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Nokia bets it all

Things haven't been going well for Nokia recently in the smartphone space. Oddly, the company is one of the world's biggest shippers of mobile phones but the vast majority of the phones it ships are low-profit “dumbphones”. The company wants to regain prominence smartphone market where profits are high, but so far has been unable to do so. 
 
Nokia tied up with Microsoft in hopes that Windows Phone would help turn around the smartphone market. So far, that simply hasn't happened with customers staying away from Microsoft's mobile phone operating system and Nokia smartphones in general. Nokia has effectively bet the farm on Windows Phone 8. Once the operating system for smartphones launches, the fate of the company -- and CEO Stephen Elop -- largely rests on the success of Nokia smartphones running the operating system.
 
Some analysts believe if Microsoft and Nokia see the success predicted with smartphones using the new Windows Phone 8 operating system, Nokia could overtake Apple for the second-place spot in the smartphone market (Android is currently number one).
 
“This is a make-or-break moment for Nokia,” said Carolina Milanesi, an analyst at the technology research firm Gartner in San Jose, California. “Everything is resting on Windows Phone 8. If that doesn’t work, it will cause an existential crisis for the company.”
 
Since Nokia shacked up with Microsoft, it has seen profits battered. The company has lost $4.9 billion reports the New York Times since announcing the switch to Windows Phone in February of 2011. By June of 2011, total sales at Nokia decreased by 19% from the year earlier.
 
While Nokia is betting big on Windows Phone 8, Nokia is expected to begin additional price cuts on existing Lumia smartphones in an effort to sustain sales through the transition to Windows Phone 8. Nokia already slashed the price of its Lumia 900 back in July.
 
Canalys analyst Pete Cunningham said, "I don’t think we are going to ever see Nokia return to the dizzy heights it was once at. Can Nokia build a sustainable business in this space? We think it can. Windows 8 will help them do that. But the market dynamics and power have shifted."

Source: New York Times





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