As Finland's Nokia Oyj. (HEL:NOK1V)
continues its downward slide in smartphone sales, the question
partner Microsoft Corp. (MSFT) is likely
wondering is exactly how much market share the company will have left when it finally
puts out a Windows Phone 7 handset in October.
While Nokia in the U.S. has been shadowed by other
handset manufacturers in the smartphone war, internationally it was one of the
proponents of the "smart" phone and the top seller of the rich-media,
internet-connected cellular devices. But ever since Apple, Inc. (AAPL)
and Google Inc.'s (GOOG)
Android operating system exploded onto the market, Nokia hasn't seemed quite
the same, delivering increasingly anemic hardware and software progress.
Nokia's answer was to embrace
the cutting edge Windows Phone 7 UI, but the problem was that it wasn't
announcing immediately available product -- it was offering a product that
would be available in about a year. So rather than signaling the rebirth
of Nokia's smartphones, the move seems to have been perceived by the public as
a signal of the death
of the current lineup -- and cause to switch to a rival phone maker.
Apple has now become the first to officially pass
Nokia in smartphone sales. Apple surpassed analyst expectations, moving
20.3 million iPhones in the second calendar quarter, while Nokia moved only [press
release] 16.7 million.
Ex-Microsoft executive and now Nokia chief
executive, Stephen Elop, tried to put a cheerful spin on the news commenting
that the changes put in place had already "started to have a positive
impact" on Nokia, and that, "We are making better-than-expected
progress towards our strategic goals."
Despite the optimism, Nokia appears in very bad
shape. For the quarter revenue dropped 7 percent to €9.3B ($13.2B USD),
while a net loss of €368M ($523.4M USD). Smartphone sales dropped 34
percent, while overall phone sales (including non smartphones) dropped 20
percent, to 88.5 million units.
The latter figure is particularly disturbing for
Nokia, as it indicates smartphones aren't the only arena it's falling short in.
And consider that Nokia's basic phones are still
more profitable than its smartphones, that's very bad news for the
Samsung Electronics Comp., Ltd. (SEO:005930) has
not disclosed its quarterly smartphone shipments yet, but it looks likely
to pass Nokia, as well. The only remaining question will be who was
first in smartphones globally -- Samsung or Apple.
For Nokia, likely to be bumped to third place,
tough questions await. Sure, Nokia, with its vast global market share,
seems like a somewhat appropriate candidate to push the slick, Windows Phone 7
OS. But will Nokia be able to appeal to Microsoft's biggest handset
market -- the U.S. -- a market Nokia has traditionally struggled in?
And with only one handset apparently set for release
in October, will that be enough to generate any sort of momentum in the face of
Apple's strong brand and Android handset makers broad selection of affordable