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
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.