Nokia's implosion has been dramatic. Its sales have dropped to a third of what they were last year in some reasons as demand for the defunct Symbian dries up.  (Source: atmospheric endeavours)

An analyst suggests that Samsung will knock Nokia out of the #1 spot for the first time since 1996. Samsung has been fueled by strong sales of Android handsets. Its latest star product is the Galaxy S II.  (Source:
Nokia's dramatic fall continues

Finland's Nokia (HEL:NOK1V) has led the world phone market since 1996.  But even as Microsoft prepares to inherit market share from Nokia, the question is increasingly becoming not when that will happen, but what exactly will be left.

Nokia's implosion has been dramatic.  The phone maker had struggled in the wake of Apple, Inc.'s (AAPL) 2007 market entry and the rise of Google Inc.'s (GOOG) Android operating system.  But at the time that "struggle" merely amounted to slower growth than its competitors.

However, with the arrival of new CEO Stephen Elop -- a former Microsoft Corp. (MSFT) Canada executive -- the deal with Microsoft, and the decision to phase out Symbian for Windows Phone 7, that slowing growth has transformed into a free-fall of market losses.

Now Nomura Holdings, Inc. (TYO:8604), a leading Japanese market research firm, says that Samsung Electronics Co., Ltd. (SEO:005930) will pass Nokia in market share this quarter -- Q2 2011.  Nomura, goes on to predict in its research note that Apple is then likely to pass Nokia in Q3 2011.

The prediction follows a more reserved statement from Gartner, Inc. (IT) analyst Carolina Milanesi, who recently stated, "If Nokia's new phones are not well received in the third quarter and with the Galaxy S2 ramping up, Samsung might overtake them and become the smartphone leader in Q3."

Neil Mawston, analyst at Strategy Analytics, refutes the report in comments to Reuters, stating that he expects Nokia to stay ahead of Samsung for the time being.

But he adds, "There is certainly a very close three-way battle going on for top spot in global smartphone volumes between Nokia, Apple and Samsung during the second quarter. With Symbian demand crashing, there is growing opportunity for Samsung or Apple to grab the lead."

Samsung's success has come largely thanks to Android, which has freed it from struggling to design a capable OS to complement its hardware.

Nokia is hoping to see success from a similar approach, but it won't deliver a Windows Phone 7 handset until Q4 2011.  And it won't switch to a full Windows Phone 7 lineup until sometime in 2012 or 2013.  Investors are growing very upset with the company's leadership after it was forced to greatly lower targets for this year and pull earning targets for next year altogether.

In Britain, Nokia sales fell in mid-May to 10.6 percent of total handsets, down from 31 percent a year before, according to market research firm ComTech.  Nokia's sales numbers are only salvaged somewhat thanks to its high volume of basic handset sales to developing markets.  Unfortunately, these sales don't help its financials much -- they feature much lower margins than smartphones.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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