Nokia still struggling in smartphone market as Q3 sees year-on-year profits dive

Analysts confident Windows Phone devices should help revive firm's fortunes, though

Nokia's struggles continue after the firm revealed third-quarter operating profits were down 60 per cent year-on-year and sales of high-end smartphones slumped by 39 per cent.

The Finnish manufacturer claimed the smartphone sales decline was due to significantly lower volumes in its sales channel, putting more pressure on the firm's first Windows Phone devices, set to be unveiled next week at Nokia World in London.

Sales of feature phones suffered a less dramatic dip, down 14 per cent, while the firm actually gained market share in countries such as India, where it shipped 18 million dual-SIM devices in the quarter.

Chief executive Stephen Elop was optimistic about the results, noting that the firm is showing signs of improvement, but added there are still many steps to go in the "journey of transformation".

"During the third quarter, we continued to take the action necessary to drive the structural changes required for Nokia's long-term success," he noted in the earnings report.

"I am encouraged by our progress around the first Nokia experience with Windows Phone, and we look forward to bringing the experience to consumers in select countries later this quarter."

Francisco Jeronimo, research manager of European mobile devices at IDC, explained that Nokia's transition from Symbian to Windows Phone has been painful, but that it's the right move in the long term.

Nokia still struggling in smartphone market as Q3 sees year-on-year profits dive

Analysts confident Windows Phone devices should help revive firm's fortunes, though

"It will take time for Nokia's Windows Phone devices to be seen by customers as a viable option and the firm will need to launch a range of handsets to win customers over," he told V3.

"Operators are happy about the Nokia-Windows partnership as they do not want Android to dominate the market. It will be important for Nokia to release a number of devices at different price points."

Jeronimo added that he expects the Windows Phone platform to overtake iOS and become the second biggest operating system behind Android by 2015.

Meanwhile, Carolina Milanesi, research vice president at Gartner, told V3 that Nokia's planned strategy of rolling out Windows Phone devices in selected markets is a sensible decision.

"Nokia needs to go into those markets where they have strong operator support and where their brand remains strong before they go and tackle markets where operators are all for Android and Apple," she said.

Milanesi also noted that the success of dual-SIM devices is keeping Nokia relevant in emerging markets and that shipping 18 million units is a very impressive result in a quarter.

Both analysts agreed that Windows Phone devices should improve Nokia's fortunes, but that it will not be possible to see how successful the Microsoft partnership has been until the second half of next year.

Microsoft has confirmed that it is now rolling out its Mango update to almost all Windows Phone 7 devices as the firm looks to use the software update and its partnership with Nokia to compete with Android and Apple.