Newspaper article International New York Times

Nokia Struggles to Find Its Footing

Newspaper article International New York Times

Nokia Struggles to Find Its Footing

Article excerpt

The firm, which is selling its handset business to Microsoft, announced a fourth-quarter loss of $34 million, adjusted to exclude its phone unit.

Microsoft's push into the smartphone market may not get off to the best start.

Nokia, which is selling its cellphone division to the American technology giant for $7.4 billion, said Thursday that the unit's sales fell 29 percent, to 2.6 billion euros, or $3.5 billion, in the fourth quarter. The operating loss for the division was EUR 201 million.

Sales of its smartphones declined 7 percent in the quarter to about 8.2 million units, despite an increase in consumer spending during the holiday season.

Nokia's interim president, Timo Ihamuotila, said the company's midrange phone, the Lumia 520, had performed better than its high- end phones in the fourth quarter. The company said increased competition from other device manufacturers like Apple, Samsung and Sony was the primary cause for the drop in sales.

"Breaking into the high-end market was always going to be a challenge for Microsoft and Nokia," said Nick Dillon, a senior telecommunications analyst at the research firm Ovum in London. "Windows phones still don't offer the same level of applications that are available on Android and Apple's iOS. The software is still lagging behind."

Despite Microsoft and Nokia's efforts to increase market share for their phones, Windows-based phones represented just 3.4 percent of the global smartphone market in the third quarter, the latest period for which figures are available, according to the research firm Gartner.

Devices that use Google's Android operating system had almost 82 percent of the market, while Apple held around 12 percent.

After announcing the deal to buy Nokia's phone division in September, Microsoft said it wanted to combine its own marketing and development teams with those from the Nokia unit to increase its presence in the global smartphone market.

"It's a bold step into the future, a win-win for employees, shareholders and consumers of both companies," Microsoft's chief executive, Steven A. Ballmer, said in a statement on Sept. 3.

Analysts said on Thursday that Microsoft could still compete with rival phone makers, but should focus on emerging markets like India and China, where the growing number of middle-class consumers are seeking to upgrade to smartphones. …

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