Nokia Pressures Include Apple iOS, Android

Nokia is feeling pressure from a combination of lower-cost Google Android smartphones and Apple's iOS, with questions about whether it can execute a turnaround.

It seems as if every other week a new Google Android phone arrives on the market, ready to join its ever-expanding family. The latest is T-Mobile's HTC Wildfire S, which features a 3.2-inch display, Android 2.3 (codenamed Gingerbread), and a 5-megapixel camera. It will debut Aug. 3 for $79.99 after mail-in rebate.

Android's proliferation is a much-lamented issue among Google's rivals-unless you're Microsoft, which could receive significant revenue from its newfound strategy of coaxing Android manufacturers into royalty agreements. (Microsoft claims that Android violates its intellectual property, making it very clear to those manufacturers that it's more than willing to fire off a lawsuit if a deal isn't reached.) For Apple, Hewlett-Packard and others in the ecosystem, the sheer size of an Android Army threatens to blunt the market impact of their newest projects or swamp them entirely.

And if you're Nokia, Android represents an existential threat.

There was a point, not too long ago, when Nokia dominated the global market for phones. And even as the company lost ground at the high end of the market to Apple's iPhone and similar competitors, it could still count on an Alamo of sorts at the lower end-something that's also at risk, thanks to devices like the HTC Wildfire S and its $79.99 price point.

Nokia's solution is to change the game entirely, abandoning its homegrown Symbian operating system in favor of Windows Phone. But thanks in part to that general pressure from Android, Microsoft's smartphone platform is experiencing a notable lack of marketplace traction. For its part, Microsoft hopes that its upcoming "Mango" update, which contains some 500 new tweaks and features, will help change that story. For the moment, however, it looks as if Nokia's exchanging one struggling platform for another.

Nonetheless, Nokia executives are putting a brave face on their current predicament.

"The challenges we are facing during our strategic transformation manifested in a greater-than-expected way in Q2 2011," Nokia CEO Stephen Elop wrote in a July 21 statement accompanying his company's latest quarterly results. "However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business."

(Nokia reported a net sales decline of 7 percent and an operating profit decline of 41 percent-to $556 million-over the year-ago quarter.)

He claimed that a "more responsive approach to product pricing," along with a shift in sales focus and marketing resources, helped create what he termed "healthier sales channel dynamics." That being said, the company sees no relief from the competitive pressures squeezing its bottom line, at least in the near term. And even as Android eats away at Nokia's lower-end market share, Apple has apparently overtaken Nokia to become the world's largest smartphone producer by volume.

In June, Elop offered an audience a glimpse of what looked like a Nokia N9 smartphone running Windows Phone. The N9, which currently runs a MeeGo operating system slated for mothballing by Nokia, married a curved 3.9-inch AMOLED (active-matrix organic LED) screen to a body engineered from a single piece of polycarbonate. Presumably, other devices are in the pipeline, as well.

But it could take a lot more than a few new smartphones to reverse the company's current trend.

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