What happens when your major cell phone client scales down on their orders? Ask Compal Communications, whose revenue went down 39.5% last June, while worse expectations are foreseen for July.
Apparently Nokia is making some serious cuts to their Windows Phone 7 orders and this involves immediately any or all of their current Windows Phone 7’s including the 610, 710, 800 and 900. Compal Communications is the primary ODM (original design manufacturer) and that directly affects their business as we have seen in the form of a drastic reduction in revenues.
But what does the future have in store for Compal and for that matter the newer versions of Windows phones that Nokia has in store? Well, it is a revealed secret that Nokia is moving towards Windows 8, meaning that they will need to cut down on unwanted inventory for models they will be phasing out eventually. It could also mean that Nokia is probably trying to scale down on orders to outside ODMs and trying to manage the production from in house. They have been doing that for the Lumia 900, which is not outsourced, but built in-house. It could also mean they are trying to shift orders from Compal to some of their Latin American production partners.
For customers at least, there is not going to be much of an impact at the moment because of Nokia scaling down Windows Phone 7 production. Nokia promised a launch of the Pink Lumia 900 for AT&T and they are going ahead with that launch as planned on the 15th of this month.
So it seems that at this time it is Compal who has to bear the brunt of this change of heart from Nokia. We sincerely hope that it is just a scale back of orders for the older designs and that fresh orders for the newer models are just around the corner.