The plight of Nokia Corporation (ADR)(NYSE:NOK) does
not look promising at all because predictions have revealed that sales will
plummet and the company will lose more market share even though investors are
eagerly waiting for the unveiling of Microsoft's Windows Phone software 8. This
launch is supposed to be the “saving grace” for Nokia’s smartphones.
Nokia, which was a cutting-edge brand and a
leader in the cellphone market for more than a decade, could not withstand
competition from Apple and Samsung in high-end devices sector. Now it is also
losing customers to Asian makers when it comes to lower-end devices. Samsung
surpassed Nokia and became the world's No. 1 cellphone maker in the first
quarter selling 86.6 million units, in comparison to Nokia’s 83 million.
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The company dropped from a market share of 40% in
2008 to 29% in the last year. Reports state that the figures will be extremely
dismal at the end of this year as well. 2nd quarter losses totaled
almost $1.7 billion and overall sales came to 7.5 million at a 19% decline.
Investors are hoping that Microsoft’s liaison with Nokia might strengthen the
latter’s position in the US .
Nokia realized the need to replace its Symbian
software because rivals like Apple and Samsung had moved ahead due to having
superior operating systems for mobile devices like the iOS and Google’s Android
respectively. Symbian was replaced by Microsoft's Windows Phone software. CEO
Stephen Elop stated that some losses would occur in the 3rd quarter
as the Symbian phones will take time to phase out.
Analyst Neil Mawston from London-based Strategy
Analytics predicted that Nokia sales will drop to 83 million devices as opposed
to 98 million by Samsung. Smartphone sales will also decline, coming to 8
million devices with Apple and Samsung way ahead with 27 million and 55
million.
Shares of Nokia had gone down drastically below
€2 in mid-June, but it went up 13% in the past three trading session. Mawston
stated that Nokia needs to convince investors that the collaboration with
Microsoft will be fruitful because the competition is getting fierce and Nokia
will have a hard time catching up, let alone surpassing its rivals.
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