with Nokia World next week and a risk of a warning in September.” What’s the big problem? According to Ferragu, people just don’t want Windows Phones.

“Our research shows that for many years, poor sales of Windows-based phones stem from a deep and stable lack of consumer interest for the product,” Ferragu wrote. “Despite numerous and repeated efforts of manufacturers (Nokia, but also Samsung (005930) and HTC (2498)) and Operators to develop an alternative to Android and Apple (AAPL) based on Windows, and despite the launch of numerous phones based on Windows with strong features, reviews and marketing support, the operating system remains cornered to less than 5% market share in smartphones.”

He continued, “The lack of consumer interest for Windows-based phones has been very consistent in marketing surveys we have carried out across the globe over the last several years. The situation of Windows in mobile phones is now very unlikely to revert. Smartphone Operating Systems benefit from ecosystem dynamics in terms of application ecosystem but most importantly consumer advocacy and adoption.”

Ferragu believes that despite new developer opportunities presented by the coming Windows 8 and Windows Phone 8 platforms, Microsoft’s (MSFT) mobile ecosystem will never catch up with iOS or Android. As a result, he sees nothing but heartache ahead for Nokia, which is expected to unveil multiple Windows Phone 8-powered devices during a press conference next week.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.